The XPS Group, a UK-based pensions and insurance consulting and administration firm, has today launched XPS Xchange, an innovative service designed to transform the sale of illiquid assets.
With the secondary market for trading illiquid assets having grown from £6bn to £100bn per annum over the last 20 years, according to Setter Capital Volume Report FY 2023, ”XPS Xchange is a departure from the traditional method of solely using a broker to find the best price”, the firm stated.
Instead, XPS Xchange scans the breadth of the market and banking solutions for buyers and sellers, enabling a wider search so trustees can achieve optimum outcomes in line with their objectives on governance, value and timescales, it added.
As a result, by accessing this wider pool of buyers and sellers, “XPS Xchange can deliver better outcomes for clients wanting to trade illiquid assets, potentially increasing the value realised from a transaction by up to 20%”, the firm noted.
Furthermore, XPS claims that through its expertise in institutional investing, XPS Xchange will minimise third-party fees, often resulting in savings on broker fees exceeding £500,000 on a typical £100m trade.
André Kerr, partner at XPS Group, said: “The illiquid asset market has grown exponentially over the last 20 years, but traditional transaction methods have often left clients with limited options. XPS Xchange was developed to improve outcomes around governance, value and timings.”
He said the new approach provides buyers and sellers the “widest possible range of options, empowering them to make informed decisions and achieve the best possible outcomes”.
The move follows the firm’s launch of an illiquid solution for small and medium-sized defined contribution (DC) pension schemes in May in response to the UK’s Mansion House reforms, which encourage pension schemes to increase investment in productive finance.
Industry progress on accessing illiquids
The UK industry has seen similar services and products being launched by other consultancies and asset managers over the past few months to cater to several institutional investors intending to incorporate illiquid assets into their portfolios.
Isio also launched in May a platform enabling investors to sell illiquid assets “more efficiently”, a move driven by demand from pension schemes to sell illiquid assets.
Isio Fund Liquidity Options (i-FLO) has been driven by the “significant” demand the consultancy has seen from UK pension schemes to sell illiquid assets, combined with the difficulties sellers face doing so in a timely manner and at a good price.
A survey conducted by the Defined Contribution Investment Forum (DCIF) showed that UK DC schemes, especially master trusts and large single-employer pension funds, are increasingly interested in accessing illiquid assets via Long-Term Asset Funds (LTAFs).
Most recently, Fidelity International received regulatory approval from the Financial Conduct Authority (FCA) to launch its first LTAF to provide investors with access to a globally diversified range of public and private asset classes.
Schroders was first to announce regulatory approval for an LTAF, in March 2023, while HSBC and WTW announced launches in March and April this year, respectively.
In June Arcmont and Carne Global also received approval from the FCA for a joint private debt LTAF.
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