February 24, 2010
Temasek, Li Ka Shing Foundation Invest $15M In SecondMarket
by Tomio Geron- Dow Jones VentureWire
To aid an expansion into Asia, SecondMarket Inc. has raised $15 million in a Series B financing from state-owned Singapore firm Temasek Holdings PLC and a charitable foundation run by Hong Kong tycoon Li Ka-shing.
Each firm invested $7.5 million and took a 5% equity stake, giving the secondary market operator a post-money valuation of $150 million.
Existing investors FirstMark Capital, which previously led an unspecified Series A round for SecondMarket, and New Enterprise Associates and SVB Financial, which came in as investors through the acquisition of InsideVenture Inc. in October 2009, didn't participate in the round.
SecondMarket is profitable and didn't need new funding, and wasn't interested in entering Asian markets until 2011 or 2012. "But we thought if we bring these investors on - these two are among the toughest to turn down - we should accelerate and start our expansion now in 2010," said Jeremy Smith, chief strategy officer at SecondMarket.
SecondMarket has not decided which marketplaces it will create in Asia to expand beyond its U.S. based marketplaces in areas such as private company stock, auction-rate securities, bankruptcy claims and limited partner interests.
However, the main areas it is looking into are real estate and illiquid debt and equity securities, Smith said. The company is focusing on Hong Kong, Singapore and China as its main markets to start. SecondMarket will open an office in Hong Kong and an Asia headquarters in either Singapore or Hong Kong.
Each country in Asia is different in terms of regulations and securities laws and it will take time to develop in each one, Smith noted.
This year SecondMarket is sourcing buyers and sellers of existing asset classes on SecondMarket's site. Private company stock, limited partner interests, structured products and Lehman Brothers notes and claims are common areas of interest for buying or selling, Smith said.
In 2011 the company will launch new regional-specific asset classes and marketplaces. The company didn't have immediate plans in Asia for the conferences and other late-stage start-up company events that it has held in the U.S.
Started in 2004, SecondMarket says it conducted approximately $2 billion in transactions last year, and has more than 8,000 participants that include hedge funds, private equity firms, corporations and other institutional investors as well as wealthy individuals.
Participation outside the U.S. now makes up about 10% to 15% of SecondMarket's business, up from 1% or less two years ago, said Barry Silbert, the company's founder and chief executive. In the past year, the company has seen a "real increase in interest coming from Asia," he added.
-with Peter Stein
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