In 2015 Multiplicity Partners, the specialist for illiquid and distressed assets, observed a 100% year-on-year increase in the number of illiquid assets tendered for sale by Swiss wealth managers. These assets included hedge fund, private equity funds, structured products and bankruptcy claims. This development is also accompanied by a drop in position sizes offered, often making it uneconomical to transact as larger buyers are deterred considering the efforts involved. This required a simplification in the secondary transaction process as the tedious re-registration for such assets is only feasible for larger positions. In a dedicated effort Multiplicity has established a network of buyers with custody relationships at many Swiss banks. Banks in Switzerland hold client assets registered in their own name through nominee accounts, these positions can therefore easily be transferred from one client account to another within the same bank as no external approvals are required. Transactions can thus be settled within 3 to 5 business days only. An additional benefit, bank internal transfers eliminate the settlement and counterparty risk inherent in private market transactions.
Andres Hefti, partner at the firm, explains: “We are very pleased to finally have an efficient solution for wealth managers and private banks that need to sell illiquid portfolios held in custody at major Swiss banking institutions. If your client wants to close his account at a certain bank, there is a good chance now that Multiplicity can transparently price and negotiate the transaction, thus facilitating a successful transfer to another custody account at the same bank. This development combined with our extensive proprietary database covering illiquid and distressed positions allows us to substantially increase efficiency in the pricing and trading process, and hence overall trading volumes, especially also for smaller positions.”