New platform gives clients liquidity boost

15-Mar-2016

By Sarah Kendell

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A new platform aimed at the Australian retail investment market will give advisers the opportunity to buy and sell illiquid assets such as pre-initial public offering (IPO) shares through an open online marketplace.

In an interview with financialobserver, PrimaryMarkets.com chief executive Nick Capp, who has previously worked in strategy and consulting roles at Telstra and PwC, said the platform would give advice clients the ability to build a more diversified portfolio without having to sacrifice liquidity.

“Being in the capital markets for a long time I saw that there was never a marketplace for unlisted assets – everyone has always relied on informal closed networks to try and transact,” Capp said.

“We see this as an opportunity to give investors that liquidity, so if there is a need to get out of an asset quickly, they have an option outside ringing around their friends or some other financial planners.”

While options such as listed investment companies and the ASX’s mFund service had already begun to make the managed fund space more liquid, he said PrimaryMarkets.com would provide additional advantages, such as being able to transact units in funds that were oversubscribed and being able to access securities in unlisted companies.

“We got the idea from some comparable platforms in the United States which traded securities from employee share schemes without having to wait until the company had an IPO,” he said.

“In that case it’s a chance for investors to get a position in something they’ve never had access to before.”

The group was working with local advisers to become intermediary members of the platform so they could trade on their clients’ behalf and it had received positive feedback from the industry, he said.

“An adviser might get a new client and there is typically a bit of churn as they go into and out of different assets, depending on what the new adviser recommends, and within those old investments there is always going to be a component of unlisted assets which are typically illiquid,” he said.

“Advisers are saying it’s a great marketplace to handle those illiquid assets, which otherwise would sit on the books forever.”

In addition to the local retail market, the group was also looking at partnering with financial institutions further afield, he said.

“We’ve had a lot of interest out of North America and are also engaging Hong Kong and Singapore intermediaries to try and build that as fast as we can,” he said.

“We’ve also set up an alliance with a peer-to-peer lending group in Chile – they have a lot of high net worth investors who might be able to provide some interesting new assets for Australian investors to look at.”

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