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SecondMarket launches trading of limited partnership interests in funds

SecondMarket, which bills itself as the world’s largest marketplace for illiquid assets, has added trading in limited partnership interests in private equity funds, venture capital fund

SecondMarket, which bills itself as the world’s largest marketplace for illiquid assets, has added trading in limited partnership interests in private equity funds, venture capital funds, hedge funds and funds of funds.

Through SecondMarket, limited partners will have the opportunity to monetize their stakes even when a fund has no formal redemption programme or has restricted redemptions. It will also enable limited partners in private equity and venture capital funds to transfer their future capital commitments to investors that are better able to satisfy these obligations.

 ‘Today, many limited partners are in need of capital or have a desire to rebalance their portfolios,’ says chief executive Barry E. Silbert (pictured). ‘However, many are locked into their positions for years or are unable to receive capital distributions due to redemption restrictions. A centralized and transparent market, operating in close coordination with the funds themselves, is necessary to enable these limited partners to sell their positions.’

Limited partnership interests represent over USD2trn in investments. Hedge fund assets under management, which peaked at the end of the second quarter of 2008, represented USD1.4trn in investments at the end of last year, according to Hedge Fund Research.

Private equity investment, as measured by initial capital raised, currently represents approximately another USD1trn in assets, according to Thomson Reuters and Private Equity Intelligence.

SecondMarket has also announced it has hired Jeffrey C. Bollerman to help lead its LP interest market. Prior to joining SecondMarket, Bollerman developed investment products for Citigroup Global Wealth Management and was an attorney at Ropes & Gray representing hedge funds, private equity funds and other private investment vehicles.

SecondMarket’s trading network includes nearly 2,000 pre-qualified market participants managing more than USD500bn in assets.

‘These are unprecedented times in the financial markets, and we look forward to helping limited partners and fund managers address their immediate liquidity needs,’ Silbert says. ‘We also look forward to helping develop a sustainable long-term model for private equity, venture capital, hedge fund and fund of funds businesses.’

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