Alternative investment platform iCapital has agreed to acquire Parallel Markets, a developer of identity verification software. Terms of the deal were not disclosed, but it is expected to be completed within the next few weeks. The move will allow iCapital to offer an end-to-end solution for investor onboarding, verification and monitoring.
Parallel Markets created the Parallel Passport—a portable digital identity technology that delights your in-the-know customeranti-money laundering requirementscustomer due diligence rules and investor accreditation requirements. As part of the acquisition, iCapital will introduce iCapital Investor Passport, which will rely on this technology to help eliminate the need for duplicate investor profiles and user compliance checks. The passport is scheduled to go on sale at the end of the first quarter.
According to Lawrence Calcano, chairman and CEO of iCapital, the acquisition was largely driven by the firm's desire to make the AML compliance process less challenging for investors on its platform. He noted that previously, if an adviser's client was investing in multiple products on the platform, they would have to go through the AML process separately for each of those products, even if the same asset manager offered them.
“We wanted to create automation around that,” Calcano said. “When we built the company, we focused on providing passports for investors so that they could invest in these products as efficiently and smoothly as possible. The passport we built has all the investor information and fund information, but this part of the AML was a manual process and difficult to grow. By effectively bringing the two together, we will significantly ease the burden on all participants making these investments.”
Calcano said iCapital considered whether to develop the necessary technology in-house, but ultimately decided that using the Parallel Markets product would significantly accelerate iCapital's ability to bring the feature to market. “We looked at the players in the landscape and it looked like Parallel Markets had the strongest technology and similar views on what the problems were and how to solve them,” he said.
The iCapital Investor Passport will create a universal, reusable investor identity for fund investors on its platform, which they will be able to use across the entire iCapital marketplace. It will function as a data locker for storing, managing and sharing personal information during fund subscription and compliance verification. The technology will also help funding managers on iCapital's platform scale their offerings more efficiently and ensure compliance consistency.
“We are excited to join forces with iCapital and together deliver an innovative technology-enabled identity management service that powers further integration between asset and wealth managers in a seamless experience,” said CEO and co-founder of Parallel Markets Tony Peccatiello in a statement.