#36 Chris Corcino - Securing the Future of Private Markets

Stefan Wagner (00:00:40) - I'm here with Chris Cassino, co-founder and CEO of Alpha Notes. Thank you, Chris, for joining me. Let's start with a simple question. What motivated you to establish alpha nodes?

Chris Corcino (00:00:53) - Absolutely. It is indeed a pleasure to be a guest here, Stefan. When I reflect on why I co-founder of a node, it really goes back to my 15 plus years of experience at firms such as Deutsche Bank, GE Capital, Investors Services and well-known large financial institutions. They provided me a background into alternative assets emerging markets, structured credit, private equity.

Chris Corcino (00:01:20) - Back to why we launch Alpha Node. It just so happened that towards the end of 2016, I met Ferrari God, who is currently CEO at Alpha Nodes and also a co-founder. He had experience, uh, very different than mine, focus on different aspects of the capital markets, catering more towards the institutional asset manager crowd that he was familiar with. The pains I was seeing that the market was facing. Right. Uh, willing accredited investors wanting to improve their portfolios by adding alternative high yield assets. And that's when we basically decided to launch alpha nodes. We realized that there was a huge gap. And we believe private markets in general will continue to grow. And you know what? It's been five plus years. And we feel at this point we've proven that indeed there is a need for for the solution that alpha Nodes provides. If I may just kind of add a little bit there. You know what keeps us going? It's the sheer size of the private markets. I mean, it's a multi-trillion market, right.

Chris Corcino (00:02:24) - And and I think we were just scratching the surface in terms of, uh, the market being aware of who we are and what we do. And I think given everything going on, you know, there's a huge underlying technology revolution, right? Whether it's a blockchain, whether it's AI in the sector. I feel my, my experience there, uh, provides a hopefully a very interesting and distinctive, uh, point of view for alpha nodes.

Stefan Wagner (00:02:51) - You describe Alpha Nose's is a securitization platform for fund managers. And particularly you you're active in the private markets. What sort of do you think are the key factors that have shaped the current financial landscape?

Chris Corcino (00:03:07) - The the evolution of the private market is actually something that I'm really passionate about. Um, there are perhaps a handful or so of key drivers in the history throughout my experience, but I think nothing beats, uh, technology. Tech has been and continues to be just this engine of change and innovation into the sector. Right?

Stefan Wagner (00:03:30) - Everything we literally have seen in the last decades would have not been possible.

Chris Corcino (00:03:34) - Yes, indeed indeed. And going back, you know, about a decade ago, as you mentioned, when when these, uh, fintechs and various types of private market platforms started to sprout out, the democratization that ensued thereafter was very significant. Now, with the arrival of generative AI, I'm just super excited to see what comes next. Just to kind of, you know, come full circle, you know, in addition to technology and other significant driving force, uh, I consider that to be, uh, post 2008 regulatory changes right after the global financial crisis. There's now tighter reporting and compliance, which honestly was quite needed, I believe. And that's helped shape, you know, better structured financial products. And hopefully folks feel Alfa nodes, uh, products uh, fit such description. Um, last and not least, uh, what comes to mind is a very significant driving force is investor mindset. Uh, the investor mindset certainly has shifted in the favor of private markets products. Right. There is increasing appetite for these alternative products.

Chris Corcino (00:04:44) - And that's just because people are simply looking for higher returns, uh, away from traditional public markets. Right? Particularly, uh, in a low interest rate environment, which we see all across the world, uh, or volatility, uh, as.

Stefan Wagner (00:04:58) - Well. The transaction has been around for a while, but how does sort of alpha nose distinguish itself?

Chris Corcino (00:05:05) - Fortunately, it's a very large market in a rather large world. But, um, on our particular case, I like to think it's all about innovation and tailoring our services to what our clients, uh, really need. You know, we're really about doing things efficiently. You know, the more we talk about it, I'm sure the more I hope the more this comes across. But providing a turnkey service, uh, being efficient in the selection of counsel, trustee, uh, all of these approaches, you know, help, help us be nimble, help us be cost efficient as well.

Stefan Wagner (00:05:39) - Maybe I can jump in. You know, we have now worked for a while, a little bit together.

Stefan Wagner (00:05:43) - And as Vesta, we have, you know, worked with Melanie Allen. But your long expertise in the market really shows.

Chris Corcino (00:05:51) - Thank you I appreciate that. I mean, uh, the integration that we have with weather is critical for us to ensure timely, on demand reporting on Nav for private market strategies, which which you rarely find in up to the minute information on such private product and we are able we are often not able to provide that. Our typical clients are fund managers with somewhere between half a billion to all the way up to $20 billion in AUM. So in this context, we have a range, uh, to date, over 60 separate issuances. Uh, you should note alpha notes, right? That's where the name comes from. Um, now, in terms of specialization, we have been very active in private equity, structured credit and trade finance. You know, broadly speaking, these are the asset classes we see a lot of activity on. Or we partner with asset managers on. More specifically, one area where we've uh, I like to say we've made a mark for ourselves as commercial real estate, both debt equity sort of hybrid structures with a huge focus on retail, um, office space, uh, warehousing as well.

Chris Corcino (00:07:02) - But just just broadly speaking, commercial real estate is very significant for us, uh, from a sort of split that equity, about three quarters of of the issuances we do are wrapping private equity investment strategies. The remainder quarter. It's a bunch of structured credits, uh, whether it's asset backed securities, trade finance related performing non-performing type of assets and emerging markets, it's it's the best of what we have done thus far. All very exciting and quite diverse.

Stefan Wagner (00:07:33) - So I can assume many of these structures are quite long dated. Yes.

Chris Corcino (00:07:37) - On average most issuances we do, uh, come out with a 7 to 10 year tenure. Now understanding that in in many instances the asset classes is private equity. So you can't really put par rails around certain terms that you can more often more easily, rather with, with private credit, uh, our issuances have the ability to extend maturity or rather, uh, adjust accordingly, uh, rather efficiently.

Stefan Wagner (00:08:06) - And when such a project starts, what role does your firm play in it? Where where do you how do you help your clients do?

Chris Corcino (00:08:16) - Absolutely. The structuring knowhow that our shop has is one of our sort of key, uh, distinctions in the market. Right. With that in mind, we believe we bring a lot of efficiency by really providing a turnkey approach solution to our clients. What we do, you know, from selection of counsel, as mentioned earlier, uh, trustee, we collaborate. We have, uh, standardized agreement with all of our counterparties. So it's really a little bit like plug and play, uh, modular, if you will. We connect very quickly with council, uh, with banks, uh, with custodians. And we do the structuring, the documentation, the settlement, uh, the reporting, the, uh, nav distribution, um, all of those tasks, uh, to ensure that a transaction is properly launched and properly monitor, uh, and reporting going forward. Yeah.

Stefan Wagner (00:09:14) - When, when I started researching for this interview, I realized your company started also in 2017, the same year as Vesta. So maybe you can tell us a little bit about your milestones, what you have achieved during that time, or what notable things.

Chris Corcino (00:09:29) - That that is indeed a very nice coincidence in terms of the milestones we we've gone through. I would say the first layer that I would mention is being highly internal, but and integration. But certainly that ultimately allows us to to do what we do efficiently. Right. There is that integration with waste and the likes of waste on the likes of the Bank of New York, which are our biggest partners today. That allows us to have a very, uh, robust capital market, financial products every time we we do an issuance. When it comes to pulling a private market strategy or asset that sits in a little bit of a darkened corner of the market and kind of bringing it closer to to the center stage, um, energy distribution, energy production. You hear it time and time, uh, has become critical to us, and it's expected of us by our clients. Right? So being able to have reputable, uh, distribution channels, uh, plugged in already, whether it's the Vienna Stock Exchange through Bloomberg, uh, through Thick Financial, that basically trickles down to, to most financial, financial institutions.

Chris Corcino (00:10:42) - That means to to paint a picture if you're a, an investor, right, that ultimately have your funds call it, uh, at a large bank in the world. And from time to time you receive your statements of where your investments are. You never see your private market investment unless it's offered by that particular bank to you. Right? You'll never see it in that statement. Uh, incredibly, our notes and the reporting of such the related needs are able to be shown in such statements, you know, whether it's provided by any bank, because we report, uh, we manage to provide our reporting through channels that are picked up by them. And I think that's something we're very, very proud of as well. Yeah.

Stefan Wagner (00:11:25) - Now, you mentioned it. You spent quite a bit of energy in, in, in the last few years in building your technology out to provide the service of clients. Now, what type of technology platforms or system to utilize to facilitate the securitization process?

Chris Corcino (00:11:41) - We try to use always bank rate technology. So when it comes to cloud, uh, and security, we certainly go to the well-known service providers. Right. But I guess I would like to stress a couple of things that are more specific to our, uh, use case to our business model. And very critical to that is the integration we have with this, uh, company called conga. What conga does natively through Salesforce is that it basically digitizes the documentation, uh, process every key relevant information, numbers, dates, uh, interest rates, uh, special conditions are picked up elsewhere. Uh, when it matters for reporting purposes, when it matters for, you know, uh, distribution, calculation of distributions, all of those things, um, automating operations. And with the plans of expanding globally, we certainly want to be able to track all of this information for, for the mere sake of improving upon our own product, but also making the whole execution process much more efficient. And that's something that's extremely important for us. It's a sample of what we do, but everything around digitizing and enhancing and improving follows those, those principles.

Stefan Wagner (00:13:01) - I, I couldn't agree more. I mean, for my experience as well, when I worked in investment banking, getting the documentation right and in time is one of the most important things. What kind of technology do you use once the node has been set up? Basically how? Do you manage that one?

Chris Corcino (00:13:17) - What Alpha nodes does. Right. Um, we serve a few roles throughout the life cycle of the transaction. We issue, right. On one hand, it issue securities. On the other hand, it takes those issuance proceeds and it delivers, uh, such proceeds to the underlying fund, the underlying company where investments are actually made. The requirement of such funds or companies is to be audited. So we also receive a fee there on an ongoing basis of audited financials or, you know, reportedly reporting even. Right. Last but not least is, uh, we're constantly monitoring the market. And and we from time to time see secondary market activity right through your career stream. So separate independent parties channels, when we become aware of such, uh, trade it's very valuable.

Chris Corcino (00:14:08) - And most importantly to this point, nothing confirms the current value of an asset other than the price are willing, uh, investors uh, pays at the moment. Right. So that's something we pick up as well. So the point I want to get to is our integration with Vester. Uh, prior to to our integration, we provide reporting on Nav on a monthly basis. Right. And then ad hoc whenever an asset manager, uh, needed such information. Now it's real time on demand. And we have tons of reasons to expect scale and uptick in business in the next 12, 24 months. This would allow us to continue to do what we do well, much more efficiently and completely scalable. Right. Um, so so that is one thing. When I talk about future proofing, I think about what's the future going to hold with all these, you know, advancements in technology, right? Are we going to be bringing in digital assets soon? You know, it all depends on regulation of course.

Chris Corcino (00:15:11) - Are we going to be tokenizing, uh, eventually, whatever that might be, being able to digitally and real time to this aspect of, of our reporting, we know is going to be very, very important.

Stefan Wagner (00:15:28) - Yeah. I mean, I think you're absolutely right, making such securitization of the private equity or private markets more palatable, it's important that it's, you know, you get a price, you have an idea what it is. And transparency is often what scares people away when, when they want to invest in something like this. Now a little bit of a maybe a cheeky question, but when an when an asset manager thinks about using a securitization platform like ours, sort of what kind of question should they have in their mind? What what are the things they should check off with when they ask somebody to be their securitization provider?

Chris Corcino (00:16:08) - My very first advice take a really deep look at all the counterparties involved. I think an appreciation of which parties are involved. It's a very clear signal of how your product, your strategy, will be serviced in the years down the road.

Chris Corcino (00:16:30) - Right. Because these type of relationships are always meant to be long term. So if you don't have the right well-established partners already from the beginning, I would take that with caution. Do you have.

Stefan Wagner (00:16:44) - Any view on where the jurisdiction of the vehicle should be?

Chris Corcino (00:16:48) - Our issuers are customarily based in Ireland. It's not a tax haven. It's part of the European Union, of course. So when it comes to comparing favorable jurisdictions for securitization, you look at Luxembourg, you look at Cayman, you look at Ireland. We looked at all of them. And we continue time after time to believe Ireland is a good base for global securitization. SPV.

Stefan Wagner (00:17:13) - What trends do you sort of see right now in the securitization market? Is there interest on, you know, more focus now on ESG? You mentioned tokenization. Is there something else that's worthwhile mentioning?

Chris Corcino (00:17:30) - Of goes with the price of bitcoin, right? Two years ago there was a lot of inquiries and for the last year zero inquiry and then call it the last few or most recently there's new interest as well as we pride ourselves in working with, uh, you know, brand name financial institutions.

Chris Corcino (00:17:50) - I think it's going to be a while before you see alpha nodes tokenizing a securitization. We have the capability to do that. We have done it on other contained environments. Um, but for us to provide really the benefits that our services are known for, we would need, you know, you're clear. We would need us banks, uh, we need, you know, UK banks, etc. everyone to be happy with tokenization and, and and while the world is getting there, we're not there yet. Right. So tokenization I think will be, uh, some time before we see fast adoption. However, there's an increase in demand for services within structured credits. Right. Remember today we're still 75% private equity. And I include their, um, venture capital as well. The remaining is private credit. In that space. We're seeing more demand, more activity for assets in emerging markets, high yield assets in emerging market for assets originated by fintech platforms. Right. Consumer and and and SME sort of lending related.

Chris Corcino (00:19:04) - So we foresee to as private credit itself as the sector continues to expand to see more demand from that sector in the coming, uh, short cycle. Yeah.

Stefan Wagner (00:19:15) - I mean, I can only echo that. I mean, we see. Let's just say more traditional players banks as well. Very much approaching us wanting to know is there something we can do together is, uh, you know, how can we do this? Because it's it's the benefits are clear. But, you know, not everybody is pulling in the same direction at this point in time. Now, Chris. I mean, thank you. Thank you very much for taking the time. You have a very interesting offering, I believe. But how what's the best way for people to get hold of you if they actually want to become your client?

Chris Corcino (00:19:51) - First of all, it's it's been an incredible pleasure to chat with you. Uh, I certainly hope we get to do this at some point in the future. Again, very easy info at Alpha Dotcom.

Chris Corcino (00:20:05) - Uh, if anyone has any inquiry, you can also visit us on our website, Alpha Notes. Com or even our LinkedIn page. Right. But someone in the team would be more than happy to speak to you. If you should have a note with a brief description of of what you would like to discuss to us about.

Stefan Wagner (00:20:23) - Excellent.

Chris Corcino (00:20:25) - Thank you very much.