By Spiros Giannaros, CEO, Charles River.
We are excited to welcome the Mercatus team to Charles River Development in an acquisition that was finalized by State Street earlier this month. We’ll have lots more to share about Mercatus, its technology, and our end-to-end, public-to-private technology platform in the coming weeks and months. First, here’s a quick introduction to this innovative #Fintech firm.
Who is Mercatus?
Mercatus is an investment data management platform for private markets. It was founded twelve years ago by Haresh Patel and Tim Buchner, two longtime technology executives based in San Mateo, California. Like many Silicon Valley startup stories, Mercatus’s history is based on a combination of strategic opportunity, hard work, and a little bit of luck.
Haresh and Tim came from the renewable energy industry and were well positioned to create a business connecting investors with energy projects seeking funding. It wasn’t long before the small team ran into the very same data challenges that Mercatus solves for investors today: bespoke financial models, inefficient and error prone spreadsheets, and time-consuming forward-looking analysis. They built a software platform and data architecture to help solve those challenges for one of their clients and quickly learned they had hit upon a new business model as a software company.
The rest, as they say, is history. In its early days, Mercatus focused on sustainable infrastructure investments, with a mission to support and grow renewable power technologies by providing data transparency for their investors. It soon expanded to solve the complexities underlying all bespoke infrastructure investments, such as airports, data centers, and highways. Based on the data architecture required in infrastructure investments, Mercatus eventually evolved its platform to include all private market segments, including real estate, private equity and private debt.
Today, Mercatus’s platform helps private market fund managers and asset owners scale their businesses and make smarter investment decisions by providing a holistic view of their data and insights. It offers access to flexible cloud-based asset management, deal management, portfolio monitoring, valuation management, environmental, social and governance (ESG) metrics, and investor relations solutions. It is the only data management platform that allows for valuation and scenario analysis at scale, based on its patented ModelSync Technology, a key differentiator among its peers.
Why did we acquire Mercatus?
This is a continuation of a journey we started three years ago, when State Street acquired Charles River Development. The goal was to provide scale and efficiency for asset managers with State Street Alpha℠, which combined our public markets front-office data management technology with State Street’s middle- and back-office servicing. The acquisition of Mercatus expands that value proposition into the private markets, creating a single end-to-end data management solution for multi-asset managers.
Clients will be able to manage the entire lifecycle of their investments, including the ability to view portfolio exposures across public and private markets. Our partnership will enable clients to have more granular visibility into asset and fund level data to help solve challenges caused by increased fund complexity, more sophisticated and demanding investors, the need for greater transparency, and regulatory obligations.
What do Mercatus’s clients say about the platform?
Mercatus counts some of the largest and most sophisticated private market investors as clients. What we heard from them during our due diligence process really clinched this deal for us. Clients repeatedly emphasized they were impressed by both Mercatus’s technology and the Mercatus team itself.
Mercatus brings deep domain expertise and a laser-like focus on clients, two qualities that its customers appreciate immensely. The value the platform has created for these fund managers runs the gamut:
- Helps creates streamlined processes for ingesting, analyzing, and reporting data to both internal and external stakeholders.
- Designed to make it easy to forecast the impact a given investment could have on the portfolio with instant accretion/dilution analysis in Mercatus.
- Allows portfolio managers to perform forward-looking scenario analysis across a given investment, portfolio, or fund with a few simple clicks, with the valuation models continuing to live in Excel.
- Helps clients respond to investor queries and ad hoc data requests in a fraction of the time it took previously, freeing up many hours that their analysts and associates now can spend adding value.
- Gives investors a real-time understanding of key data elements and their underlying calculations so they can trust the data audit trail behind the number.
- Provides dashboards that are designed to simplify visualizations to drive insight.
Why make this acquisition now?
Both Mercatus and Charles River have observed a shift happening among fund managers and asset owners where the lines between public and private markets and front to back office are disappearing. We’ve also seen a growing trend of managers moving away from a decentralized data strategy to gain a single, holistic view of investments. By connecting these pieces together, unified data governance creates a flywheel effect, helping all functions to generate alpha and provide their investors with a differentiated client experience. Private markets globally are positioned for fast growth* and increasing complexity. We saw the immediate need to solve end-to-end data challenges with our acquisition of Mercatus.
*https://www.pwc.com/gx/en/industries/private-equity/private-markets.html
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