Alternative sources of liquidity are a growing trend and concern amongst private placement investors, high net worth individuals, and vested employees. Owners are now, more than ever, seeking additional sources of liquidity and hedges for their stakes. Investments ranging from company issued “in the money” stock options in private firms, to traditional exchange traded stocks and restricted securities are finding new buyers.
This growing trend has caught the attention of Hong Kong’s wealthiest man. Li Ka-shing, whose net worth is roughly $35B USD according to Forbes, is reported to be a stakeholder in SecondMarket Solutions Inc. SecondMarket is a private company liquidity platform for restricted and illiquid assets, including company options and vested stock.
Temasek Holdings, an investment company owned by the government of Singapore, runs a $266B SGD portfolio and is also reported to be a stake holder in SecondMarket. Temasek mainly invests in Asian assets, like Alibaba, but has expanded upon their mandate to include assets domiciled in the USA…including the likes of Airbnb and SecondMarket.
Investment activity by SecondMarket’s backers is clearly a trend to follow for indicators on where the alternative liquidity space is going. Recent news flow seems to confirm the importance of alternative buyers and its rapid growth.
Nasdaq Inc., the parent company of the iconic American electronic stock exchange, recently announced that it acquired SecondMarket in late October 2015, according to the Wall Street Journal. The specific terms of the deal were not disclosed, but is has been widely reported that the firm raised $34M USD in 4 rounds from 5 key investors. A recent raise valued the firm at $200M USD.
The idea of liquidity around uncertain events is key. SecondMarket has transacted over $2.5B USD in restricted assets. Facebook’s IPO was a key catalyst for the firm’s growth. Catering to high net worth individuals and key employees is a growing service, for these clients require sophisticated solutions.
Liquidity options with more upside include Squadron Lending’s share financing and stock loans. As opposed to liquidating an entire position, like the service SecondMarket provides, Squadron Lending provides clients with a capital injection while a long position is maintained. Squadron has the ability to lend against existing positons in stocks around the globe, across sectors and industry groups, with varying volume characteristics.
Brokers, accountants, and other managers should consider Squadron Lending’s services for their client’s due to our global reach and extensive experience. Every client is presented with a custom liquidity solution.
Visit squadronlending.com to learn more about the alternative liquidity we provide.