Family Office & RIA Weekly Roundup | 10.03.24 | Volume 124

10/10/2024 (5 Min. Read)

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Singapore Plays into AI, FalconX Eyes Acquisitions, and Jane Street Outpaces Wall Street in this Week's Edition...

Take a Lap Around the Industry

• Best Quarter on Record: US ETFs Net $287bn in Q3 (Citywire)
• China Markets Warn Xi More Stimulus Is Needed to Fuel Rally (Bloomberg)
• Zeta Global to Buy Marketing Tech Company LiveIntent in $250 Million Deals (WSJ)
• BlackRock, JPMorgan Asset Back Dynasty Financial at $800 Million Valuation (Bloomberg)

Jane Street Outpaces Wall Street Giants but Faces Mounting Competition?

Jane Street, a historically low-profile trading firm, has emerged as a dominant force in the financial markets, particularly in exchange-traded funds (ETFs) and bond trading. In 2024, Jane Street reported an impressive 78% rise in net trading revenues, positioning it to potentially outpace larger firms like Goldman Sachs in annual trading earnings. Known for its innovative use of complex financial instruments and technologies, Jane Street has become a major player in bond ETFs, a market long dominated by banks. However, this rapid growth has brought challenges. Rivals like Citadel Securities are pushing back, and internally, the firm is grappling with the difficulties of maintaining its flat, collaborative culture as its workforce approaches 3,000 employees. Despite growing external competition and internal pressures, Jane Street continues to thrive, though some analysts believe the firm could face difficulties if its performance falters.

"There’s definitely increased competition, and I think it’s good for the overall ecosystem and good for investors.”

Matt Berger (Jane Street)

Private Funding Pulse Check

• Eleanor Health, an outpatient addiction treatment provider announced? that it has secured $30M in Series D funding, with support from Jobs' family office, Emerson Collective
• With support from Euclidean Capital, Judo Bio, a biotechnology company at the forefront of developing? medicines for kidney treatment, announced its official launch along with $100M in initial funding, comprising seed financing and a Series A round
• EvenUp, an AI startup that assists lawyers in streamlining tasks like document drafting and review, reached a valuation of over $1B following a $135M funding round with support from Azim Premji's family office
• With? backing from Edmond de Rothschild Group,? BE WTR, a Swiss-founded provider of sustainable and premium water solutions, has secured $45.45M in its Series C funding round to support its expansion plans in Singapore and across Asia

Source: FINTRX Data?

M&A Activity Tracker ??

• Cetera Financial Group has announced its first direct acquisition of 2024, purchasing Concourse Financial Group Securities (CFGS), a hybrid RIA and broker-dealer owned by Protective Life Corp., with the deal expected to close in early 2025
• CFGS, based in Birmingham, Alabama, employs around 350 advisors and manages over $12 billion in client assets, with $4 billion under discretionary management
• Protective Life Corp., which went private in 2015 after its sale to The Dai-ichi Life Insurance Company, sold CFGS to focus on its core life insurance and annuity businesses
• Cetera continues to expand its M&A activities in the rapidly consolidating market, following previous acquisitions of Avantax and Securian Financial’s wealth business

(Citywire)

Singapore Ramps Up AI Investment and Talent Push to Secure Global Leadership

Singapore is rapidly establishing itself as a leader in artificial intelligence (AI) development and adoption, driven by a robust public-private partnership model. The government’s National AI Strategy 2.0 includes a $767M investment over the next five years, aimed at securing advanced technology, building centers of excellence, and enhancing the country’s AI talent pool. The private sector is also heavily involved, with companies like Amazon, Microsoft, and Nvidia launching initiatives to support AI integration in Singaporean businesses. Ranked third globally in AI innovation by the Global AI Index, Singapore is capitalizing on its strategic investments by fostering partnerships and hosting key international tech events such as Tech Week Singapore and the Singapore Week of Innovation and Technology. These efforts not only support AI innovation but also reinforce Singapore's commitment to responsible AI governance, creating a fertile ground for future advancements in AI.

"Bringing together the public and private sector is crucial—the private sector has specific expertise and the government’s role is to complement it by establishing good infrastructure.”

Cindy Ngiam (Enterprise Singapore)

Source: Financial Times

FalconX Eyes Acquisitions as Crypto Sector Braces for Consolidation in 2025

FalconX, a digital-asset trading and brokerage firm, is positioning itself for a surge in acquisitions as the crypto sector faces tightening regulations and rising competition from institutional players. Co-founder and CEO Raghu Yarlagadda anticipates a wave of consolidation in 2025, driven by increasing operational costs in the crypto industry. FalconX is actively exploring acquisition opportunities, particularly in institutional infrastructure, data analytics, and tokenization, aiming to bolster its trading teams. Despite the broader decline in crypto M&A activity, FalconX's revenue has surged, driven by a 2.5x increase in second-quarter earnings and a tripling in derivatives trading revenues. The firm, valued at $8 billion in 2022, is backed by investors like Tiger Global and GIC and boasts over 600 institutional clients. Its strategic expansion is set against a backdrop of cautious venture capital flows and high-profile industry failures from the prior year, marking a critical moment for crypto deal-making.

“Currently, we are actively exploring potential acquisitions and assessing the relevant sectors and key players within them.”

Raghu Yarlagadda (FalconX)

Utilities Sector Shines as AI Fuels Demand for Power

The rise of artificial intelligence (AI) is driving a surge in demand for power, with the utilities sector reaping significant gains. Independent power producers like Vistra Corp. and Constellation Energy Corp. have seen their stocks skyrocket, fueled by key deals such as Constellation’s agreement to supply nuclear power to Microsoft. Vistra, favored by Third Point's Daniel Loeb, has outpaced even Nvidia, with a 220% gain year-to-date. As AI-driven electricity needs grow, investors are increasingly turning to utilities as a cheaper alternative to tech stocks, while analysts expect more deals with hyper scalers like Amazon and Google. The sector’s defensive appeal, supported by steady dividends and potential rate cuts, has positioned the S&P 500 Utilities Index for its best year since 2000, signaling a broadening of the AI trade beyond just tech companies.

"That’s gotten investors excited as they look for cheaper ways to invest in AI and not have to buy more expensive technology stocks."

?Rob Thummel (Tortoise Capital Advisors LLC)