A Big Apple technology startup that focuses on the alternative investment space is entering the mutual fund business through a deal that its chief describes as "a fairly transformative shift."
Yesterday the chiefs of New York City-based Artivest
and San Diego-based Altegris
plans to merge the two companies, with the combined company going by the Artivest name but keeping the Altegris brand on the mutual funds. James Waldinger
, CEO and founder of Artivest, describes the deal as a way to offer a "full gamut solutions and types" of alternative investment products to individual investors and their financial advisors. Pending regulatory approval, the deal is expected to close near the end of Q1.
in 2011, Artivest offers an online platform through which accredited individual investors and FAs can invest in illiquid alternatives. Artivest also white-labels its portal for broker-dealers, RIAs, and banks to offer to their FAs. So they work with alternative asset managers on the one side and distributors, FAs, and investors on the other. Artivest also offers some of its own alternative investment products.
"We are a tech firm that essentially makes it easier to access private equity and hedge funds," Waldinger says. "We do it for both sides of the marketplace."
Yet prior to working with Altegris, Artivest did not offer access to any liquid alternatives. Combining Artivest with Altegris, already an ally since last summer, will let the firms offer a "full-service experience of investing in alternatives." That means that advisors working with Artivest will have access to alternatives that fit both institutions and accredited investors on the one hand and smaller investors on the other.
"There were so many advisors that were excited about the fact that they could invest across their client base," Waldinger says. "There's no solutions out there that offer everything."
Artivest is majority-owned by its own employees, and it has several minority private equity and venture capital backers, including: KKR
, Nyca Partners
, Fintech Collective
, RRE Ventures
, the Anthemist Group
, and Cota Capital
. Some smaller institutions and angel investors also back the firm. Altegris is owned by private equity firms Aquiline
, as well as its own employees. Both firm's backers will stick around after the deal.
"All the investors from both sides are remaining on board after the merger," Waldinger says. "The largest category of owner in the combined company will be the common shareholders [including employees] ... No individual entity or person will be a majority holder of the firm."
Waldinger describes the deal as a "cash-free transaction."
"The merger is a true merger," Waldinger says.
Waldinger expects the complete teams from both sides, about 100 people in total, to stay on after the merger.
"The business will be run out of both East and West Coast offices," Waldinger says, with asset management staying in San Diego and technology in New York (while other functions are in both offices and distribution is spread across the country).
Oh, and don't expect the company to rush into other M&A right after the deal closes, though Waldinger is open to it further down the line.
"That's not on the table right now," Waldinger says.
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