Private market investments offer unique opportunities for portfolio growth and diversification.

Historically they have come with a trade-off: illiquidity. Here we explore how to sell your private market shares effectively while considering the challenges posed by illiquid assets.

Illiquidity refers to an asset’s lack of immediate marketability. Unlike publicly traded shares, private market shares cannot be easily bought or sold on an exchange.

Here are some options for selling:

1. Share buyback or repurchase

• You can sell your shares back to the company that issued them or they will arrange the share trade. The company is in control of this process, the timeline, the buyer pool, the sale price and any administration charges you incur.

2. Use a third party

• In some cases you may be able to engage a broker who specialises and acts as a third party in private market transactions. They will help find a buyer and facilitate the sale.  They will charge a brokerage commission and you will have little oversight or control over the buyer pool and timeline.

3. Use a secondary market platform such as Syndex

• Using an independent platform means the process is fee free, transparent, orderly and fair.  You are in control. Transaction history, along with the supply and demand of shares affords clearer price discovery and greater liquidity.

Syndex honours two types of secondary markets: 

• A continuous market;  this is continuously available with no specific timeframe giving investors access to trade their assets anytime, anywhere. This suits investors who have a level of urgency to liquidate their position. A price is determined per trade, between the individual buyer and seller.
• A periodic market; is available at set times during the year, with the frequency and scheduled availability set by the investment fund manager. The auction algorithm determines a single clearing price that represents the best price and the level at which the most trade volume will occur, and the least trade volume left unmatched. 

Every investment fund in the private market arena sets its own liquidity clauses affecting your exit options.  In the dynamic financial landscape of Private markets, illiquidity need not be a roadblock, investors should expect the ability to exit their investments as and when required.  The Syndex platform facilitates digital liquidity options, smoother investment exits and where allowable, introduces new investors with market depth. If your investment fund manager is not leveraging Syndex, ask them why not.