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Selling Unlisted Assets

Wednesday, October 31, 2018

When people think of selling assets to investors, the first thing that comes to mind is the listed stock exchange (or ASX in Australia). There is, however, a less known, yet thriving marketplace that provides an opportunity to buy and sell unlisted assets. It’s called the unlisted market.

Comparing Listed and Unlisted Assets

While both listed and unlisted assets offer buyers a potential return on investment, there are some distinct differences, benefits, and disadvantages for each.

The main difference is the way they are bought and sold, which can impact their value and performance.

Listed Assets Unlisted Assets
Publically listed and sold on a secondary market such as the ASX (Australian Securities Exchange) Not listed on a public secondary market
Can be traded on a daily basis Can be tough to trade and will often have restrictions imposed
Market indexes used to benchmark performance against an asset class or sub-class Performance benchmarks are not widely used
Prices are volatile and impacted by market sentiment Professional valuers price the asset on a monthly, quarterly, half-yearly or annual basis. As a result, prices are usually more stable
Can include a complex investment structure Simplified ‘unitised’ investment structure
Management can be opaque, including layers of entities Transparent management structure
High level of liquidity Low level of liquidity (illiquid)
Governed by market listing rules Subject to investment trust rules
Higher gearing (debt) levels Lower gearing for property, higher for infrastructure

How do investors buy Unlisted Assets?

Larger investors, such as large super funds, pool their funds in a consortium with other large investors in return for a part-share in the asset. This reduces the risk and ensures they are still able to diversify their portfolios. Smaller investors can do the same, although they may do so on a much smaller scale. They will often participate in direct property syndicates or schemes where small investors pool their funds to buy retail, commercial or industrial properties offering better quality tenants on long-term leases with greater potential for capital growth.

Why buy Unlisted Assets?

Unlisted assets enable investors to diversify their portfolios with an asset that:

  • is long-term, often resulting in a stable income
  • offers a lower risk due to lower volatility
  • offers a high potential for capital growth
  • doesn’t have its value impacted by market sentiment or the daily fluctuations of the listed securities exchange.

Why sell your assets privately?

There are several reasons that make selling unlisted assets appealing;

  • You can avoid exposure to the volatility of the listed exchange
  • You can avoid some of the compliance requirements to list on the ASX (such as a minimumĀ  shareholder numbers and asset values greater than $2M)
  • It offers you the opportunity to create different share classes, such as voting and non-voting options

Working with PrimaryMarkets

PrimaryMarkets provides you, the seller, with a platform for liquidity for your securities, funds, commercial, direct assets and fixed-income investments that are often tough-to-trade. Our platform connects sellers with global professional, institutional and accredited investors who are looking for smart off-market investment opportunities. The platform offers you:

  • Transaction controls to dynamically determine listing prices, participants, quantities, timing of transactions and settlement
  • Disclosure safeguards to help keep your data and sales offers confidential
  • Market integrity where the financial terms of transactions are negotiated directly between you and the buyer transparently and in real time
  • PrimaryMarkets also offers you full regulatory assurance

Selling your tough-to-trade or illiquid assets can be challenging. PrimaryMarkets is here to support you by delivering a sophisticated platform which connects our dedicated and private Trading Hub ecosystem with better aligned institutional, wholesale and high-net-worth investors. Find out more about our platform for Sellers or Contact us to discuss the sale of your unlisted assets.

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