Secondcap, a web-based platform which will handle transactions in the secondary market, has appointed Martin Graham as chairman of the board. Prior to the move, Graham worked as the director of markets and head of AIM at the London Stock Exchange.
Secondcap, set to be launched early next year, will provide “increased liquidity and a broader network for the private funds market”, said Graham, in a statement. The platform has “strong financial backing, including a wide range of private equity professionals”, he added.
The platform’s launch comes amid a recent boom in the secondary market, via which limited partners buy and sell private equity funds interests. Total secondary sales volume in 2010 could reach $25 billion, according to a report from global placement agent Triago, adding the figure would easily surpass last year’s total of $7.5 billion.
Secondcap will also not be in competition with existing brokers, said François Gamblin, chief executive officer of Secondcap, in an interview with PEO. “We’re not providing any advisory service to the seller and buyers, which is the brokerage community’s primary responsibility,” said Gamblin, who argued a more liquid secondary market benefits everyone, including brokers.
Currently the most active intermediaries in the secondary market are specialised placement agents and advisers, such as Campbell Lutyens, Triago or Cogent Partners.
Other firms have attempted to create similar electronic marketplaces for secondary transactions, but have been unable to gain traction due to limited access to deal flow and confidentiality concerns. Secondcap will attempt to distinguish itself by being independently managed, said Gamblin.
“Other companies or brokerage firms who’ve tried this would restrict their platform to only their deal flow. We’re offering greater access, not only from many different brokers, but sellers of fund interests as well”, Gamblin added.
Furthermore, “no buyer will have access to any kind of information unless they are preapproved by the GP at the beginning of the transaction”, said Gamblin in reference to confidentiality concerns.
Gamblin added this was an advantage over the current situation, considering a number of GPs often have poor control over confidential information.
Founded in 2009, Secondcap is headquartered in London and is planning on opening a New York office by the year end. The business currently awaits regulatory approval from the UK’s Financial Services Authority.