Creating Liquidity in Private Markets: Understanding Secondary Markets | Aspen Funds
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Creating Liquidity in Private Markets: Understanding Secondary Markets

Discover how to leverage secondary markets for alternative investment strategies. We sat down with Brian King of LODAS Markets as he walked us through how they’re creating liquidity in a historically illiquid market and why secondary offerings can be attractive for investors.

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Ben Fraser: Hello, future billionaires. Welcome back to another episode of the Invest Like a Billionaire podcast. Got a very fun episode for you today. This is an interview with Brian King of LODAS Markets and it’s really fascinating. His background, he shares, which he worked for the New York Stock Exchange and then automated trading system and has been in market making for his whole career in Wall Street and has taken his skill sets and experience and brought it to the private market alternative space where there has been a lack of liquidity.

And so he’s doing some really cool things and it’s really focused on secondaries. So if you’ve heard of secondaries investing in secondaries, we dive into what that means, why right now is a really interesting time for secondaries and how they’re creating liquidity and making markets in illiquid assets and investments like real estate.

So I definitely want to check this episode out. I think you’re gonna really enjoy it. Brian’s a super sharp individual. And I happen to know him very well personally. So it’s going to be a great episode. Please enjoy. 

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Welcome back to another episode of the Invest Like a Billionaire podcast. I am your host, Ben Fraser, and I’ve got a very special guest today, a good friend of mine, Brian King.

He is the CEO of LODAS Markets, which is a fully automated secondary market for alternative real estate investments. And Brian has held senior roles at BATS Global Markets, now CBOE, and formerly the New York Stock Exchange. So Brian has a very deep experience in the finance world and in alternatives.

And so super excited to bring him on. He’s actually here in Kansas city. I’ve been meaning to have him on for so long. So we finally made this happen. Brian, thanks for coming on. 

Brian King: Thank you so much for having me. It’s great to be a part of it. 

Ben Fraser: Yeah, so give us a little background on you on your kind of journey in the finance world and don’t skip over too much because it’s pretty, pretty cool what you’ve been able to accomplish and then how that’s led you to. 

Brian King: I was a financial advisor. And then that, that led me up into about 2005. I sold my book of business. I started my career in Jacksonville, Florida. And then I moved to Kansas City. My best friend at the time moved from the Jaguars to the Chiefs. And we got to know a lot of people here in Kansas city during that time.

And an opportunity landed in my lap to be a part of this startup called bats exchange. And so actually it wasn’t even an exchange at that time. It was just bats. And so we were in ATS and looking to change, change the world and be a competitor to the NASDAQ and to the New York Stock Exchange.

Ben Fraser: And it was exciting to be a little bit about what that was because that was the early stages of automated trading. So talk a little bit about what that was. It was just so interesting. 

Brian King: Yeah, so that was the onset of what today is known as high frequency trading. But, around the end of late 90s, early 2000s there was a new rule that was set out that basically allowed NASDAQ to be able to trade all NYSE listed symbols and NYSE to be able to trade all NASDAQ symbols and so now they could trade, a stock could trade on multiple exchanges and so a lot of competitors were trying to pop up but NASDAQ and New York Stock Exchange kept buying all of them, instead of buying all the competition.

That was like trying to come up. So BATS was able to come in and get in, create themselves and set themselves in a position where now we weren’t a traditional New York company. We were based in Kansas City. And we were so therefore we could operate at a much lower cost. So therefore the fees that we charged the brokers and the bulge bracket firms was dramatically less than what they were having to pay at NASDAQ or the New York Stock Exchange. And then on top of it, we were able, we had a unique opportunity to build technology from scratch. When you do that, sometimes you remove a lot of the legacy issues that exchanges, you patch over things. And a very clean line of code.

We were the fastest exchange by a long shot, and we were doing it at a much lower cost. And we grew incredibly fast, it was really exciting to be a part of I was able to then move over to London I was the first person on the ground to build BATS Europe and today that’s actually the largest exchange in Europe pan European, so we were, we figured out how to be able to trade across borders cross currencies, that type of thing, and so it was fantastic, and Came back to the U S and we started some other marketplaces for options and other asset classes.

I was able to spearhead the ETF listing business. And so got really ingrained in ETFs for a long while. And then we were acquired by the Chicago board of options. And I believe still to this day, that was the biggest exit story in all of Kansas city. So I think it was a startup that was ultimately excited for $3-4 billion. So great to be a part of that story. I then left and went to the New York Stock Exchange and it was awesome to be a part of such a rich history of markets. And so overseeing, trading and market structure and ETFs, it was a lot of fun to be a part of that.

But while I was at the New York Stock Exchange, it became very apparent to me that the biggest competitor that we had was not NASDAQ. It was the private markets. Companies are staying private. Interesting. Yeah. 

Ben Fraser: Can we say in private? What timeframe was this? Because was this pre jobs act 2012 or post?

Brian King: No, this would have been I was at NASDAQ, sorry, I was at the New York stock exchange from let’s say 2015 to the end of 2019. 

Ben Fraser: Okay. So the JOBS Act was in 2012 and that kind of started, but I know it had a kind of slower momentum build, but you started seeing its private market transactions.

The private market has been huge anyway, but now you could market these and, solicit, it changed the game. 

Brian King: Yeah that’s exactly right. So I think to your point, as far as the timing, when we were seeing this. Alternative investments have always been big amongst institutional investors and the highly affluent, right?

But we started to see this pendulum swing into not just the super affluent, but also the accredited investors, and then even on down to more, as we would say, retail investors. And as you see that pendulum swing, again, people were… Individual investors were now wanting to say, I want to invest like institutions do and have access to the private markets.

And so that market was growing dramatically because again, not only were companies saying private longer, but more investment dollars were wanting to be in the private markets versus the listed markets. And so seeing that kind of trajectory, my thought was whatever my next venture is, I want to be able to be a part of something that’s in the private markets.

Leaning on the fact that I had built so many, been a part of building so many marketplaces, it made sense that, Hey, I’ve spent a lot of time making liquid things more liquid. What if we were to focus on making illiquid things more liquid? And so that’s really what the genesis of LODAS.

Ben Fraser: Yeah, it’s such a cool concept and, the biggest knock on alternatives generally is lack of liquidity, right? That’s why institutions like it because you can get a premium and returns a lot of time because you’re willing to take more liquidity risk. But it’s also a downside and if you’re newer into allocating into alternatives, that might be.

A big change, right? You can’t just push the sell button on an exchange like your public portfolios and sell. Talk a little bit about how you saw the opportunity, obviously, taking the idea from concept to reality, I’m sure, is a whole story in and of itself. Talk a little bit about what LODAS does and how you’re playing in this secondary market that’s now becoming front and center of a lot of investors’ minds.

Brian King: Sure. So secondaries, technically, you’ve been able to transact in a secondary for years and years. The problem was that typically that process was you call a broker that broker goes and tries to source the other side of the trade. And most of the time you’re going to get a dramatic discount.

50 percent discount is, I would say, would probably be the average. And then on top of it, the broker typically is going to charge a 10 percent commission for finding the other side of that trade for you. You’re really going to have a massive depreciation in value if you need to get out.

And again, the SEC created lots of rules around alternative investments for retail. Cause again, the more retail in nature you are, the more liquidity needs you’re typically going to have. And because of that, again, if we can help unlock that liquidity then it should be able to be open to many more investors.

But yeah, so I think that’s, that really has been the growth pattern for us as being able to see and help to unlock that for investors of all types. And the more you get people realizing that our market exists, we now actually have competing bids where you don’t just have one buyer showing up, you have.

Multiple buyers showing up and the more buyers you have, people are competing for that flow, which helps to compress that spread. And so yes our marketplace is fully electronic, fully automated, but as I mentioned before, when you called that broker, there was a lot of paperwork. It took a lot of time to settle and clear that trade.

And so we really wanted to be able to focus on the operational side. In addition to, just. Finding the buyers and the sellers, right? So it’s right now somebody can open up an account in five minutes and they can actually be able to place a buy or sell order very quickly.

Ben Fraser: For those that maybe you’re unfamiliar with the concept of the secondary huge break debt that you did a little bit, the idea is you’ve invested into some private.

Investment, whether it’s real estate, maybe it’s a private REIT or it’s a true, private investment directly into a property or a fund, you need the liquidity, you’re willing to take a discount to what you invested because of that, you need that liquidity for whatever reason. So then you try and go find a buyer to basically replace your capital in that investment.

And then the broker dealer of that scenario historically was the kind of market maker, the middleman creating that transaction. Is that… Pretty accurate or clarify that if it’s a little more nuanced. 

Brian King: Yeah that’s exactly right. So you differentiate in the alternatives world between a primary and a secondary market.

So primary is that initial fundraise that a fund does to bring new capital on. And many times they identify what is the exit strategy, and maybe it’s going to be five years or seven years, or maybe there really isn’t an exit strategy. And so sometimes, people get to the point of, they’ve owned something for five years, there is no exit in sight, and so they’re saying, I’d like to, there’s an opportunity in something else, and so I’m looking for liquidity and again we’re not a buyer, we’re not a seller for us we have a very large buyer network and for the most part the way that it initially started was almost all of our buyers were institutional in nature.

We are starting to see that change, which actually is a good thing. And maybe in a minute we can explain why that’s such a good thing. But most of our buyers initially were institutional. And so they’re already there. And so for the most part, when somebody says, I want to be able to sell something, if it’s already on our marketplace, chances are we already have a buyer or buyers lined up making bids.

Ben Fraser: I mean, it seems like a natural evolution of… the marketplace too. I’m a little bit younger and to remember the days of the boiler room of the broker dealers on the phone, calling and buying or selling stocks, and the, on the market, but it was very transactional, very one on one, and then the internet came along and then automated trading has created this efficiency and.

And speed and closing the bid ask spread on the market. It feels like it was the early days of, back in the public markets. Is that, you’re around during those times or maybe at the kind of tail end of it, is that kind of the evolution? And now you’re seeing the same thing in the private markets, or is that not a great comparison?

Brian King: Yeah, I think it’s a great comparison. In fact, I think if you look back to the 80s, which I wasn’t, I wasn’t in the markets at that time. I was in high school or I was in college in the 90s, but in the 80s, my understanding was that, you could, sometimes drive a truck through the spreads and stocks that were trading on the floor of the exchange, right?

So the floor brokers were making a lot of money in that, but then when all of a sudden automated trading started to happen and then they changed the spreads to where now you could actually trade in pennies, it really compressed the amount that market makers could make how much money they could make.

So then it turned into volume. So high frequency trading is because now people are saying maybe I’m, maybe I can’t make this giant spread. But now I make that smaller spread, but just many times over and over. And that’s how they were able to make their money. But in order to do millions of trades in a day, it has to be a computer doing it.

A lot of those institutional investors that are coming from the eighties and nineties, they’re looking at this alternative investment market as like. A new place for them to be able to have those wider spreads, the next frontier of wider spreads opportunities. There’s a lot of guys that are moving into it, but my hope is that, we’re able to, we’ve already seen dramatic changes from where people would have seen it 10 years ago, where it was 50% discounts, right?

So now we see, in some cases, as little as 3%. But at most usually somewhere around 15 or 15 percent discount. But yeah, so there’s several products on our marketplace today that trade at a three, 4 percent discount, which is. Fantastic. That’s great for all involved. 

Ben Fraser: So talk a little bit about why would someone invest in a secondary, right?

It’s oh, it’s not the new offering. It’s an old offering. Am I getting the bottom of the barrel here? That might be a thought someone would have. They hear that word, talk about why it makes sense. Obviously the big reason probably is discounts, explain a little bit of what makes this interesting.

And then you meet contact offline before, like it’s been getting a lot of headline press, right? A lot of advisors and a lot of institutional investors are sites set on these types of offerings and explain some of the reasons why. 

Brian King: Let’s say one reason is that, in many cases a sponsor might create a fund and that, that vintage, that fund could be very desirable and they could have actually really good outcomes from it.

And so some people are like, Oh, I wish that it could have been a part of that vintage to that fund. All of a sudden an opportunity comes along and it’s a closed offering, but now you’ve got an opportunity to get into it. And so not only can you get into it, but maybe you can even get into it at a discount, which is a big win.

It’s a mature fund. It’s proven that it’s working, that type of thing. And so there’s a lot of interest just to be a part of something that you couldn’t be a part of. We also have a lot of financial advisors. And this is an area of real growth for us where we now have not just institutional buyers, but RAAs that are saying, Hey, we already have our clients who already owned some of this, but I have this client over here that has no exposure to this particular fund.

If I could get them in, it’d be fantastic. We just made a press release today about a reduction in our fees for Blackstone’s B REIT, right? So B REIT is an open REIT right now. It’s a 70 billion fund, so it’s really large. But we have a whole world of RAAs that are coming to us saying, Listen, I’m buying this on a monthly basis.

Every single month, we’re buying into B REIT for our clients. If I can give them a three or four percent discount to NAV for all the people that are looking to exit if I could do that for my clients, I’m a winner. I’m a hero to them. so Yeah, that’s another reason why we see a lot of pickup in activity there.

Ben Fraser: This might not be the right Blackstone product, but I remember reading a few months ago, maybe earlier this year, there were a lot of redemption requests or liquidity requests in the fund. Yeah, and maybe, I don’t know what their big reason was, but their investors are getting spooked or whatever, whether or not you believe in the flat weather, the assets are still really good, it might be a great time to get in. So there might be liquidity requests they have. In real estate it’s hard to create liquidity because you have fixed assets that you’re owning and improving and holding for a long period of time.

And so you’re basically allowing capital to replenish and to trade without impacting the fundamental or property level of strategies and assets, right? 

Brian King: And that’s exactly right. And I think your recollection of what happened earlier this year, it’s actually still happening.

Blackstone put out another notice today to shareholders about the fact that they still have an oversubscribed redemption queue. And they’re only able to meet X percent of the redemptions that are in there. And That’s why we listed it on our marketplace to say, listen, there are people that can’t get out that need or want to get out and they can get 100 percent of their transaction today, if they trade on it, yes, it’s going to trade at a little bit of a discount.

I think the last trade that we had was around a 4 percent discount. But yes, as an avenue for somebody that is looking for liquidity to be able to have it. You just made the point of the fact that with real estate, real estate is not innate, innately liquid, right?

And so there’s a lot of people that, a lot of people that early on when we were building this said, real estate’s not designed to be liquid. And my counter to that is neither is IBM, right? IBM is a company that is the only reason why IBM is liquid is because there’s a secondary market around it.

You’re sharing, you’re transacting your shares in the underlying company. And that’s what ultimately is, enables it to be liquid. The exact same thing exists for real estate, whether it’s shares or units or whatever the fund structure might be. 

Ben Fraser: Yeah, no, that makes total sense.

You think about two, okay, one, if it’s a closed end fund. You’re buying at a discount, which is desirable, but then also you’re buying later into the fund. And so your IRR from a time value of money and. If you’re adjusting for that, it’s likely going to be even higher, even with the discount, right?

Cause you’re coming into a more mature vintage. So there’s, from my standpoint, a lot of desirability around that, especially if it’s like you said, a good vintage that was closed out. You couldn’t get into talking a little bit about just what you’re seeing just at a high level of the market right now.

So we’re seeing. Obviously, the fastest interest rate increase here in the U. S. we’ve ever had. It’s impacting real estate, commercial real estate in lots of different ways, probably most acutely, office is probably stronger than most. But from a capital market standpoint, what are you seeing?

Are you seeing from our standpoint, we’re actively acquiring Assets, transaction volumes have gone way down just because interest rates are higher and the bid ask spread between buyers and sellers is just still pretty wide, right? The sellers don’t want to sell for lower values than they were getting a year or two ago and buyers have very expensive debt.

They got to now fold into the equation. What do you see on the capital market side and even the bigger institutional side of things? Has it been active? Is it slow as well? Talk about some of what’s happening, what you’re seeing. 

Brian King: Yeah, so I think one, I’ll say we’re seeing dramatic increases in the secondary market.

But in addition to just the flows from a traditional, how you would think of secondary markets, we’re also seeing another trend start to evolve where Some sponsors aren’t able to refinance certain debts. And so given the current environment or if they did, if they were able to, it might.

Really hurt the underlying fundamentals of that particular asset. There, there’s a pretty decent sized amount of people that right now are trying to say maybe I can recapitalize that debt piece with equity. And so we see a lot of people going back to the table of trying to raise additional equity.

For the actual fund, which is interesting. I would say that even before we saw this dramatic increase in interest rates, one of the bigger areas of where we were starting to see sponsors come to us was to say, we have an interest in holding some of these assets for a longer period of time.

Typically what if somebody is a developer and they go out and they can raise. Investment dollars for people who are doing development deals. Typically the people who invest in development deals, once that asset is stabilized, they want to move on and go do the next development deal, they want to have their exit and that type of thing.

So a lot of sponsors, build that into the equation. They have an exit after two and a half years or three years whenever that asset is stabilized. But a lot of the sponsors are saying, what if I were able to continue holding that asset? As the GP lets those underlying LPs do the development deal, let them have their exit, but instead of selling the asset to some institutional fund, what if we were to recap it through the secondary market channel and allow the people who want that stable cash flowing asset to be able to come in?

And so it’s using a secondary market in a way. Most people didn’t originally intend to but but it’s certainly a something that we’re seeing a lot more interest in 

Ben Fraser: Now that makes so much sense. It’s so obvious really, cause you’re right. The investor base, like we do a lot of development projects as well.

And the investor base for the development projects is very different from the stabilized cash flow, long term hold, investors, right? They have different goals that you’re trying to hit different time periods. And so historically, if you are doing a development project to get the investors that want the higher returns, shorter time periods, their money back, you got to sell, right?

But now you’re saying you can actually recapitalize, actually just replace, uh, the capital stack with whether it’s new debt or new equity or both. With new investors that actually have the appetite for the kind of go forward proforma of the property and you still retain ownership. That seems like too good to be true, 

Brian King: right?

And meanwhile, the sponsor is able to clip a coupon because they’re still managing the asset. And in any case you have sponsors that they’re known for a particular type of asset. Okay. We build hospitals or we build gas stations or we build whatever. And the more of those that you get to keep control of.

The more you keep your thumbprint on knowing what the underlying metrics and dynamics are and that type of thing. So there’s a lot of benefits to doing that. And so we’re seeing that start to become a trend. 

Ben Fraser: Yeah. Especially with the feast and famine of development, right? It’s really good when it’s really good.

It’s really hard when it’s not good. So it can smooth out some of the cash flow curves for a sponsor, right? If you can have stabilized assets, you’re just. Like you said, clip and coupons from management fees. Yeah, that makes a lot of sense. So what other things did you mention earlier ?

You’re seeing more retail investors moving into secondaries and you mentioned that’s a good thing. Why would you say that? It’s just, 

Brian King: It’s a bigger audience. So when you see this, when you see this pendulum swinging it’s a whole untapped market of investment dollars, right? So the opportunity for the alternative investment market to grow.

In my opinion, and based on some of the a lot of the different people that I talked to and listened to and respect in the industry, I think everybody’s nodding and echoing that same sentiment is that there is a big untapped market for investment dollars in this space.

But again, the, in order for. The more that pendulum swings to, from highly affluent or super affluent to retail meaning that maybe they don’t even check the box of an accredited investor, the further you get along that pendulum, the more important liquidity is going to become.

And if you don’t unlock liquidity the SEC will never really allow it. The individual investor is able to invest in most of these funds unless there’s some specific liquidity associated with it. 

Ben Fraser: Yeah, that makes sense. One question I wanted to go back to real quick because I forgot to ask this because I’m very curious on the deals that are recapitalizing because they’re needing new equity, to either, in the case of a refinanced or short on the proceeds to pay off the senior lender or the senior plus MES lender or whatever.

We’re seeing that a lot too, right? Because we’re seeing interest rates are higher, there’s been pressure on cap rates. NOIs are maybe struggling in the short term because we’ve had big operational cost increases like insurance, property taxes and labor. And then in some markets, we’re actually seeing short term rent decelerations, like all these factors are just compressing margins and putting pressure on deals.

What are you seeing? Is there, are you seeing appetite for these secondaries that are not replacing capital from a, investor A trading with an investor B, in the kind of existing deal versus new money in to replace another part of the capital stack? But to hopefully finish out the business plan or to make it through the next kind of time.

And then what are you seeing those trade acts? I would imagine when you’re doing that, you have to reset net asset value, right? Which might negatively impact the primary offering investors. So talk a little bit about that because I meant to ask that and forgot. 

Brian King: Yeah. So I think across the board, what we’re seeing is there’s no one deal that looks the same as the other.

I will also say that maybe taking a quick step back is to say that on our, on the marketplace that we have today that’s fully automated you’re not going to see that nuanced of a transaction today. You’re not going to see that nuanced transaction happen. On screen, fully automated, typically what we’re, what’s most seen is something where you’re transitioning ownership from person A to person B, very simple, very similar to how you would think of an exchange, a stock, traditional stock exchange, your chain trading ownership from person A to person B.

When you’re doing something that’s a little more complicated, a little more nuanced there’s a lot more talking involved, right? You’re making so there’s enough people that are coming to our marketplace where we’re able to make introductions, facilitate meaningful relationships and that type of thing.

And so that’s, a lot of that stuff happens off screen, so to speak. But if that, so that makes sense. But going back to what I said, like every deal is definitely going to be different. And you have, there’s certainly going to be some negotiations when you’re trying to talk about.

Replacing debt with equity or anything else that’s again, unique in nature because it does, it can impact the rest of the investor base. Sure. 

Ben Fraser: And go into the more vanilla or traditional transactions you’re seeing of just investor A to investor B and making that market, what, how does that spread get determined, right?

Or is it just demand for that particular thing? Unit of X fund is more desirable. So where you’re bidding out, is it like a. A true bidding platform or is it this is the price is being set and we’ll see if there’s offers there and if there’s a lot, maybe we increase it or how does that work functionally on the back end of the platform?

Brian King: Yeah. For the vast majority of funds that we have on our marketplace they’re larger, right? I would say that, where we started this is, we have, we’ve expanded beyond this now, but where we started, we’re mostly registered funds. They’re registered, they’re filing K’s and Q’s, they’re not publicly listed, but their information is made publicly available.

And so what we do is we scrape all that data, make it completely available and transparent to buyers and sellers. And then what we do is uh, in most cases we have a large network of buyers that We’ll look at those funds and say, I have an interest in this particular one. And so they put out bids.

So we have a, again, we function much like a traditional stock exchange. We have limited orders. You’re never going to see a market order. And especially in an illiquid market, but that’s not something we want to address, but you also see on our marketplace something called an IOI, which is an indication of interest and an RFQ, which is a request for quote.

And so in the registered market. Mostly what we see, I’d say 90 plus percent of all transactions, the buyers have gone in, they’ve underwritten the fund they’ve underwritten the deal, and they say, this is where I’m willing to buy this particular fund, and they name a price, and they put in an IOI, an indication of interest that says This is where I’m a buyer.

And then another buyer comes in and does the exact same thing. We do see that they wind up being relatively tight, tightly grouped; sometimes you can get a wide range, but what happens is now the seller comes in and they see where the NAV is. They see the other data points and then they see where the bids are.

And then in most cases they say, that’s where the market is. That’s enough for them to realize that’s where the market is. And they go and they hit the best bid, right? In some cases they say that they bid at 10, I’d really like to be able to get 10, 20 they can put in a limit price and be able to.

See if somebody will come and hit that offer. And the IO, people who put in the IOIs, they get a notification that says, person hit person put in an offer at 1020. They can choose to put in a limit order to take it out or not. But like I said, most of the time in the registered fund space, we see the sell orders hit the bid orders.

And so you don’t really have a bid ask spread. What you might have is the way we might look at it if you have an NAV bid spread, right? And whereas the NAV might be at a premium to where the current bid is. And then, but on the. Private fund side if it’s a smaller private deal, let’s say a hundred million dollars or, maybe even 500 million certainly we can do have funds listed that are smaller than that.

But if it was a hundred million dollar deal. You probably don’t have a tremendous amount of buyers that are actively bidding on it, right? So what happens is a seller raises their hand and says, I want to be able to sell this particular fund, and they can do an RFQ, a request for quote, and that basically hits our buyer network, and they can come in and look at the deal docs to see where they would make a bid.

No, that’s that, that goes into an area where some funds have RF, some funds have ROVers on them or where you write a first refusal that prevents you from being able to trade it without the sponsor first looking at it. But in most cases, what the sponsor does is. They work with us to be able to say, Hey, we’ll pre approve that buyer network.

And that allows them to be able to get a look at the information that’s been provided. 

Ben Fraser: I would assume if these are reg D offerings and they’re doing like a 506c, they have to verify accreditation or have to approve the investor sophisticated or. What not right, but I’m assuming you’re we approving we do front end or how 

Brian King: Does that work?

Yeah, so we actually do all the accreditation stuff. We do KYC AML all those types of checks. We’re already doing on everybody anyway So to 

Ben Fraser: sign up for the platform, you have to go through the process and you give that So people the sellers know that these are qualified buyers, what you know, what kind of nuance question but back in my kind of fund life, I was working at a larger asset manager, it was publicly traded mutual funds.

They had a closed end fund, and the fund, traded on exchanges, a lot of times it would trade at a premium to NAV which is the opposite of what we’re talking about, where most of the transactions on your platform are traded at a discount to NAV. Why is that? Is that just purely a function of demand?

Did you ever see certain deals trading at a premium to NAV? Or what’s the thought there? 

Brian King: Yeah. So to date, we haven’t really seen anything at a premium. We have had a lot of people talk about, Hey, would you ever be interested in listing hedge funds on your marketplace? And the short answer is yes, we would be happy to list hedge funds on our marketplace.

And I think in a hedge fund world that maybe has. It’s closed to new investors but performs really well, you’re going to get, there’s going to be demand to get into that. We mentioned the word vintage earlier, right? So if there’s a certain vintage of an asset that’s performing incredibly well.

There’s probably gonna be some competition to get into that particular fund. So it definitely can happen. I just think that for a lot of the real estate deals that we see, there’s some innate built in maybe risk or perceived risk inside of it. Sure. In addition to wherever the NAV might currently be, I think sometimes people are baking in a little bit of a little bit of a hedge for themselves and getting into that particular fund.

Ben Fraser: Got it. And then just right now what are the current asset classes that you’re focused on? I know real estate’s the biggest portion, but you have a couple others that you’re focused on right now. And what are you looking at in the future? Yeah, so right now 

Brian King: Our our about 80 percent of what trades on our marketplace is real estate related.

The other two primary areas are going to be private debt or BECs. And then the last one is we do trade some energy funds and the, just to high level reason of why real estate is that, a lot of people invest in, The things that they know, right? So you invest in if you grew up around art and you understand art, you invest in art.

And you don’t find somebody that didn’t grow up in art typically that says, I am now an art investor, but the asset class that everybody invests in just about even if it’s just a whole. Is real estate, everybody invests in real estate, right? It’s the biggest asset class. And so that’s a very natural audience.

So as we’re going out and finding buyers, a marketplace is always building both buyers and sellers. So it’s super important for us to make sure that anything that we list on our marketplace, we want to make sure that we have the other side of the trade too. And looking at energy, looking at real estate, and private debt is very in vogue right now.

And so looking at those three asset classes is really easy. Certainly yes being able to look at other things like I said, hedge funds. Once you’ve created one asset class it’s really actually from an operational perspective, very easy to do other asset classes. Again, we just want to make sure that we’re not.

too thin on the things that we look at and that we don’t, we make sure that we have a buyer network for all the different assets that we trade. 

Ben Fraser: Yeah. Makes sense. What’s the best way for folks if they’re listening? Hey, I want to go check out LODAS markets and see if I qualify for the platform and I’ll look at what’s going on.

And just, can you clarify, is it for accredited investors or qualified investors or? Who can participate in this in this marketplace as of right now? Yeah. 

Brian King: So the first thing, if you’re interested in learning more or checking out the products that are available to buy or sell you would visit And then you can set up an account. It takes five minutes to set up an account. Technically to get in behind the firewall, you just need a username and password. That username being your email but yeah, it’s very easy to be able to do that. You can also email us at Back to the other part of the question, who can do it? You do not need to be an accredited investor to sell. So you can sell on our platform if you already own something. Again, if you think about a REIT, a publicly registered REIT you don’t have to be a qualified investor to, to buy it either, but.

You do have to be suitable and for us right now, we’re not trying, we’re trying to avoid having to worry about state suitability laws and stuff like that. So if you’re an accredited investor, it gets you around that particular characteristic. But yeah, we do have a lot of institutions, we have a lot of family offices and then a lot of financial advisors that are signed up and buying things on behalf of their end clients as well.

Ben Fraser: Awesome. We’ll put those links in the show notes. So if people can check it out and Brian, thanks so much for coming out. It was really fun conversation and we’d love to have you back on down the road and hear how the platform is 

Brian King: evolving. Awesome. Thank you so much, Ben. It’s great to be a part of it.


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