Liquidity in private markets
|The need for liquidity in private markets is becoming more crucial than ever before, with private equity investments at an all-time high. |
The continuing evolution of private equity itself and especially its explosive growth in the last few years, has made the development of a robust private market both necessary and inevitable.
The last decade has seen rapid growth in unquoted securities as investors seek the legendary gains available from investing in private companies.
At the same time, there is huge pent-up demand for the selling of shares in private companies from EIS/SEIS investors, crowd funding investors and employees at companies who were rewarded shares in the earlier stages.
|Where’s the exit?|
In the absence of an IPO or trade sale, there is no practical way for early stage investors to exit. An increasing number of exciting private companies are seeking, rather than choosing the traditional public markets, to raise growth funds from investors directly.
Since the S/EIS scheme’s were established, circa 35,000 companies have received £26bn of funding.
A vast army of private companies exist in the UK, employing 15.5 million people, generating combined revenues of over £1.8 trillion.
|Paper Wealth Unlocked|
Increasingly investors in unquoted companies are looking to trade their investment portfolios more freely and frequently in what is mostly an illiquid market. More and more investors are looking to free up capital they have had locked up in previous investments.
Thousands of private companies funded via EIS/SEIS structures eventually reach “end of life”. Very few have IPO or trade sale based exits in place and early stage investors have no reasonable or practical mechanisms through which to monetise their stakes.