A New York-based trading firm for illiquid assets that's grown by leaps and bounds the past two years is readying a push into Asian markets. SecondMarket says it may eventually employ as many as 150 people across Asia, or 50 percent more than its current U.S.-based workforce.
The firm decided to speed up its Asia move after it obtained $15 million in financing from two major Asian investors in February. At the moment SecondMarkets has two employees in Asia to scout out the business, determining which types of illiquid securities are most viable in the region and locating potential buyers and sellers. It will open a Hong Kong office in a few weeks and plans to roll out its first Asian-specific asset class in early 2011. Two likely possibilities are real estate and various illiquid debt instruments, says Chief Strategy Officer Jeremy Smith.
SecondMarkets could adopt either Hong Kong or Singapore as its Asia headquarters. Initially, it will hire up to six more employees in the region. Over the next few years, however, the firm says it might add anywhere from 40 to 150 employees there. Unlike its U.S. operation - centered in New York with just one other small office in Palo Alto, Calif. - the Asian operations will likely be scattered over a number of regions in view of Asia's large geographic size and many legal jurisdictions. "If we had 100 employees, not one office would be greater than 15 or 20 people," says Smith.
SecondMarket had planned to move into Asia in a few years, with 2012 as a tentative start date. Then it received $15 million from the Li Ka Shing Foundation, a charitable foundation founded by entrepreneur Li Ka-shing, and Dunearn Investments Pte. , a wholly-owned subsidiary of Asia's biggest sovereign wealth fund, Singapore-based Temasek Holdings. Each invested $7.5 million.
"If we were ever planning to get into Asia, those are the two partners we needed to have," says Smith. "Now that they're on board, it makes sense for us to accelerate our timeline to launch." He says SecondMarket wasn't looking to raise additional capital, but the Temasek/Li Ka Shing investment was "an offer we couldn't refuse."
SecondMarket, founded in 2004, has a workforce of roughly 100 employees. It's expanded from origins in helping corporate officers sell restricted stock to now encompass trades of everything from limited partnership interests to auction-rate securities to commercial mortgage-backed securities. It brokered about $2 billion in trades last year.