Secondary Market – Jan/Feb 2021 update

Secondary Market – Jan/Feb 2021 update

23rd February 2021 by Joel Ippoliti

What a start to the year for Seedrs Secondary Market with January and February openings coming close to record months at £796k and £1.13m transacted respectively. The previous high was back in May ’20 at £1.28m so these two opening months are a great start for 2021 and just quietly, the market tipped over a total of £10m of secondary trades across 30k share lots – quite a mark considering almost 20% of has come in the last 2 months!

In February’s market there were 656 buyers, 718 sellers who between them sold 215 businesses across 1,810 share lots with about 80% of the value coming from share lots greater than £1k. The last two markets have been driven by a handful of very large (individual) buyers. In February the top 3 buyers by value accounted for 30% of all transactions as they clearly saw value to be captured. So the ‘big’ money in this time of great uncertainty is finding solace in opportunities found firstly in private secondary markets and secondly in our private secondary market! 

Sellers conversely banked and average profit (after fees) of £1k each, not a bad considering the average sold per seller was £1.5k!

The sharelot sales volume by price tier in February were as follows:

These sharelots can be broken out by sector as follows:

Top 15 total value transactions by business as follows:

I’ve also found it very encouraging that over the last 6 months we have seen more sellers and the value per seller increasing. This is exactly as we would have hoped and expected with the introduction of variable pricing…

Over the same time period we have also seen the number of businesses increase steadily along with the value per business.

So whilst you can clearly see much of the value is being driven by a small number of buyers and businesses, the increased activity is having a ripple effect.

From month to month a point of consternation from buyers (particularly of the sort after businesses) is when sellers do not confirm the sale. We often get asked why this step is necessary and why we don’t fix it. We have gone into detail about why here and in the light of our variable pricing improvements we will be revisiting this advice again. In the meantime I thought I would share some facts on this behaviour, in February we lost £14.7k in unconfirmed share lots, 24 lots were cancelled by the seller and 43 were not confirmed. This represents about 2% of the value / volume of lots sold and is a couple of percentage points below average so perhaps with increased warnings and the deterrents of not confirming a sale introduced, this has had an impact. 

The February market also saw the final implementation of a range of additional limitations we put on pricing and fractional shares submitted in a share lot. We found with all limits removed a small number of sellers were listing a large number of small fractional shares at very large mark-ups thus creating a reasonably small share lot size but containing shares with an overly distorted price markups. As of February, share lots are limited to whole shares only (except where they represent 100% of your holding or where the share price is greater than £100) and to a maximum mark-up of 500% thus somewhat eliminating this behaviour.

Next market is shaping up as usual, strong supply across the board with £4.8m in value already submitted for sale, a near record number of businesses at 451 (previous 458) and 2.5k sellers (previous 3k which was record). Top businesses listed for sale are as follows:

Note: not all businesses will be eligible for listing, eligibility checks are carried out the day before market opening.

Here’s to another successful March market!

Joel Ippoliti

Joel Ippoliti

Chief Product Officer

Digital Agency Kent