Thiel-Backed Firm Helps Ultra-Wealthy Trade Hedge Fund Holdings

(Bloomberg) --

Addepar Inc., a Silicon Valley firm whose clients handle almost $2 trillion of wealth-management assets, created a way to more easily trade investments in hedge funds and private equity funds.

The new Marketplace application will be part of Addepar's broker-dealer subsidiary, Acervus Securities, Chief Executive Officer Eric Poirier said. Addepar will allow clients to invest in funds through financial-technology company Artivest, and in pre-initial public offering tech firms through a partnership with EquityZen.

Addepar's clients are primarily family offices and registered investment advisers, meaning they have granular insight into how the ultra-wealthy are allocating money. Such investors are increasingly looking for more liquidity in assets that are typically hard to buy and sell, and want to make their trades digitally, Poirier said.

“We have thousands of advisers across hundreds of firms,” Poirier said in a phone interview. “We're in a position to add value, essentially as a distributor.”

Silicon Valley and Wall Street firms have been rushing to take more of their transactions online, especially as the coronavirus epidemic leads to soaring levels of market volatility and little ability to meet with advisers in person. Electronic market-maker GTS recently announced a new trading platform for pre-IPO stocks with backing from hedge fund titan Paul Tudor Jones's investment firm. Poirier and Artivest CEO Martin Beaulieu say their transaction volumes have been rising during the crisis.

“You don't have to touch paper, you don't need to sit across from an adviser,” said Beaulieu, whose firm offers funds from companies including KKR & Co., Millennium Management and DoubleLine. “In the last five to six weeks, we've seen activity on the platform increase 35%.”

Addepar's investors include billionaire Peter Thiel and Palantir Technologies co-founder Joe Lonsdale. The firm has counted Morgan Stanley and Jefferies Financial Group Inc. as clients, and in March said it obtained new financing led by Laurence Tosi, the former chief financial officer of Blackstone Group LP and Airbnb Inc.

Poirier's firm also announced it would be working with Melting Point Solutions, which advises on secondary-market transactions, and StoneCastle Cash Management, for a cash-deposit program.

Addepar also plans to partner with iCapital Network, a fintech firm backed by Blackstone and BlackRock Inc. for more options in the private equity and hedge funds universe. It also will work with Zanbato, which helps create liquidity for pre-IPO stock.