Blockchain-powered fundraising platform Globacap has launched a new solution to boost liquidity for private companies, including peer-to-peer lending platforms.
Globacap Liquidity enables private companies to create “controlled liquidity events”, choosing their share price, event timing and investor pool, without having to undergo an initial public offering (IPO).
Globacap said that it offers fully automated technology to make secondary trades in private securities as seamless as those in the public markets.
It said its liquidity product resolves two key challenges typically faced by private companies and prospective investors: a lengthy know-your-customer (KYC) process for direct transactions, and the need for investment funds to be held by a third party.
With Globacap, investors will face the company rather than each other, with KYC being handled automatically and anonymously between the two parties, the company said.
Globacap research has found that one of the biggest motivators for an IPO, cited by 41 per cent of mid-sized and large companies, is the realisation of liquidity by selling some of their shareholding.
However, the majority (88 per cent) would still like to keep the business private for as long as possible and hold off on an IPO or private equity buyout.
“At Globacap our mission has always been to overhaul the archaic processes behind the private capital markets,” said Myles Milston, chief executive at Globacap.
“We started by offering private placement and share issuance, then share registry management and finally our liquidity product enables automated secondary transactions, making transacting in private securities as seamless as public markets.
“As the first company to ever digitise our own shares, we have experienced the benefits of being able to easily access liquidity while remaining in control. By launching the liquidity feature we have completed the full Globacap end-to-end ecosystem, and enabled other companies to digitise their shares and realise the same benefits.
“Our customers tell us that they value the ability to retain control, but that often means turning down a route to large-scale funding. At the same time, existing liquidity options can leave them with less control over their own organisations and the valuation is in the hands of investors.
“By overhauling the legacy private equity exchange landscape, our product represents a new and improved route to liquidity for private businesses and investors alike. It’s the first step towards our ultimate vision of a tokenised securities landscape.
“Our platform works for debt now – we’re focusing on marketing to attract secondary transaction in shares to start with, however the platform is debt compatible.
“Our technology is able to digitise any private share or debt security, and our automated workflows process settlement across the board. For P2P service providers, we already have whitelabel clients of our technology and we can work with any P2P service provider to enable secondary liquidity in their equity or loan portfolios.”