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Navigating Financial Landscapes

Unlocking Liquidity and Strategies for SMEs

SUMMARY: In a landscape marked by challenges such as rising interest rates and the Silicon Valley Bank turmoil, the “secondaries” market emerges as a crucial player. While exploring strategies for international SMEs, emphasizing liquidity during busy trading periods and efficient operational processes. The overarching theme underscores the significance of adept liquidity management in dynamic financial environments.

The private markets, encompassing venture capital and private equity, grapple with recent challenges, notably rising interest rates and the Silicon Valley Bank turmoil. Amid this, the “secondaries” market emerges as pivotal, facilitating the trade of existing stakes in private equity, credit, real estate, and infrastructure.

A standout player is Bellevue Global Private, a Swiss firm under the Zurich-based Bellevue Group. Managing Partner Chris Davies details their unique focus on late-stage buyout companies in recession-resistant sectors, operating in the $1 to $30 million transaction range. This niche, often overlooked by larger entities, aims to leverage attractive alpha-generating opportunities.

Davies highlights the benefits of secondaries, notably the absence of “blind pool risk.” Unlike traditional funds awaiting deployment, investments are active in known companies, reducing uncertainty. The secondaries market hit $108 billion in volume last year, with Jeffries predicting a rebound to $120 billion in 2023.

The Silicon Valley Bank collapse looms as a potential catalyst for ripple effects. Davies suggests it could induce caution among banks financing private equity secondary funds, complicating and increasing capital raising. Regulatory scrutiny might rise, imposing reporting requirements and changes limiting fund operations.

The broader industry grapples with adapting to the secondaries market, necessitating significant education. Despite this, investor portfolios constituted 52% of secondaries volume last year, surpassing general partner-led deals. Jeffries anticipates a rebound, underscoring the market’s resilience.

Davies foresees a shift in secondaries market valuations, especially in sectors like VC technology facing challenges. The SVB collapse may pose funding challenges and increased risk aversion but could also unveil opportunities in distressed assets and undervalued startups.

Transitioning to international SMEs, the emphasis is on liquidity during busy trading periods. Strategies include seeking additional funding during peaks, offering better payment terms, and utilizing invoice financing for immediate cash, transferring payment responsibilities to third parties.

Efficient operational processes take center stage, with automation and real-time data access recommended to enhance cash flow and profitability. These insights underscore the pivotal role of liquidity management in both secondary markets and international SMEs, navigating a dynamic financial landscape.

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