State Street buys Mercatus platform to automate private markets

Firms can manage all aspects of investment from a digital platform.

State Street Corp of Boston has purchased Mercatus, a digital investment data platform designed for servicing a range of private markets, from infrastructure to private equity to real estate, affiliate title Private Funds CFO reported.

Haresh Patel

Mercatus allows fund managers to integrate various software services onto a single platform. It allows organizations to run risk scenario testing for their portfolio companies and facilitates smoother reporting from funds. The service was designed for GPs but has since been offered to LPs.

As a result of the acquisition, State Street will now offer State Street Alpha for Private Markets, a service designed to allow fund managers and institutional investors to fully manage all aspects of private investment from a fully integrated digital platform.

Mercatus, based in Silicon Valley, has operations in the US, the UK and India and manages more than $1 trillion in invested capital across its global client base.

State Street’s object is to provide clients with total integration and automation, covering both the public and now the private markets. The deal will allow Mercatus to link up with other automation service platforms like State Street’s Charles River Development, which covers public markets. The Mercatus deal came about because of growing investor demand for access in the hope of reaping higher returns from private markets.

“Until recently it has always been done the same way. Email, Excel, people and duct tape,” Haresh Patel, chief executive officer of Mercatus told Private Funds CFO. “The covid pandemic has produced a tailwind that is accelerating change to a faster, more responsive system. People need the data at their fingertips.”

Patel reckons that the pandemic has pushed the PE industry’s digital transformation ahead by two years. First came a demand for transparency on the part of limited partners, a desire to monitor investments more closely without increasing costs.

Next came the pandemic and a need to evaluate its impact on every portfolio company. That put a strain on the system and raised awareness of the need for data to be accessed and analyzed quickly to make timely assessments and swift execution, he added.

Centralizing information across public and private markets allows the organization to better “weaponize” information for competitive advantage.

Discussions with State Street started soon after Mercatus began a hunt for growth capital. Patel noted that the market was so small, and deals were being done so readily that it made sense to approach potential partners who already had deep relationships with private market clients. State Street was one of the first such partners approached.