A recently-launched platform offering high net worth individuals access to expensive private equity funds may open a window for wealth managers wanting to enter the asset class.
Moonfare went live in Germany just over a year ago. The service allows clients to invest in established private equity vehicles run by the likes of KKR and Carlyle, which would normally set a six- or eight-figure entry point, with a minimum investment of £100,000.
The Berlin-domiciled platform, which counts clients in the hundreds and manages more than £70 million in assets, launched in the UK last November.
Founder Alexander Argyros, formerly of JP Morgan and private equity firm KKR, says local market maturity and investor knowledge of the asset class have turned this into the fastest growing part of the business.
Three months in, Moonfare’s UK arm has some 50 clients amounting to £10 million of assets under management (AUM), with an average portfolio size of £200,000.
Although the fintech firm mainly targets wealthy individuals predominantly working in accountancy, law, consultancy or the private-equity sector itself, it has also caught the attention of wealth managers who find private equity an attractive yet hard to access investment, Argyros says.
He is now in talks with a handful of UK wealth managers, small private banks and multi-family offices running anywhere between £2 billion and £50 billion.
‘Such firms are interested in partnering with us in two ways: by referring their clients and then doing a revenue share or by integration, where an account manager brings clients directly to the platform,’ he said.
Moonfare charges a 1% one-off fee, plus an annual management charge of 0.5% on top of the fees set by each fund in which users choose to invest.
Despite the cost, this type of indirect access to private equity offerings still resonates with wealth managers whose main obstacle to a more straightforward route is the high entry minimums normally required by these funds.
‘We also make it easier for them as we take on the operations side of things,’ Argyros said, referring to the general admission that the private equity fund structure is not readily accessible to the wider industry and that many lack the knowledge or due diligence skills to carry out fund selection.
With the total number of people registered on the platform having more than doubled to 1,700 since last year, Argyros’s future plans involve offering vehicles across venture capital, real estate and distressed debt.
‘It’s optimistic that our clients create a portfolio of two to three funds in their first year with us. This could result in a portfolio of six to eight in a three-year period,’ he said.