Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
00:37:18 · Michael Sidgmore, Yann Magnan
[00:37:18] S0: It's an interesting question too, because when you think about a lot of successful market data businesses in other categories, capital markets, market trade web, MarketAxess, just as a few examples, Acadiasoft is another example. They brought the industry together. iCapital has done it in private markets too. Do you feel that there's an importance around that, particularly for something like valuations? And what I'm really getting at here with this question is, does creating industry participation, not just in a customer sense, but also in an investor sense, move you closer towards standardization and uniformity around data and processes that'll make private markets go faster? [00:38:00] S1: Yeah. And the answer to that is definitely yes. I think there is a strong use case that there is a technology out there that would facilitate this reporting and valuation work and also data standardization work that would be useful for the entire industry. And that's what we're hearing from our investors and from the industry, generally speaking, that anything that can be done to get these things done faster anyways in the interest of industry. So short answer is yes.
00:38:00 · Yann Magnan, Michael Sidgmore
[00:38:00] S1: Yeah. And the answer to that is definitely yes. I think there is a strong use case that there is a technology out there that would facilitate this reporting and valuation work and also data standardization work that would be useful for the entire industry. And that's what we're hearing from our investors and from the industry, generally speaking, that anything that can be done to get these things done faster anyways in the interest of industry. So short answer is yes. [00:38:32] S0: Brings up another interesting question, which is you build 73 strings at a time when the industry is moving increasingly fast. We talked about this. Evergreen structures, the growth of private credit. You have to do valuations more efficiently and much faster than has been the case. Do you think you could have built 73 strings five, ten years ago, or was the industry not ready from a technology and architecture perspective to be able to do the things that you wanna do with the foundations that you've leveraged from the presence of enterprise software around data lakes and things of
00:39:12 · Yann Magnan, Michael Sidgmore
[00:39:12] S1: that nature? It's a question of the maturity of technology and also the cost of that technology. So five or ten years ago... Well, we started five years ago ish, but ten years ago, what I think is that the technology was probably not fully there yet. And more importantly, the cost of it would have made it not relevant for the bulk of the market. Now things have changed. Technology is much more mature. We have multiple options available in terms of technological choice If we want to develop something new, if we want to move fast. Cloud infrastructure is very robust, very secure as well. There's another piece that's very important is the safety of data. Our clients are very sensitive and as they should to the security of their data. And we live in a world now where things are pretty complex, but the other way around, there's multiple solutions that can help make this data really safe. So all of that is pretty major at this point in time. That's also one reason why things are accelerating so fast at this very point in time. [00:40:22] S0: So we talked about looking backwards to kind of get here today. Looking forwards in private markets, you sit in such an interesting perch within the industry because you see all the data and you see what's happening with all that data. What do you think this data can be leveraged for going forward?
00:40:22 · Michael Sidgmore, Yann Magnan
[00:40:22] S0: So we talked about looking backwards to kind of get here today. Looking forwards in private markets, you sit in such an interesting perch within the industry because you see all the data and you see what's happening with all that data. What do you think this data can be leveraged for going forward? [00:40:41] S1: I think that this data that our clients are collecting and aggregating in the moment it starts to be standardized in some kind of cloud infrastructure, there's definitely a case to be made that how can you aggregate that data anonymize that data, of course, and create benchmark indexes out of that, that would be relevant to inform back the market as well. So that's probably something that's going to develop, I would say, in the next few years. There's been some recent developments going in that direction, recent transactions that point in that direction as well. And, yeah, I guess everybody's seeing that something is is... Burgiss getting acquired by [00:41:22] S0: MSCI, Preqin getting acquired by BlackRock, model portfolios coming out. BlackRock Partners Group is one example of that. ICapital has model portfolios as well. It's really interesting to think about. So do you think that looking forward, private markets will start to look more like public markets in the future?
00:41:22 · Michael Sidgmore, Yann Magnan
[00:41:22] S0: MSCI, Preqin getting acquired by BlackRock, model portfolios coming out. BlackRock Partners Group is one example of that. ICapital has model portfolios as well. It's really interesting to think about. So do you think that looking forward, private markets will start to look more like public markets in the future? [00:41:39] S1: Yeah. I mean, I think it's going to converge at some point in time. I can hear people say, but private should stay private. Yes. Of course. But if you want to go private, the only way would be that it's closer and closer to public in the way it operates. Because the way to go the private industry is to attract more investors. And the way to attract more investors will be to make sure that the information is as transparent as possible, as frequent as possible, that people can benchmark one investment to another one really fast. Yes, probably
00:41:39 · Yann Magnan, Michael Sidgmore
[00:41:39] S1: Yeah. I mean, I think it's going to converge at some point in time. I can hear people say, but private should stay private. Yes. Of course. But if you want to go private, the only way would be that it's closer and closer to public in the way it operates. Because the way to go the private industry is to attract more investors. And the way to attract more investors will be to make sure that the information is as transparent as possible, as frequent as possible, that people can benchmark one investment to another one really fast. Yes, probably [00:42:10] S0: brings Interesting a good intellectual question, though, because there are detractors of private markets who say it's quote unquote volatility longer. Because the lag time in valuations mean that you don't necessarily have the same volatility that you'd have with a value or mark as you would in public markets. The other side of that is the fact that private markets are private saves investors from themselves at times because they can't trade out of it, and over a longer period of time perhaps they're better off just being patient and holding despite the volatility that they may or may not be able to see on a daily basis as an example. What does creating more readily available valuation and transparency around valuations, which I think we all agree is a good thing, but what does that do to the concept that I just brought up, which is the fact that sometimes there's a good reason in private markets why things are private or illiquid. How do you think about those two competing or counterbalancing features?