Blackstone Sells Self-Made Data System Backed by James to Ipreo

Blackstone Group LP will sell an investment reporting service that it created initially for its own use to Ipreo Holdings LLC, a data provider it acquired last year.

Blackstone, the largest alternative asset manager, started iLevel Solutions in 2006 to organize performance and valuation data from its hundreds of portfolio companies and report the information to investors in its funds. It spun the service out in 2010 as a separate company.

“The thesis behind spinning out iLevel was that this technology was very powerful and could help the industry get more transparency into their data and ultimately increase allocations to the asset class as a whole,” Kevin Black, iLevel’s chief executive officer, said in an interview. He declined to comment on financial terms of the deal.

Transparency into investments will be one of the key drivers behind the expansion of alternative assets, which may swell to $15 trillion by 2020 from about $8 trillion, PwC said in a report last month. Institutional investors and wealthy individuals will increasingly allocate money to managers of private equity, real estate, credit and hedge funds if they can more easily access performance, valuation, fee and expense data, the accounting and consulting firm said.

Other iLevel owners include Swift River Investments, the family office of Blackstone President Tony James and two brothers; Carlyle Group LP, the second-biggest alternative asset manager; Hamilton Lane Advisors and Duff & Phelps.

James, who with brothers David and Ben started Swift River to make investments with family money, wasn’t involved in the sale process, said Christine Anderson, a spokeswoman for New York-based Blackstone.

Industry Maturing

ILevel has 60 employees and 140 clients, the majority of which are money managers with the remainder as fund investors, known as limited partners.

“If you can get real-time access to data, you’re going to have far more comfort being an investor in the asset class,” Erik Hirsch, Hamilton Lane’s chief investment officer, said in an interview. “The level of dialogue that we can have back and forth about what’s happening is many, many levels better than what it’s ever been before. That, to me, is what’s starting the maturation of this asset class.”

Ipreo was acquired by Blackstone and Goldman Sachs Group Inc.’s merchant banking unit from KKR & Co. last year, valuing the New York-based financial data provider at $975 million. Bloomberg LP, the parent of Bloomberg News, competes with Ipreo in providing initial public offering data.

Macquarie Group Ltd. was the financial adviser to Ipreo, and Barclays Plc advised iLevel, according to a statement announcing the transaction on Thursday.

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