In short
- Secondary transactions let early shareholders and employees sell part of their holding before an exit.
- A compartment can acquire those shares and issue a note to several investors.
- Company consent, transfer restrictions and pricing are the key points to verify.
Private companies stay private longer, and early investors, founders and employees often look for liquidity before an IPO. Secondary transactions transfer existing shares from those holders to new investors.
Organising a secondary through a compartment
- Identification of sellers and of the shares available
- Verification of transfer restrictions, rights of first refusal and company consent
- Acquisition of the shares by the compartment, or by a holding vehicle it controls
- Issue of notes to investors, with an ISIN, settled through their banks
What investors should know
- Secondary prices may differ from the last primary round
- Information on the company may be limited to what the seller can share
- Liquidity depends on an exit event
Kerdo structures secondary transactions as notes issued by Luxembourg securitisation compartments, and shows current opportunities to verified professional investors in its deal room.
This article is general information for professional investors and does not constitute investment, legal or tax advice. The documentation of each series governs.