March 20, 2020

Continuing private market growth in volatile times

The road ahead is uncertain, and although there will be pain along the way, there is no reason that growth (albeit slower) can’t still be the narrative for the private markets. 

Over the last decade since the GFC, growth in alternative investments (defined here as investments in private markets plus hedge funds) has outpaced growth in stocks and bonds. Internationally, alternative investments (largely private investments), as an asset class are gaining ground, now exceeding 7%, the highest of all time.¹ 

Syndex, a private market investing platform, is reporting similar gains. As at Feb 29th Syndex disclosed it has $2.83 billion of assets under administration.  This is a 28% increase from the same time last year which was a 180% increase over the year before that. 

Since the GFC, many investors have sought diversity in their portfolios, and see private assets that have a low correlation to the wild swings of the public markets as attractive. Investment activity into private, real assets, will continue from those seeking income from their capital as the OCR drops into oblivion, or from those transacting on the secondary market; seeking liquidity or an opportunity.

For FY2020 Syndex has also seen a 28% increase in volume of secondary trades. In the last six months (Aug 1st to 31st Jan 2020) there has been a 192% increase in total value traded compared with the six months prior. 

“We are seeing gains in all our markets,” says CEO Ross Verry, “but these increases in the secondary market are quite significant.  Private markets are historically illiquid which was a barrier to many investors, but by offering a secondary market, we are making private market assets more investible.” 

A secondary market could prove pivotal in encouraging continued investment in unsettled times. The simple mechanics of this market allow those who need to exit an investment, for whatever reason to do so.  And, for those entering the market there is added peace of mind. 

All in all the data points to the fact that Syndex are providing tools to investors and issuers that are giving more accessibility, transparency and ease to transact, all of which are supporting the Private Markets growth story.  

“In line with global markets we can surmise that there has been a maturing of the market and there have been more investors looking for opportunities, even at a secondary level. We expect this to continue.”

“To date we’ve seen success with the secondary market. The dominant commercial property offers have seen a lot of interest, with multiple trades completed within 1-3 days.”

Capital raising is also part of this growth story - more than 40 Issues appeared on the public marketplace this year. In contrast to stocks and bonds Syndex promote private investment opportunities as ‘interesting’, with assets that are real and various, i.e, medicinal cannabis, agri-tech, med-tech, boutique hotels, etc. 

Other exciting developments have been delivered from the US market, bringing large brand names such as Elon Musk’s SpaceX, AirBnB and Impossible Foods here to offer New Zealanders investment opportunities.

None is more exciting, and pertinent, than the latest offer; to invest in a diagnostic system for the rapid detection of virus’, including Covid-19.

“There wasn’t a lack of investors or offers prior to March. Going forward we hope history helps in our predictions and expectations. There was a surge in private investing during the GFC and we expect to witness similar investor behaviour.”

As investors search for the right vehicle to keep their capital at work, more and more will land at private investments.

For more information on services provided by Syndex go to:

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Financial investment involves risk of loss - please seek professional advice before making any investment decisions.  The views and opinions expressed in this blog are those of the authors. The information we present is of a general nature and should be used as a place to start your own research. It is not intended as investment or financial advice.

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Ross Verry

Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.

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