Asset Match Says Interest in Early Stage Investment is High but Liquidity Challenges are a Problem

Peer to peer trading platform, Asset Match, is out with some research on the demand for a secondary market for alternative securities. Asset Match is a London-based platform that enables shareholders to trade shares in unlisted companies.

According to Asset Match, nearly two million UK shareholders about the value of their shares and are ignored by the companies they have backed.  Asset Match labels this “mass frustration” as UK shareholders are “let down by poor investor relations.” This attitude is contrasted with a positive Post-Brexit sentiment towards stocks and shares which is resoundingly positive; 23% of UK investors said they intend to invest in stocks and shares in 2017, topping property (11%), bonds (7%) and commodities (7%)

Pointing to a survey of 2,000 UK adults, Asset Match said it found:

  • 10% of UK shareholders said they have never been given the opportunity to discuss options regarding their shares since making their original investment
  • 9% feel locked-in due to an inability to sell or trade the shares they own in a private company – equating to over 600,000 trapped and frustrated investors
  • 11% of shareholders say they have held shares for longer than they intended to
  • This figure rises to 20% among 18-34 year olds, showing the next generation of investors are more frustrated by the lack of fluidity in equity investments
  • 27% of respondents or the equivalent of 1.8 million shareholders across the UK – do not know the current value of the shares they own
  • More than a million shareholders (16%) would like to invest in other high-growth businesses but cannot because of an inability to sell their existing shares

Of course, Asset Match seeks to address this issue by providing a regulated and transparent marketplace for unlisted securities including both debt and equity.

Stuart Lucas, co-CEO of Asset Match and a former senior manager at Bear Stearns, said shareholders want liquidity but they are stymied in the current environment;

“Demand among investors to buy shares in Britain’s exciting high-growth businesses is rising all the time, particularly as alternative finance, angel investment and crowdfunding become more prominent. However, this research uncovers a concerning problem being experienced by those who have already invested in these companies – namely, shareholders are too often ignored and pushed to one side. There are huge numbers of shareholders in the UK who want to sell their shares but cannot, don’t know how much their shares are actually worth, or wish to invest in other companies but are trapped in their current investments. Failure to address this issue will not only breed further discontent within Britain’s shareholder community, but also risks stunting the long-term growth of the private sector by not enabling investors to sell shares and re-invest in the next generation of scaling companies.”

There have been several platforms that have attempted to create secondary trading platforms. Crowdcube, the largest UK investment crowdfunding platform, revealed its intent to create a secondary exchange some time back – but to date there has been no announcement.  The challenge of enabling a secondary market for alternative securities is not unique to the UK and remains an issue in most markets with vibrant alternative finance ecosystems.