Legacy Infrastructure Limits Alt Investing, Inflation Targets Remain Under Fire and UBS Targets Billionaires in this Week's Edition...
Take a Lap Around the Industry
Architects See Business Nosedive, CRE Market in Crosshairs (CNBC)
Tesla Profitability in Focus Amid Price Slashing (WSJ)
Mortgage Rates Above 7% Lead to Steep Drop in Loan Demand (FoxBusiness)
Fed Governor Waller Unwilling to Commit to Rate Hike Path (Bloomberg)
Beyond Stocks and Bonds: Building The Future of Alternative Investing
Alternative investments including venture capital, private equity, and hedge funds have grown substantially over the past 30 years, with private investment in these assets now exceeding $13 trillion. As the investor base expands beyond traditional institutional investors, the infrastructure underpinning these asset classes faces challenges in efficiently scaling and delivering optimal user experiences. Legacy technology stacks paired with manual reporting processes like PDFs and wire transfers reflect systems initially built for a narrower institutional investor base. Similar infrastructure limitations exist for emerging alternative assets such as farmland, litigation finance, and crypto which currently lack cohesive sourcing, reporting and custody frameworks. As alternative investments seek to sustainably engage more investors and advisors, upgrading infrastructure through improved data utilization, intuitive interfaces, and seamless integrations appears vital. With alternative asset allocations representing significant portfolio exposure, the opportunity exists to modernize systems for both traditional and emerging alternative classes as they transition into the mainstream. However, it remains to be seen which solutions will champion needed infrastructure modernization.
"For these asset classes to scale, they will need institutional capital, actively managed funds and financial advisers — and all of these depend on better data."
David Jegen, F-Prime Capital
Private Funding Pulse Check
Society Brands, a tech-enabled consumer products company building a global growth platform, has secured $25M in a Venture funding round joined by Thibodaux, LA-based Callais Capital Management
In a recent Series C round, Cox Enterprises participated in a $45M investment in Nova Credit, a modern credit bureau that helps businesses make more fair and informed decisions
New Legacy Group, LLC has participated in a $9.75M Series A funding round for Urban Sky, an aviation and aerospace manufacturing company developing a high-altitude Microballoon
Granger Management LLC has engaged in a $6M Seed investment in Nucleus RadioPharma, a Rochester, MN-based pharmaceutical manufacturing company developing targeted radiotherapies
Inflation Targets Under Fire as Prices Remain High
In the early 1990s, central banks began adopting explicit inflation targets as a way to boost credibility and anchor expectations. However, with inflation proving stubbornly high around the world, these targets are being tested. Many major economies are now going on nearly three years of missing their central banks' inflation goals by a significant margin. Even China has undershot its 3% target for months due to deflationary pressures. With inflation still elevated and central banks aggressively hiking rates, it remains to be seen how long it will take for countries to return to their targeted levels. This persistence of high inflation despite central banks' efforts to rein it in is putting their commitments to maintaining price stability and hitting their inflation goals to the test.
"The Federal Reserve remains locked in a fight to bring down inflation from still-elevated levels. One of the Federal Reserve’s main aims is to keep inflation expectations anchored in the public. Completely abandoning an inflation target in the middle of a battle against high inflation might do the opposite, thus raising people’s long-term inflation expectations."
Roger W. Ferguson
UBS CEO Ermotti Looks to Bank Even More Billionaires Post Credit Suisse
UBS, Switzerland's largest bank, is looking to expand its wealth management business beyond acquiring struggling rival Credit Suisse to dominate the market for billionaire clients, particularly in the United States. UBS CEO Sergio Ermotti returned to lead the bank after it acquired Credit Suisse for a bargain $3.8 billion as the latter teetered near bankruptcy. Ermotti aims to use Credit Suisse's U.S.-focused investment bank to serve America's ultra-wealthy and challenge Wall Street giants on their home turf. Although UBS trails domestic U.S. players in assets under management, Ermotti believes absorbing parts of Credit Suisse will give UBS the scale, sophisticated product offerings, and banker talent needed to aggressively pursue wealthy U.S. entrepreneurs and private equity firms. The strategy hinges on leveraging Credit Suisse's investment bank, despite its risk management flaws, to be a pipeline supplying newly minted millionaires to UBS's industry-leading wealth management unit. If successful, UBS could cement its status as the top wealth manager globally.
"No one else in the industry has had this kind of chance...In UBS’s 150 years of history, this was the one big opportunity, almost for free. I think they would really have to mess up for it not to work out for them."
Christoph Kuenzle, Zurich University
SEC Cracks Down on Private Equity Fees and Marketing
The Securities and Exchange Commission has revealed its latest priorities for examinations of private equity and other alternative asset managers. The SEC, Wall Street's top regulator, plans to scrutinize private fund fee arrangements and fund marketing practices in its upcoming sweeps to ensure compliance with regulations.
This reflects a greater focus on the private equity industry under SEC Chair, Gary Gensler. Specific issues the SEC will examine include calculations of management fees, disclosures of conflicts of interest, marketing performance claims, valuations of illiquid assets, and adherence to contractual terms like limited partner advisory committees. The enhanced transparency into exam priorities encourages firms to evaluate and strengthen their own compliance in high-risk areas that directly impact investors. With private equity playing an increasingly prominent role in financial markets, regulators aim to stamp out violations through more rigorous oversight and new rules - though the industry has pushed back on some proposals as overreach.
"There is an intense focus at the moment on what exactly your fund documents say about how you calculate management fees after the commitment period, how you account for write-downs and whether your practices match what fund documents require..."
Steeplechase Capital Partners launched as a new independent practice affiliated with LPL Strategic Wealth Services, housing approximately $265M in AUM
Trevor Johnson and Brian Russo founded Steeplechase Capital Partners, focusing on business development and high-net-worth strategy
Based in Newtown Square, PA and Windham, NH, the team serves professional athletes, high-net-worth families, and small business owners
By moving to LPL, the team gained more flexibility to build their ideal practice and put clients' interests first (GlobeNewswire)
Written by:
Andrew Popp | Sr. Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
