The current lack of connectivity in private markets limits the number of investors asset managers can reach with their funds. Through the creation of a digital global network for private funds with homogenised market infrastructure, asset managers can connect with a global distributor base, making their funds easily accessible to a much deeper pool of investors.
In 2023, Goji and Euroclear launched a new service for private market funds on Euroclear’s FundSettle platform which delivers this solution by connecting asset managers with Euroclear’s extensive network of distributors, allowing them to raise more capital from a growing number of investors. On the other side of the equation, distributors gain access to any private fund of their choosing, therefore enhancing their value proposition to clients and enabling them to achieve their investment objectives.
Growing demand
Over the past decade, asset managers in private markets have been experiencing higher demand for their funds than ever before, as investors seek out strong returns and portfolio diversification.
Increasing demand has come not only from institutional investors, but from individuals too. Traditionally, individual investors have been hindered by high minimum investment requirements and the limited operational resources available in private markets. Nonetheless, they understand the benefits of diversification and, as regulations are updated to support their participation in private markets, they wish to take advantage of the same benefits experienced by institutional investors.
Hamilton Lane estimates that in 2024, the percentage of high-net-worth investors (HNWIs) allocating to private funds will climb to 46%, representing a 17% increase since January 2023 and a significant revenue opportunity for the market.
For asset managers to successfully tap this capital, scalable, homogenised market infrastructure needs to be introduced with an emphasis on connecting market participants.
No connectivity, no scale
The current lack of market infrastructure and widely adopted technology creates pain points for all.
Asset managers are unable to connect to distribution channels and are therefore limited in the number of investors they can reach with their funds. Equally, distributors are unable to digitally connect to private wealth channels, leading to lower client satisfaction and an inability to keep up with demand, especially as HNWIs and smaller investors look to enter private markets.
A solution is required that is by nature simple yet innovative, market-neutral yet market-transformative.
Future-proof solution
Euroclear, after assessing the market landscape and client demand, recognised the need for change. Following its successful acquisition of Goji, the financial market infrastructure (FMI) launched a new service on FundSettle, its existing funds platform which currently services mutual funds. This service leverages Goji’s technology to create a globally connected network for private funds.
Goji’s technology provides asset managers, fund administrators, and distributors with a digitised platform to automate and streamline the end-to-end investor lifecycle. The combination of Euroclear’s expansive network with Goji’s technology and private markets expertise provides the end-to-end access and digital infrastructure that private markets need.
By listing their private funds on the FundSettle platform, asset managers can make them discoverable to over 2,000 distributors in the Euroclear network, unlocking unprecedented access to scale. Distributors and their clients can access managers’ funds via their existing FundSettle accounts or through the Goji White Label Platform (GWP).
Using Goji’s technology, asset managers can offer distributors a fully digitised end-to-end investment journey that enhances their value proposition for end-investors and enables them to achieve their investment objectives in private funds.
This includes fully digitised investor onboarding, where distributors can easily onboard clients from any jurisdiction. Distributors can then generate pre-filled subscription documents that are signed digitally by clients. Euroclear’s settlement infrastructure or Goji’s client money account can be leveraged to digitise capital calls and distributions. Distributors will also have full visibility of all capital events and transactions. Finally, investors will have access to real-time, transparent fund and portfolio-level reporting and metrics.
Soon to be integrated into Euroclear’s funds offering are global distribution agreements, which can be utilised by asset managers and distributors to provide the legal and regulatory framework to drive scalable distribution, and connectivity. These agreements will allow managers to distribute to a greater number of private banks and wealth managers without needing to sign a new agreement each time.
With this comprehensive suite of services, Euroclear and Goji are connecting every market participant in the private funds industry, from fund managers, to distributors, to the end investor. With this level of connectivity, growth is maximised and benefits unlocked for all.
If you would like to learn more about how you can connect with Euroclear’s global network of distributors, please get in touch using our contact form.