Ryan Hicke, chief executive of $8.5bn tech company SEI, says that such is the growth of private markets, it is unlikely his business would be a public company if it was looking to raise capital today.
Originating in the 1960s, SEI has been publicly listed since 1981, but the markets have changed so fundamentally that the company’s leadership may have gone down a different path.
Hicke says: "If SEI launched today, we may not choose to be a public company. The access to capital is significantly different than it was 25 years ago — there's fewer public companies than there were and [with private capital] you have a different level of flexibility."
Private markets are where capital is heading in current times. As the initial public offering market dries up in the UK, many businesses are selling to private equity, or raising money through private credit.
Taking the next step
SEI has been positioned in this sector for more than 20 years, facilitating alternative asset classes for professional investors. It now wants to take the next step and help the private capital markets offer their services to the retail client.
Hicke, who joined SEI in 1998 and has been chief executive for two years, says: "Let's say that a private credit manager says: 'We're going to launch a retail fund; we want to get that in front of intermediary clients'.
"We believe SEI is ideally positioned to create a platform that facilitates the access to your intermediary client, to create an alternative asset class. There are intermediaries out there, saying: 'I want to put private equity in my client's portfolio'.
"The trend of private markets incorporated into portfolios will increase over the coming years. Ninety per cent of the meetings I deal with investment managers is how they're going to access the retail market; and 90 per cent of intermediaries is how they can access alternatives."
SEI builds platforms for wealth managers and fund managers, and in the UK it powers the technology for Evelyn Partners, Waverton and Schroders Private Wealth, doing a similar job to FNZ.
But Hicke believes that private markets will be the next iteration of investment offering in the wealth management space, especially in the retail sector.
To achieve this there will need to be a huge transformation of awareness in the retail investment arena, and providers will have to jump through many hoops to have their product reach the end client, he says. "Fund managers have to get regulatory permission and they have to work out the fund structure that will allow a retail investor to access that fund.
"Investors are going to need to get educated as there are different tax implications, the fee structures are different, and there's a lot of education required around allocating private markets in a client's portfolio. If [in the US] they do that through a 40 Act fund [a US-pooled retail fund], they will have to provide some level of transparency as a 40 Act fund."
