TLDR:
- Palico has become the first company approved by FINRA to facilitate online LP-led secondaries deals.
- This approval could have significant implications on the LP-led secondaries market as companies stay private longer, and small LPs are often overlooked by brokers.
Palico, a Paris-based company, received approval from FINRA in July to facilitate end-to-end LP secondaries transactions online as an electronic trading system (ETS). This move is seen as a significant shift in the LP-led secondaries market, which traditionally operated offline through brokers and faced challenges such as opaque networks and costly fees. Palico’s marketplace allows LPs to upload information on stakes they want to sell, and buyers can access the data room, bid on stakes, and conclude deals essentially like transactions on eBay.
Christopher Jeffery, a general manager at Palico, mentioned that the platform had been in development for over two years and is set to launch direct buying capabilities by the end of the summer. The LP-led secondaries market is booming, with LPs needing liquidity as companies remain private longer. Palico’s platform caters to smaller LPs who are often overlooked by brokers focusing on larger tickets.
While Palico is the first company approved for online LP-led secondaries transactions, it may not be the last. The space is expected to grow as more buyers enter the market, and LPs need liquidity solutions. As the broader secondaries market expands, Palico is well-positioned to meet the growing demand for LP-led secondaries transactions.
