Technology and Liquidity

Posted on
29th March 2019
By Travis Miller

Technology and Liquidity

Liquid illiquids (By Travis Miller, 29th March 2019)

Alternative investments are associated with being illiquid as they are typically over the counter and not listed on an exchange or commoditised in nature. With these exposures investors will demand a liquidity premium, which in simple terms means they want a greater return than achieved in liquid investments.

According to Investopedia "illiquid" refers to "the state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value." 

Can we have our cake (higher return) and eat it too (liquidity)?

This is where technology and platforms come into play.  Through the iPartners platform there are over 2,500 registered investors actively considering primary offers and with the launch of the iPartners liquidity module, investors can offer for sale existing holdings through to all registered investors.  Accessing liquidity is as simple as three steps.

  1. Click Sell on your existing investment
  2. Select the amount and price
  3. Submit

Since the launch, we have seen a significant increase in secondary activity through the platform.  Not as liquid as listed equities, although as the number of registered investors grows, so will the investor choice to exit and access to liquidity from the investor base.