UBS Starts Exchange Where Wealthy Shop for Private Investments

UBS Group AG’s Americas business has joined forces with two financial technology firms to set up an exchange for affluent clients to buy and sell private assets.

The Swiss bank together with Envestnet Inc. and iCapital Network are behind what they’ve dubbed the Alternatives Exchange, where independent advisers and their high-net-worth clients will be able to browse, purchase and sell private investments such as real estate, hedge funds and private equity, according to a statement.

UBS is seeking to expand access to alternative investment products typically offered to the wealthiest investors, as it continues to increase its focus on investors who tend to use a broader range of asset management and investment banking services. Large private asset management firms have been boosting their ranks of high-net-worth clients who’ve seen account balances lifted by buoyant stock markets amid the U.S. economic resurgence.

“This strategic relationship will enable us to scale our product offering for investors and strengthen our position in the alternative investments sector,” Tom Naratil, President Americas at UBS, said in the statement.

Under the initiative, Envestnet will provide access to a select group of alternative investments by UBS and iCapital Network through the new Alternatives Exchange.

Within Minutes

The exchange will automate processes to more quickly compile and analyze documents needed to list such investments, Naratil said in an interview. Documents which previously took a full day to complete may now be done within minutes, allowing clients to evaluate assets more quickly, he said. He likened using the exchange to buying dinner on Seamless.

“If you’re a wealthy person with $5 million, you couldn’t previously think of investing in a private equity fund or hedge fund,” said Lawrence Calcano, chairman and chief executive officer of iCapital. “But now through the low minimums afforded by this platform you’re able to put $500,000, or 10%, of your portfolio to work across many different investments to achieve diversification.”

Only accredited and qualified investors will be able to purchase and sell investments over the exchange, and the offerings will also be available to the more than 106,000 advisers that currently use Envestnet’s platforms.

UBS, which has $1.6 trillion invested assets in its global wealth management business in the Americas, believes investors may allocate as much as 30% of their assets toward the region’s alternatives over the coming years. Most investors are not near that level, Naratil said, but the exchange will more easily allow them to do so.

“We are making this really easy for general partners who want to make their products available to high net worth investors,” Calcano said. “That’s a fundamental game shift.”

©2021 Bloomberg L.P.

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