Alternative investment platform iCapital has agreed to acquire Parallel Markets, an identity verification software developer. The terms of the deal were not disclosed, but it is expected to be completed within the next several weeks. The move will allow iCapital to provide an end-to-end solution for investor onboarding, verification and monitoring.
Parallel Markets created Parallel Passport—a portable digital identity technology that satisfies know your customer/anti-money laundering requirements, customer 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 live 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 advisor’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 investors with the Passport, so they could invest in these products as efficiently and seamlessly as possible. The Passport we built has all the investor information and fund information, but this AML piece was a manual and hard incremental process. By effectively bundling the two, we would significantly ease the burden on all the participants making these investments.”
Calcano said iCapital looked into whether it should develop the necessary technology in-house but ultimately decided that using Parallel Markets’ product would significantly speed up iCapital’s ability to bring the function to market. “We looked at players in the landscape and it felt like Parallel Markets had the strongest technology and similar views as to 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 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 fund managers on iCapital’s platform scale their offerings more efficiently and ensure consistency in compliance.
“We are thrilled to join iCapital and together provide an innovative, tech-enabled identity management service that powers further integration between asset and wealth managers in a seamless experience,” said Parallel Markets CEO and co-founder Tony Peccatiello in a statement.
