Overcoming illiquidity

Corporate advisory and equity analysis firm, Vantage Analysis has provided a solution for unlisted businesses and investments funds grappling with poor investor sentiment around illiquidity.

Vantage Analysis founder Rafi Peer, in partnership with his brother and former financial planning consultant Dani Peer, has formed Investor Match, a security facilitation service that matches buyers and sellers of unlisted securities. Targeting wholesale and sophisticated investors, Investor Match provides investors with the opportunity to buy or sell illiquid shares in unlisted companies, property syndicates, unit trusts and investment funds.

The brothers stated Investor Match was ideally positioned to provide a much-needed service in the post global financial crisis (GFC) era, in which, both businesses and investors were operating in a significantly different and more complex environment.

“The ‘new normal’ has reset both asset prices and the way in which investors do business,” Dani Peer said, adding investment liquidity had become a key issue.

“During the super-bull years between 2002 and 2007 many unlisted businesses raised millions of dollars in equity from sophisticated investors and private equity funds. The GFC has disrupted or delayed exit strategies. Businesses have decided not to list due to the apprehensive mood on the [Australian Securities Exchange] and anticipated trade sales have not materialised. Investors are now holding scrip, which cannot easily be sold — if at all.”

Peer added holders of unlisted property fund units are in a similar position, with the majority of funds choosing to extend their term rather than sell assets in a weak market to redeem investments.

“Property fund investors are now faced with no visible exit strategy and in many cases a suspension of distributions,” he said.

Investor Match aims to partner with unlisted businesses and investment funds, facilitating trades between existing shareholders or unit holders and new investors. While the service is aimed at minimising liquidity risk for investors, as well as enabling new and existing investors to increase their holdings at a fair price and provide the opportunity to invest in otherwise inaccessible, privately-owned businesses, from an unlisted business perspective their securities become more attractive to investors unwilling or unable to make a long-term commitment, Peer said.

“Our service also has the potential to increase the value of the security as liquidity usually attracts a premium,” he added. “Another benefit is an opportunity to broaden and strengthen the pool of investors that can be called on for future funding.”