2022 was a challenging year for the European platform market. The inexorable decade-long asset growth of the market went into reverse, as market falls hit B2B platform assets under administration, which fell to €3.6tn. Only a few groups managed to end 2022 higher than they finished in 2021.
Two big themes emerged in the institutional platform market over the last year, according to our European Fund Distribution: Platforms report, published this morning:
- Platforms have continued to diversify their revenues away from retrocessions (payments to distributors from asset managers) into ‘value-add’ services. Platforms have been expanding their services around data and ESG in particular, enhancing their offerings both up the value chain to asset managers and down to distributors.
- They are also expanding into offering alternative investments. Platforms aim to bring the same efficiencies to private capital as they have brought to UCITS distribution over the past decade, hoping to open up a new pool of assets. These efforts are now going beyond the onboarding of feeder funds from the likes of iCapital, Moonfare and S64.
The expansion into value-add services has prompted platforms into a buying spree, acquiring specialists in such areas as data, ESG and private capital to fill gaps in their propositions and expand their range of services.
- Allfunds acquired instiHub Analytics and Web Financial, and bought a majority stake in MainStreet.
- Clearstream’s owner Deutsche Börse acquired Kneip.
- MFEXbyEuroclear acquired Greenomy, Impact Cubed and Goji.
These acquisitions broaden platforms’ services and also help them diversify revenues away from retrocessions. While the European Commission has held off for now on an outright ban on retrocessions across continental Europe, the threat is never far away.