Asset Match is the only company in the UK currently offering this service. Themselves a startup, founded in 2012 and even having completed their own fundraise on a crowd platform.
In a nutshell, AssetMatch provides an auction-based marketplace where buyers and sellers can place their share offer, and when the auction closes, the match price, the average price, between what sellers want and what buyers want, is achieved, and then ALL the deals are done at that match price.
It’s a clever, simple, and correct way to achieve a true valuation for shares, and it enables individual investors to achieve a partial or total exit, without the company itself getting involved.
It therefore also provides a clear valuation for the company, or at least goes a long way towards doing so.
Iain, Rohit, what’s your take on all this?Iain: We’re definitely interested in providing both the companies and their shareholders some sort of optionality when it comes to selling their shares. Creating a fair and transparent marketplace for buying and selling shares is, surprisingly, a new concept. Ours is a disruptive offering in the financial services industry where share trading is traditionally done by private agreement, through an intermediary or on a public market.We currently have over 20 companies on our platform that hold periodic auctions and as you have mentioned, ultimately trade at a single clearing price. These companies are all established UK companies that range in size from just under £1m up to £650m market capitalisation. Some names you may have heard of include Tottenham Hotspur, The Co-operative Bank, IntegraFin and BrewDog.
Rohit: BrewDog is an interesting one. They raised money themselves directly from investors before crowdfunding platforms really existed. When they came to us, they had over 14,000 shareholders and had promised these investors that they would have an opportunity to sell their shares at some point in the future. We ran our first auction for Brewdog in November 14, and over 220 people participated. We had a range of prices including a seller willing to accept £25 per share and a buyer willing to pay £205 per share. Our algorithm identified a trading price of £125 per share and over 118 people traded at that price. The auction was arms-length and transparent and participants could amend their bid and offers up until the end of the 5-hour auction window.
Iain: This is an example of how our platform has worked to the benefit of all participants and we would expect that as crowdfunding companies continue to grow and become successful, that they too will look to a platform such as ours to provide their own shareholders with the option of liquidity.
Rohit: Indeed, as the proliferation of the platforms continues, it will only be a matter of time before the shareholders will be demanding some sort of liquidity particularly after the 3 years EIS lock-in has expired. I would anticipate that the number of successful exits, that were previously limited to a trade sale or IPO, will increase and that in the future, Asset Match will be the destination of choice for private companies, their shareholders and sophisticated investors to buy and sell shares in the private company asset class.