South Korea-based financial management software provider Qraft Technologies has raised $146m from internet and telecommunications group SoftBank Group.
Qraft develops and operates deep learning-based algorithms and has used its artificial intelligence engine for its NYSE-listed exchange-traded funds (ETFs).
Part of the SoftBank cash will be used to help the company expand in the US and China while an undisclosed amount will be used to fund share purchases from undisclosed investors.
Qraft plans to open offices in New York, San Francisco and Hong Kong while SoftBank said it will become a customer of Qraft and work with the company to develop an AI-equipped portfolio management system for public asset portfolios.
Kentaro Matsui, former managing director at SoftBank Group and managing partner at SB Investment Advisers, which runs the two Vision Funds, said: “Qraft can revolutionise the way financial institutions manage public equity assets, by providing their own AI technologies that have been tested and proven in the US equity market.”
Robert Nestor, former president of Direxion ETFs and head of BlackRock’s iShares Factor ETF business, recently took charge of Qraft’s US expansion as its US CEO. He said outside of trading, AI technology had only started to change the $100 trillion asset management industry.
In a call, Nestor told Global Corporate Venturing that traditionally, managers tried to find alpha – the excess return on an investment after adjusting for market-related volatility and random fluctuations – by developing a hypothesis and testing it against data to support disprove the model. With AI, however, the algorithms can look at the data and come up with models to generate outperformance.
SoftBank’s private company data from its portfolio and insights could bring unique insights to public trading, Nestor said, adding: “It is an inevitable evolution”.
