iCapital Network Forms New Partnership With Morgan Stanley to Provide Alternative Investment Feeder Fund Services

iCapital Network, a US fintech platform democratizing alternative investments for high-net-worth individuals and their advisors, announced on Friday it has formed a partnership with Morgan Stanley to provide alternative investment feeder fund services. It was revealed that the alternative investments feeder fund business transferring to iCapital is comprised of approximately 115 investment vehicles across a range of investment strategies.

FintechiCapital reported that its proprietary end-to-end technology solution will be leveraged to streamline ongoing operations and administration services for the funds and provide support to advisors and their high-net-worth client base. Following the transaction with Morgan Stanley, iCapital will service approximately $40 billion in private fund assets for more than 100,000 underlying accounts. While sharing more details about the collaboration, Lawrence Calcano, CEO of iCapital Network, stated:

“Morgan Stanley has been a trusted, strategic business associate of iCapital for the last two years, and this agreement is testimony to the collaborative nature of our relationship and common goal to enhance the alternative investing process for advisors and their clients. The iCapital technology’s capacity for scale, customization and support allows us to offer a level of service in the alternative investing industry that has not previously been available and we look forward to providing the highest quality experience for the Morgan Stanley team during this transition.”

iCapital then noted that Morgan Stanley will continue to source and monitor alternative investments for its clients while providing ongoing guidance to those clients on the role of alternative investments within a diversified investment strategy. Investors in these funds will continue to be clients of Morgan Stanley. Jeremy Beal, head of Alternative Investments at Morgan Stanley, went on to add:

“iCapital has emerged as the industry’s leading provider of technology, infrastructure and feeder fund services. Our relationship with iCapital will bring greater scale and efficiency to our feeder fund business as well as enhanced technology and reporting to our advisors and clients.”

Wall Street Backing Off Its Bitcoin and Crypto Ambitions- For Now

The cryptocurrency mania of 2017 was impossible for Wall Street to ignore, but a mainstream avalanche into crypto is easier said than done, and a stampede of clients demanding crypto-based products from their institutional brokers just hasn’t materialized yet, Bloomberg reports.

“The market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business,” Daniel H Gallancy, whose firm, Solid X, is now seeking permission from the SEC to sell a Bitcoin ETF, told the outlet. “That was top-of-the-market-hype thinking.”

All eyes were reportedly on Goldman Sachs to lead the supposed blue- suit vanguard into the new “digital asset” sector, and the company has taken repeated runs at crypto by forming a dedicated trading desk, investing in the custodial company Bitgo, and hiring Justin Schmidt for leading its “digital asset” division.

But so far, a source to Bloomberg says only 20 clients have invested in a Goldman Sachs Bitcoin-based derivative product called “non-deliverable forwards,” and Schmidt has commented publicly that regulators are cramping his style.

Another source tells the outlet that Morgan Stanley is waiting on client demand for a Bitcoin futures-based swap product, which is available, but which has not yet traded due to insufficient interest.

Citigroup has a non-custodial Bitcoin derivative product waiting in the wings too, but none of these have been trading either.

Barclay’s Plc in London, is, reportedly, “almost back to square one,” with its inquiries into crypto as well.

The two people hired to look into the matter, Chris Tyrer and Matthieu Jobbe Duval, both left this fall, and Barclay’s has reportedly announced that it has no plans to launch a dedicated crypto trading desk.

2018 was a much different year than last, as Bitcoin traced back many of the gains achieved last year, when the coin briefly traded at $20 000 USD in December 2017.

Still, “crypt-optimists” will point out that Bitcoin, which currently trades for around $4000 USD, is still trading at around 3.3 times more than what it was two years ago, and many investors seem willing to ignore that the Bitcoin system appears to be zero-sum- meaning gains generally only come through the incorporation of more investors and not necessarily because of real-world value creation.

Gains are gains, and money must and may be made, especially if crypto is one “sector” not necessarily exhausted by regulation or institutional investors taking cuts again and again before dishing the remains to the public, vapourware or no.

Eugene Ng, a former Deutsche Bank AG trader in Singapore and current purveyor of the crypto hedge fund Circuit Capital, says institutions are building out their infrastructure now to harness the next wave of gold-dust-dazzled dupes:

“It appears as if progress is coming to a halt, yet nothing could be further from the truth…The bear market is going to allow many of these institutions to build the proper foundations without rushing to build-out infrastructure without adequate testing for fear of missing out on a gold rush.”

Morgan Stanley to Host Inaugural Canada Technology Startup Day in Montreal

Morgan Stanley (NYSE: MS) announced on Thursday it is set to host its inaugural Canada Technology Start-up Day at its Montreal Technology Centre today. The financial giant reported that the invitation-only event is providing some of Canada’s most promising emerging technology companies with the opportunity for direct dialogue and deep discussions with top technology and business executives.

Morgan Stanely also explained that CEOs and leadership from 12 Canadian technology and fintech companies will showcase solutions that cover the breadth of Morgan Stanley’s innovation priority areas, which including cloud computing, productivity and social, big data and analytics, machine learning, automation, artificial intelligence, blockchain, and cybersecurity. While sharing more details about the event, Alan Vesprini, Managing Director and Head of the Morgan Stanley Montreal Technology Centre, stated:

“This is not just a day for ideation and networking, this is about solving real-world, complex business problems. By bringing promising start-up companies and key decision makers in Morgan Stanley’s business and technology together, we empower both parties to take a deep dive into future opportunities that could transform how we do business and serve our clients.”

Shawn Melamed, Managing Director at Morgan Stanley and Head of Technology Business Development, also commented:

“We are excited to meet with these dynamic, young companies today. The start-up ecosystem in Canada is incredibly diverse and evolving at rapid speed. Morgan Stanley’s Technology organization has a long track record of forging powerful tech partnerships which accelerate innovation and drive new products and services.”

Morgan Stanley did not say when the event would take place.


Morgan Stanley Wealth Management Partners With The Zelle Network to Launch New Payment Services Feature on Mobile App

Morgan Stanley Wealth Management announced on Thursday the launch of its new person-to-person payments service called Morgan Stanley Send Money with Zelle.  According to Morgan Stanley, the service enables its clients to send money and receive money from almost anyone with a U.S. bank account using the recipient’s email address or U.S. mobile phone number. While sharing details about the service, Eric Heaton, Managing Director, Head of the Private Banking Group, stated:

“We are excited to offer our wealth management clients a convenient way to send and receive money from the Morgan Stanley Mobile App. Morgan Stanley Send Money with Zelle lets clients make payments using their mobile device, without any additional costs.”

Morgan Stanley also revealed The Zelle Network connects the financial institutions and enables consumers to send payments from their mobile phone. Heaton then noted:

“By joining the Zelle Network, we are providing clients with an integrated platform that will help them manage their everyday cash management needs.”

The new service is now available on the Morgan Stanley Mobile App for iPhone and Android. Morgan Stanley then added that by enrolling in the Send Money With Zelle feature, clients may qualify for Morgan Stanley’s Premier Cash Management Program (Premier), which rewards clients for consolidating their everyday cash management activities with the firm.

Morgan Stanley Believes Bitcoin Needs Regulations for Further Growth

In a recent report titled “Blockchain: Unchained?”, Morgan Stanley details its hesitance towards Bitcoin and outlines its belief that in order for Bitcoin to see continued growth, more regulations need to be enacted.

While Morgan Stanley does have high hopes for blockchain, the technology behind Bitcoin, the investment bank isn’t yet sold on the booming cryptocurrency market. Bitcoin especially has seen a huge surge in price over the last few months with the value of a single Bitcoin more than tripling since March. The investment bank claims that the recent surge has led to many investors calling Morgan Stanley with questions about investing in Bitcoin.

3 Main Reasons for Bitcoin’s Meteoric Rise

The report that was released recently details 3 main reasons why Morgan Stanley believes the price of Bitcoin has risen so rapidly. First, the growing market of Initial Coin Offerings (ICOs). ICOs are becoming a much more common way for small companies to raise large sums of capital. Instead of taking their company public, the company creates a blockchain based token which it sells to potential investors. The tokens do not grant any ownership interest in the company but may be redeemed in the future for cash. It’s a quick and easy way for companies to raise capital, with some companies raising millions in seconds.

The second reason Morgan Stanley outlined was China’s involvement in the cryptocurrency market. China notably places strong limits on its citizens transferring wealth across borders. Morgan Stanley believes that a large number of wealthy Chinese are using Bitcoin to transfer their money to other countries as a loophole to China’s currency outflow regulations. Finally, other Asian countries like Korea and Japan are going crazy for Bitcoin as well. Japan in particular actually formally recognized Bitcoin as legal currency which explains the rise of Bitcoin in that country, although Korea’s surge is not as easily explained.

Will Regulations Lead to More Growth?

Still, Morgan Stanley isn’t 100% sold on Bitcoin. The investment bank sees Bitcoin more as an investment vehicle than an actual currency given the amount of risk and volatility. Even in the face of huge gains in Bitcoin’s value, the bank believes in order for Bitcoin to grow further, more regulations need to be enacted. Morgan Stanley did not specify what kinds of regulations need to be put in place, but the report did mention that increasing privacy is a chief concern for many. That may be a problem since regulators would likely want to know as much information as possible about the investors and speculators involved in the Bitcoin market. Given the SEC’s recent concern about the ballooning ICO market, maybe regulations are on the horizon.

Big News for Prosper: Marketplace Lender Signs Agreement for $5 Billion in Loan Purchases from Consortium of Investors

Prosper Marketplace, one of the leading online lenders in the US, has signed an agreement with a group of institutional investors to purchase up to $5 billion in loans over the next 24 months. The agreement alleviates a challenging situation that has been endured by most all US based online lending platforms: gaining sufficient access to capital to fund the demand for loans.

The investors in the consortium are affiliates of each of New Residential Investment Corp., Jefferies Group and Third Point, and an entity of which Soros Fund Management serves as principal investment manager.

Prosper said the consortium will also earn an equity stake in the company based on the amount of loans purchased.  Additionally, warehouse financing of up to $1 billion will be provided by a syndicate of lenders including Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley. 

David Kimball, CEO of Prosper Marketplace, said they were pleased with the agreement and said they were looking forward to a long-term relationship that will help build a large scale business.

“This deal gives us the funding stability and additional capital markets expertise we need to continue to grow our marketplace and achieve profitability in 2017.”

Prosper said it has maintained positive momentum since the second half of 2016, with monthly loan originations growing steadily since July.

The Prosper loan portfolio was said to be delivering solid returns to its institutional and individual investors, with an estimated net return of 7.86% for January 2017.

Prosper also added that it continues to diversify its investor base, and is focused on bringing new banks and other institutional investors onto the platform.

Financial Technology Partners (FT Partners) served as strategic advisor to Prosper Marketplace and its Board of Directors on this transaction.  DV01 will be the loan data agent to the consortium.  

Addepar Launches Investment Platform For Morgan Stanley’s Private Wealth Teams

Addepar announced on Tuesday it formed a partnership with Morgan Stanley to deliver its investment management platform to Morgan Stanley’s private wealth management teams. 

HandshakeMorgan Stanley private wealth management teams will reportedly use Addepar’s data aggregation, performance reporting and client portal to do sophisticated analysis and fulfill end-clients’ needs for tailored communications. Armed with the top technology and key data insights, advisors can spend more time on what matters most: working directly with clients and building deeper relationships.

Chris Randazzo, CIO of Wealth Management at Morgan Stanley, stated:

“We look forward to working with Addepar. They have an innovative platform that our private wealth advisors will look to leverage to deliver a differentiated service to high net worth clients.” 

Eric Poirier, CEO of Addepar, then added:

“Morgan Stanley has a strong track record of using technology to achieve industry-leading client service. Our platform enhances their ability to serve the reporting needs of their most complex end clients. A partnership of this caliber moves the goalposts for what advisors and their end clients can expect. It is a big step for Addepar and our ambitious vision to power global finance with a unified data model and open platform, empowering anyone to make truly data-driven investment decisions.”

Affirm Receives $100 Million from Morgan Stanley

Max LevchinAffirm has received a $100 million lending facility from Morgan Stanley. Affirm will use the new capital to expand its Point of Sale (PoS) financing to more retailers. The company stated it expects to triple its loan volume for the year.

Affirm was launched by PayPal co-founder Max Levchin who envisioned a platform that brings the loan making process down to the time of purchase. The PoS platform is designed to provide consumers a better rate than the standard credit card service while providing retailers with a valued service. The lender uses proprietary credit models to help assess the creditworthiness of a borrowers. Affirm is already in place with over 750 online/offline merchants around the country.

Speaking with AFR this past summer, Levchin stated that banks are not just too big to fail – they are too big to innovate. He believes that someday soon, Affirm will be larger than PayPal. He also believes that Affirm will soon challenge global financial institutions.

Levchin also stated;

“In America, four of the leading banks in the US are among the 10 least loved brands and 71 per cent of millennials would rather go to the dentist than listen to what banks are saying.”
And that is just one of the reasons he wants to challenge traditional banks. Now he has more money to do just that.

Lending Club Hires former BlackRock & Morgan Stanley Executives

lending-club-620x350As part of the rebuilding process Lending Club (NYSE:LC) is seeking out new hires with traditional Wall Street cred.  Today the leading marketplace lending firm has hired not one, but two former Wall Street bankers. Lending Club has appointed Valerie Kay, formerly an MD with Morgan Stanley, to Head of the Institutional Group.  Raman Suri, previously an MD with BlackRock, joins as Head of the Retail Investor Group. It is obvious Lending Club is directing resources to solidify their funding channels – something that makes a lot of sense. The duo will report to Patrick Dunne, Chief Capital Officer, who joined Lending Club in July after a 25-year career at BlackRock and other investment firms.

Kay is said to bring 25 years of experience to the Lending Club executive bench. At Morgan Stanley Kay gave 20 years including 12 years as a Managing Director. She held several leadership roles within Global Capital Markets including Deputy Head of Asset Finance, Head of Structured Asset Monetization and Head of Mortgage Finance. She was most recently part of the Institutional Securities Group.

Suri has held a variety of senior roles at BlackRock iShares and its predecessor, Barclays Global Investors (BGI), including Head of RIA and Institutional Segments and Head of Product for US iShares. He joins Lending Club with 15 years of experience and will hold the important role of encouraging more retail money onto the platform. Most recently Suri served as MD, Head of Insurance ETFs at BlackRock, overseeing the entry of iShares into the $5 trillion insurance market.

Scott SanbornScott Sanborn, Lending Club CEO, said the key strength of Lending Club is the diversity of their capital – an area they have been working hard at improving.

“Valerie and Raman will play important roles in helping our marketplace achieve its full potential in terms of scale and resiliency.”

Kay said she was excited to be a part of Lending Club and the process of transforming consumer credit.

“I’m thrilled for this opportunity to join a talented team and further build the institutional investor strategy,” said Kay.

Suri added he was looking forward to expanding retail investor access to Lending Club loans.

“I’m looking forward to working with the team to expand Lending Club’s ability to help more retail investors achieve the returns that the marketplace delivers.”

Sanborn and the entire Lending Club team have had a tough run following the departure of former CEO Renaud Laplanche. Sanborn has been working diligently to resurrect platform confidence and hopefully growth.

PeerIQ Secures $2.5M in Follow-On Seed Funding for P2P Credit Risk Analytics Platform

PeerIQ, a financial information services company that connects peer-to-peer (“P2P”) lending to the capital markets by helping institutional investors analyze, access and manage risk, today announced that it raised $2.5 million in a seed-extension round.

PeerIQParticipants in the round include new investor and customer Victory Park Capital, as well as Fenway Summer Ventures and existing investors Uprising and former Morgan Stanley chairman and CEO John Mack. The financing follows the company’s April 2015 receipt of $6 million in seed funding from several prominent capital markets and technology investors.

PeerIQ will use the funds to accelerate its core growth initiatives: continuing new feature development for its risk analytics platform, growing its institutional investor client base, and hiring additional tech and client delivery talent. 

Ram AhluwaliaRam Ahluwalia, co-founder and CEO of PeerIQ, stated:

“Over the past six months, we’ve delivered our first-generation platform and demonstrated the value of institutional grade market surveillance, scenario-testing, cashflow analytics, as well as portfolio management and reporting. This investment from a core customer is important validation of our product and will allow us to accelerate new feature development and client delivery. We are excited to partner with Victory Park Capital, as well as Fenway Summer Ventures and our existing investors.”

Philip Nanney, Vice President of Victory Park Capital, noted:

“Despite the rapid growth in both P2P loan origination and institutional participation in this market, there are few providers of advanced risk management and reporting solutions. As the market continues to grow and mature, we believe many asset managers will require tailored risk analytics in the P2P space, and we are excited to support PeerIQ in meeting this market demand.”

john mackJohn Mack, former chairman and CEO of Morgan Stanley, shared:

“As P2P lending continues to develop, market participants are looking to diversify their funding sources, from securitizations to credit facilities to closed-end funds. Advanced analytics and standards, which PeerIQ is bringing to market, are helping these new sources to scale effectively.”

Raj Date, Managing Director at Fenway Summer Ventures and formerly the first Deputy Director at the Consumer Financial Protection Bureau, added:

“PeerIQ’s suite of tools will drive better capital allocation and risk management in this new asset class, which is important to banks, regulators, and investors alike.”

PeerIQ Secures $6M in Seed Round; Set to Launch Peer-to-Peer Credit Risk Analytics Platform

PeerIQ, a financial information services company that connects peer-to-peer lending to the capital markets by helping institutional investors analyze, access and manage risk, today announced that it has raised $6 million of seed funding.

PeerIQUprising and John Mack, former chairman and CEO of Morgan Stanley, led the round and were joined by Vikram Pandit, former Citigroup CEO; Arthur Levitt, former SEC Chairman; Dan Doctoroff, former CEO of Bloomberg LP; and Eric Schwartz, former co-CEO of Goldman Sachs Asset Management, among other prominent capital market and technology investors.

PeerIQ will use the funds to further build out its risk analytics platform, grow its institutional investor client base, and expand its team. Its analytics platform aggregates industry data from leading online P2P marketplaces and offers sophisticated credit risk analytics and independent benchmarks that allow investors to: assess loan performance, generate cash flows, value and manage portfolios, run scenario analyses, and price credit instruments. More broadly, the company’s offering aims to enhance the efficiency of securitization and other asset-backed transactions that will fuel the next phase of P2P lending growth.

Co-founder and CEO of PeerIQ, Ram Ahluwalia, stated:

Ram Ahluwalia“Institutional investors have played an important role in the category by investing at scale via online lending marketplaces. Yet, future growth increasingly depends on expanding access to liquid ABS markets, which will unlock new sources of capital and lower funding costs. PeerIQ is supporting this next phase by providing the independent, institutional-grade analytics needed for efficient deal structuring and better understanding of P2P across new capital markets.”

John Mack, former chairman and CEO of Morgan Stanley, explained:

john mack“As more and more institutional investors embrace P2P lending, they are looking for advanced analytics solutions. PeerIQ is creating the first risk analytics platform designed to meet their deal structuring needs, while also helping to drive standards for this maturing asset class.”

Managing Partner at Uprising Andy Lam, added:

Andy Lam“We are incredibly impressed by the technical depth and market sophistication of the PeerIQ team and share their vision of the vital role that better data, intelligence and standardization will play in P2P lending. By addressing the investment requirements for many large lenders, PeerIQ will enable efficient capital to enter the sector, create new opportunities for P2P platforms, and generate substantial impact by helping more borrowers achieve their financial goals.”

Brief: Lending Club IPO Tops $1 Billion After Exercise of Over-Allotment Option

Lending Club (NYSE: LC) an online marketplace the connects borrowers and investors, announced on Tuesday (December 16th) the closing of its initial public offering and the exercise in full of the underwriters’ option to purchase an additional 8,700,000 shares from Lending Club.

Lending Club on NYSE IPOAfter the underwriters’ exercise of the option to purchase additional shares, a total of 66,700,000 shares were sold at the price to the public of $15 for a total of just over $1.0 billion in aggregate gross proceeds, which included the sale of 59,000,000 shares by Lending Club and 7,700,000 shares by selling stockholders.

Morgan Stanley & Co. LLC and Goldman, Sachs & Co. acted as joint lead book-running managers for the offering. Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc. acted as joint book-running managers for the offering. Allen & Company LLC acted as lead manager, and Stifel, Nicolaus & Company, Incorporated, BMO Capital Markets Corp., William Blair & Company, L.L.C., and Wells Fargo Securities, LLC acted as co-managers for the offering.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission and was declared effective on December 10, 2014. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Rumors Circulate That Lending Club May Seek Private Buyer & Skip IPO

RumorIn an article published on PEHub this past week, the author stated that according to several sources Lending Club is also considering a buyer and is “pursuing a dual track”.  Lending Club announced that it had filed for an Initial Public Offer this past August.  Morgan Stanley and Goldman Sachs were slated as joint book runners for the deal.  The IPO has been described as a coming of age moment for the entire global peer to peer lending industry.  Reports have stated the valuation was hovering around $5 billion after Lending Club captured a $3.75 billion just this past April.  While some see the valuation as getting lofty, other industry observers note the total addressable market is enormous and the evolution of p2p lending is still in its infancy.  Lending Club may lending_club_logo_newset the pace for other industry participants that are already queuing up to publicly trade shares. On Deck Capital has already announced their intent to list shares on the NYSE.  Rumors published have stated that Lending Club intends on listing on the NYSE as well.

There are benefits to skipping the IPO but the real question is which strategic buyer would be in the market to acquire the leading P2P platform in the United States.  There are plenty of financial companies or other potential strategic purchasers with sufficient capital to close the transaction but do they see the value for shareholders going forward.renaud laplanche

Unlike some other countries, P2P lenders in the US mainly partner with banks to complete the lending transactions.  Lending Club CEO Renaud Laplanche is on the record stating that instead of just steam rolling the old school industry, apparently Lending Club would like to bring them along.  But Fitch has speculated that banks could be feeling the disruptive pressure. Perhaps an obvious acquirer would be a big bank.  At least one industry follower has speculated that Facebook could be an acquirer given their willingness to pay “ridiculously high multiples”.

Ben Franklin $100 BillExpectations have been that Lending Club would list shares before the end of 2014.  With the holiday season just around the corner if that timeline is going to be met – the shares would need to trade fairly soon.