Alternative investment platform iCapital Network has partnered with private equity giant KKR and created its own investment company to inherit and manage a $430 million fund. The companies have big plans for it, and say their moves are steps toward making private equity and other investments accessible to more retail investors.
“This is a unique opportunity to offer investors access to one of the most respected investment managers in an established, innovative product customized for accredited investors,” Lawrence Calcano, chairman and CEO of iCapital Network, said.
On Wednesday, iCapital announced that it created an RIA subsidiary called iCapital RF Adviser to begin managing the iCapital KKR Private Markets Fund. Nick Veronis, the head of portfolio management, a managing partner, and the co-founder of iCapital Network, will lead the new RIA, which will be responsible for investment selection, portfolio construction, and operational oversight.
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Started in 2015, the $430 million closed-end fund was formerly known as the Altegris KKR Commitments Master Fund and was part of iCapital’s acquisition of Artivest last year. The fund’s board of directors and shareholders approved the change to management in February.
At the end of 2020, the fund had about 400 underlying portfolio companies in buyout, growth equity, and real estate strategies across vintages, industries, and geographies. From inception through November last year, the fund’s Class I shares gained an annualized 8.7% net of fees with less than 45% of the volatility of global equities.
The fund plans to invest or commit at least 80% of its assets to private equity investments sponsored or advised by KKR, which also revealed Wednesday it acquired a “less than 25% stake” in the iCapital RF Adviser. The $252 billion asset manager will have no control over the RIA, including a presence on any investment committee, or given any input into the RIA’s investments, it said in a statement Wednesday.
KKR also made an investment in iCapital Network. It did not disclose details about the investment, but executives said the companies are working more closely together. Their interests are aligned, and the creation of the RIA is consistent with iCapital Network’s mission, Calcano said.
In the immediate, KKR will primarily help advertise the iCapital KKR Private Markets Fund and, along with iCapital, benefit from its growth. “This could be a much larger fund,” Calcano said.
KKR agrees. The structure and availability on iCapital’s platform “reduces the hassle factor” for investors, Doug Krupa, managing director and co-head of KKR’s Private Wealth Partners group, told RIA Intel.
Right now, the fund’s assets are “in the millions...we think that first letter could be a ‘b’,’” Krupa said. The asset manager sees feeder funds like it scaling significantly, he added.
In its effort to grow and improve its $70 billion platform, iCapital has also acquired other alts platforms and research and education services.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.
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