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iCapital CEO Lawrence Calcano
iCapital CEO Lawrence Calcano

iCapital Buys Bank of America Alt Feeder Fund Ops

iCapital will be managing behind-the-scenes operations for certain Merrill Lynch and U.S. Trust accounts.

Alternative investing platform iCapital Network announced it has entered into a definitive agreement with Bank of America to acquire the bank’s alternative investment feeder fund operations. iCapital expects the volume on its platform to more than quadruple as a result, growing from $6 billion in invested capital across 14,000 underlying accounts to $25 billion across nearly 70,000 accounts.

Bank of America’s Merrill Lynch and U.S. Trust account holders and advisors will continue to use their existing interfaces and their client relationships, but the inner workings of the system will be improved, said Lawrence Calcano, CEO of iCapital.

Bank of America’s Investment Solutions Group will continue to source, distribute and monitor alternative investment feeder funds on its platform, according to iCapital, and its guidance on the role of alternative investments won’t change. The funds will continue to be distributed through Merrill Lynch and U.S. Trust channels. iCapital’s back-end automation will improve how books are processed, for example, and reporting functions should be better integrated with the user-facing portal, said Calcano.

“Merrill is one of the biggest providers of these kinds of investments to their clients, so strategically it’s a big step forward for us,” said Calcano. “Job one is to make sure the execution of this is seamless.” His firm will be hiring 22 Bank of America employees who are currently supporting the feeder funds businesses to ensure continuity.

The acquisition is a reflection of the firm’s approach to technology. iCapital doesn’t want to disrupt; they’d rather enable, said Calcano. “What we’re not doing is competing with the advisors for their clients,” adding “we’re trying to make their provision of these assets to their clients easier.”

Financial terms were not disclosed. The deal is expected to close during the first half of next year.

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