Europe-focused wealth platform ROYC eyes evergreen and sector-specialised funds
London-and Stockholm-headquartered wealth platform ROYC is seeking to roll out evergreen structures along with other strategies, such as large-cap buyout and sector-focused funds, in the coming months for its European client base.
ROYC was founded in 2002 by former Blackstone managing directors Octavian Popescu and Oscar von Reis, as well as Mathias Leijon, previously Mohal co-head of corporates, institutions and investment banking a Nordea.
ROYC, which stands for return on your capital, is a B2B white-label, sech- driven platform that handles all legal, operational, administrative, marking and fundraising tracking processes for its clients, who include wealth managers, family offices, asses managers and financial advisers.
Its network includes more than 250 GPs and over 3,500 client users, according to its website. The minimum ticks is €100,000.
ROYC's platform allows clients to receive real-time, Al-curated updates on the latest trends and insights tailored to their investment portfolio. It has also collaborated with depositories and fund administrators to integrate the platform with capital call transactions.
Private Equity International sat down with founder and co-chief executive Popescu to find out more about ROYC's operations and its plans to expand fund managers' reach into Europe's private wealth ecosystem.
Why did you zoom into Europe-focused regional banks and advisers?
Europe is very fragmented. There are hundreds of regional banks and thousands of financial advisers and multifamily offices. Some of these banks go stuck in their own operations and have issues scaling, they also don't have the resources of a large global bank to hire hundreds of people or to manage it. When they come to us, that is their main issue.
What's challenging for them is managing the operational aspects of opening private marks access to individual investors in areas ranging from marketing and content, to KYC onboarding and digitlalising the subscription and reponing process. That's when we saw the opportunity to provide a platform covering sales suppon, reporting and structuring in one technology offering.
Tell us more about your GP selection process.
Almost all CP's we work with are key global players in private markers, who we know directly or through our network. We look at their track record, and that needs to be backed by a team that's been there for a long time. At the end of the day, it's a different type of investor in their fund (individual investors and families) so their risk tolerance isn't the same as institutions that will invest in hundreds of funds. There has to be a quality bar that needs to be quantifiable. Ultimately, we also do reference checks with other investors.
We have a few thousand funds that we're tracking and a few hundred we are in active discussions with. That number may grow or shrink depending on fundraising timelines and market environment. We have an open mind -whether it's infrastructure, growth or large-cap buyous-as long as they are high-quality managers. We want our clients to choose who they invest in from a menu of funds we curate and diligence.
We've been in existence for two years and have avoided going to market to just sell portfolio products; we wanted to get the technology platform up and running first and subsequently launched a handful of funds. We have so far focused on secondary managers, continuation funds, late-stage growth funds and mid-market buyouts from several US and European GPS, and expect to launch other strategies such as infrastructure, large-cap buyout and specialised buyout funds in the next months.
How much of your time is spent enhancing ROYC's tech infrastructure?
Developing a front-end application and interface for a client is relatively easy to put together with a number of contractors. What we're focused on is building a back-end solution catering to the needs of financial advisers, which they can scale over time and integrate via plug-and play APIs and white-labelling. Our chief technology officer was our first hire and we're backed by a number of executives from tech companies including Klarna, Mollie and Snowflake. We have a growing team of about 15 in-house software engineers and about half of the team is focused on product development, customisation and improving customer experience. We operate more like a B2B fintech company than a financial company.
What is ROYC prioritising over the next two to three years?
We're working on several evergreen structures, which I think are an entry- level product for financial advisers to get their clients into private markets. We're working with GPs who want to offer these products, and we can be the structuring and technology provider for that. We are also working on providing parallel Luxembourg structures for US funds that want to tap into the European private wealth market in an efficient way.
We're also focused on selecting institutional-grade managers and a providing a diverse menu of offerings that is top quartile, [rather] than just pushing everything out there in the market. The biggest part of our tech roadmap is focused on adviser-orientated tools, including what helps drive client engagement and onboarding, post-sales support, streamlined reporting and portfolio management.
There's been a crop of digital wealth platforms that have launched over the past two years. How will they reshape the industry?
That access barrier to funds will disappear over time as this industry becomes more and more focused on private wealth. Technology innovation in this space will facilitate more individuals to participate in private markets investing, and the expectation is that the experience should eventually be similar to investing in a mutual fund.
Automation will play a big role here - not just AI and machine learning, but optimising processes and giving advisers the right tools to make informed decisions. That's why we would probably stay away from a direct-to- consumer approach: ultimately, these clients need to be advised by someone else on the rest of their portfolio. Over time, I expect to see more consolidation in the wealth platforms space.
https://www.privateequityinternational.com/europe-focused-wealth-platform-royc-eyes-evergreen-and-sector-specialised-funds/