Over the last five years, we’ve seen the market for liquidity from alternative assets – commonly known as the secondary market – grow from over $74B in 2018 to more than $140B in just the first half of 2024,1 demonstrating the need and demand for early exit solutions. However, unlike larger institutions, mid-to-high net worth (MHNW) individual and small-to-midsized-institution (STMI) investors have not had the same access to, or benefit from, the secondary market. We believe this is partly because the current secondary market seems to be inefficient, complex, costly and generally not built to serve MHNW individual and STMI investors who often do not have the time or financial resources to engage in prolonged, complicated transactions.
At Ben, we’ve been focused on trying to democratize the landscape for alternatives and allowing investors of all sizes to potentially realize solutions when they’re needed, wanted, or simply when it makes financial sense. To that end, Ben has pioneered the advancement of several interesting and innovative technologies in an effort to create a more transparent, secure and rapid path to an early exit. One of those new tools, AltQuote®, is designed to offer a broad range of alternative asset investors a free, rapidly generated indicative quote for their alternative asset interests based on an extensive fund database of over 82,000 funds. After an investor receives a quote (or even before a quote is provided), an investor can start the process of exploring exit solutions offered by Ben by simply opening an account with Ben through our online, regulated platform, Ben AltAccess®, and working through the informational requests.
With the beginning of the new year we thought it was the perfect time to look at the trends we believe we have identified in the alternative assets market based on information AltQuote has been compiling from its users for more than 15 months. We sat down with Jeff Welday, Ben’s Global Head of Originations & Distribution, to talk about what Ben has learned from the AltQuote data and what his team expects in the alternative asset sector in the coming year and beyond.
1 H1 2024 Global Secondary Market Review, Jeffries
How has Beneficient identified the demand for early exit solutions from high-net-worth alternative asset investors?
We launched the AltQuote® platform in 2023 with the goal of being able to generate nearly instant quotes for investors’ alternative assets. Much of the business case for its perceived need in the market was based on conclusions we drew from a survey Ben conducted of 600 MHNW investors, with our findings and conclusions being gathered and published in The Ben Liquidity Report®.
The responses to that survey highlighted several important observations about individual investors’ attitudes and preferences towards alternative investments and obtaining early liquidity from these illiquid investments. Three important findings from The Ben Liquidity Report survey are highlighted below:
- 85% of respondents indicated that they increased or maintained alternative investments since 2016 and almost every respondent – 96% of them – reported they planned to maintain or increase their allocation to alternatives through 2026.
- The top reasons respondents identified for seeking liquidity for an investment were to get access to another investment opportunity and to generate longer-term returns.
- Only a few respondents said they were interested in generating cash for unexpected expenses and only 9% of the respondents sought liquidity to pay for life events such as death and divorce.
Additionally, 17% of respondents indicated that they were interested in all-cash options for their exit option. 34% of respondents said they were interested in equity or the potential for equity upside in the liquidity provider as their exit option choices. (See the disclosure below for details of the Ben Liquidity Report survey.)
How has Beneficient’s AltQuote tool highlighted the demand for alternative asset early liquidity from high-net-worth investors?
Since the launch of AltQuote, Ben has compared the Ben Liquidity Report findings to the information investors have provided when looking for a quote on their alternative assets interests through AltQuote. In 2024, 57% of the 320 investors or financial professionals submitting information for quotes said they were interested in options to pursue new investment opportunities or to realize investment returns. And more than 40% reported they were seeking liquidity for unexpected expenses, which is more than twice what survey respondents said.
Reasons for Asset Exchange Submitted to AltQuote 2024
Another interesting finding from the customer AltQuote submissions is that the majority of submissions have been directly from individual investors (roughly 83% of all submissions). At the same time, portfolio submissions from general partners and wealth advisors represented less than 10% of all submissions each. We believe that the number of wealth advisors and general partners requesting quotes and full liquidity requests will accelerate as the industry continues to evolve.
2024 Self-Reported AltQuote User Role
What growth trends, if any, have you seen in the alternative asset industry and secondaries market since the launch of AltQuote?
We’ve been tracking how the rise in allocations to alternative assets coincides with the reduction in the numbers of public companies available for investment. This decline in the number of publicly listed U.S. companies2 underscores a concentration of risk in public equity markets and partially explains why alternative assets have become a critical source of growth and diversification for a wide range of investors, not just large institutions.
Just as the 2022 survey predicted, the demand for alternative investments has continued to grow. Investment data firm Preqin has projected global alternative assets under management to reach $24.5 trillion by the end of 2028, compared to an estimated $16.3 trillion at the end of 2023.3 Preqin’s Future of Alternatives 2028 Report states: “As financial markets move into a new phase of higher interest rates and heightened economic and geopolitical uncertainty, demand for portfolio liquidity has increased. Secondaries funds are poised to perform well in this environment, given the opportunities to purchase fund interests at fair value.”
2 The World Bank Group, 2019.
3 Preqin’s Future of Alternatives 2028 Report
Secondaries are more fractured, but overall volume is trending upward with more entities establishing alternative asset secondary funds, as well as providing liquidity to institutions. The MHNW investor, however, still seemingly has relatively few options for their individually owned alternative assets.
Alternative asset firm GCM Grosvenor, in a year-end piece, put the total 2024 secondary market at $140 billion, the highest level ever observed for secondaries and a 20% increase over 2023.
In the same piece, Grosvenor predicted: “Looking ahead for LP-led secondaries tighter pricing over the past two years, driven by reduced economic uncertainty and the closing of larger secondary funds, is likely to attract more LP sellers in 2025. Similarly, on the GP-led side, sponsors are increasingly favoring continuation funds to retain high-performing assets, which is expected to sustain volume in the coming year as sponsors explore creative liquidity solutions.”
Besides high-net-worth investors, can others use AltQuote for early exit quotes?
Yes. One of the main objections for new prospective investors coming into an alternative investment fund is their discomfort with a potentially long lock-up period. Ben, we believe, is well positioned for this secular trend by being able to deliver our online liquidity platform to wealth managers and general partners as a turnkey, private label solution. That is part of the reason why we offer the Preferred Liquidity Program which is powered by Ben AltAccess.
Ben started out offering quotes for 57,000 professionally managed funds. How has that changed?
We’ve expanded our database to include quotes from nearly 82,000 professionally managed funds for more than a dozen private fund types and vehicles with only a few key pieces of information from the investor. The AltQuote is provided directly to the visitor’s email address without establishing an account with a password, and if they want to proceed with a liquidity transaction, an AltAccess account can be easily established.
Additionally, Ben announced an enhancement to the liquidity process in October 2024 called Machine-Automated Pricing System (MAPS) that features accelerated transaction processing and advanced capabilities. We believe we are leading the industry in providing individuals, Limited Partners, General Partners and wealth management professionals services for alternative assets they have not been able to access in one place before.
As we head into 2025, our commitment to innovation and customer-centric solutions continues to drive our work in the alternative assets space. By combining an expansive database, streamlined processes like AltQuote and AltAccess, and cutting-edge advancements such as the Machine-Automated Pricing System (MAPS), we are seeking to redefine how individuals and professionals interact with private fund types and vehicles. As we move forward, we remain dedicated to the goal of delivering unparalleled access, efficiency, and value to our clients.
To learn more about AltQuote and experience it yourself, click here.
Important Disclosures
Subject to Qualifications.
Liquidity exit strategies offered may not include all options, may vary over time and may be subject to qualifications; all exit options, including historic options such as cash, may not be available or offered to prospective customers at any given time; your options may differ. Exit options are presented on a case- by-case basis in Beneficient’s discretion and may be offered for less than current net asset value based on a variety of factors, including asset-specific factors such as Beneficient’s valuation analysis. References to “liquidity” generally refers to an opportunity offered by Beneficient to exit an investment in an illiquid asset in exchange cash, equity or debt securities (which may include a private offering of securities), or a combination of cash and securities. Beneficient can discuss with prospective customers what options may be currently available, including based upon the specifics of such customer’s situation and illiquid assets.
As the context dictates, Ben or Beneficient generally refers to Beneficient, a Nevada corporation and its subsidiaries and affiliates, including Beneficient Fiduciary Financial, L.L.C. Jeff Welday is the Global Head of Originations and Distribution for Ben.
These materials are provided for illustration and discussion purposes and are not intended to be and do not constitute financial, tax, legal, or investment advice or recommendations, an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities. Offers to sell or purchase any specific security can only be made through definitive offering materials and/or agreements. The information herein is as of the date indicated, is summary in nature, is not complete, is subject to change, and does not contain certain material information about Ben. No representation or warranty, express or implied, is made as to the accuracy, timeliness or completeness of any information contained herein. Investments involve risks and are not suitable for all persons. Author opinions do not necessarily reflect the views of Ben. Prospective customers are encouraged to consult with their financial, tax, accounting or other advisors to determine whether Ben’s products and services are suitable for them.
No assurance can be given that a Beneficient liquidity option may over time be successful or more advantageous, that a customer’s objectives will be achieved, or that a customer will not incur losses. The information contained herein does not purport to be complete or to cover all the information or risk factors which a customer may need to reach a decision, and it does not take into account the specific investment objectives, financial situation, sophistication, investment experience or particular needs of any specific customer or type of customer. Past performance is not indicative of future performance. Liquidity options are subject to a wide variety of business and market risks and other considerations.
While the third-party information provided is believed to be accurate and reliable, no independent investigation has occurred. Reports and survey results may change over time. These materials include various statements, views, and information that are forward-looking or non-factual, including from third parties (collectively, “Statements”). Such Statements constitute only subjective views, beliefs, outlooks, estimations, opinions or intentions as of the dates shown, and are subject to change due to a variety of factors, including fluctuating market and business conditions. These Statements should not be relied upon and are subject to significant business, economic and other uncertainties, known and unknown risks and contingencies, many of which cannot be predicted or quantified and are beyond the control of Ben. Future evidence, events and results could differ materially from those set forth in, contemplated by, or underlying these Statements. In light of these risks and uncertainties, there can be no assurance or representation that these Statements are or will prove to be accurate, timely or complete in any way.
Securities brokerage services are offered through AltAccess Securities Company L.P. (“AltAccess Securities”),which may provide certain materials to recipients. AltAccess Securities is affiliated with Beneficient, a Nevada corporation, and/or any of its affiliates, subsidiaries and successors (collectively, “Ben”) and is a broker-dealer registered with the Securities and Exchange Commission and various states and a Member FINRA/SIPC. Investments involve risks and are not suitable for all persons.
Ben Liquidity Report Survey
600 mid-to-high net worth investors were asked these questions:
How has your allocation to alternative investments changed over the past 5 years?
| Answer | % | Count |
| Increased slightly | 23.17% | 139 |
| Increased significantly | 34.00% | 204 |
| Stayed the same | 27.33% | 164 |
| Decreased slightly | 13.33% | 80 |
| Decreased significantly | 2.17% | 13 |
| Don’t know | 0.00% | 0 |
| Total | 100% | 600 |
Which of the following best describes your future plans with regard to your allocation to alternative investments over the next 5 years?
| Answer | % | Count |
| Plan to slightly increase allocation | 34.17% | 205 |
| Plan to significantly increase allocation | 31.67% | 190 |
| Plan to keep current allocation | 30.00% | 180 |
| Plan to slightly decrease allocation | 4.17% | 25 |
| Plan to significantly decrease allocation | 0.00% | 0 |
| Don’t know | 0.00% | 0 |
| Total | 100% | 600 |
When thinking about what your needs are when it comes to seeking liquidity for your current investments, how IMPORTANT are the following? (with 1 being not important and 5 being very important)
| Question | 1 | 2 | 3 | 4 | 5 | Total | |||||
| Take advantage of new investment opportunities | 1.47% | 4 | 20.15% | 55 | 38.83% | 106 | 30.04% | 82 | 9.52% | 26 | 273 |
| Generate capital to fund an existing business need | 0.67% | 2 | 18.33% | 55 | 41.33% | 124 | 31.33% | 94 | 8.33% | 25 | 300 |
| Ensure I am ready for the unexpected | 1.31% | 4 | 14.05% | 43 | 41.50% | 127 | 33.99% | 104 | 9.15% | 28 | 306 |
| Rebalance my portfolio | 2.15% | 7 | 18.71% | 61 | 39.88% | 130 | 31.29% | 102 | 7.98% | 26 | 326 |
| Ensure a sufficient savings cushion | 0.98% | 3 | 19.93% | 61 | 33.99% | 104 | 36.60% | 112 | 8.50% | 26 | 306 |
| Pay a debt or settlement | 1.97% | 6 | 20.66% | 63 | 40.66% | 124 | 31.80% | 97 | 4.92% | 15 | 305 |
| Start a new business | 2.06% | 6 | 22.34% | 65 | 39.86% | 116 | 30.24% | 88 | 5.50% | 16 | 291 |
| Feel as if I have control over my financial life | 3.16% | 9 | 20.70% | 59 | 34.39% | 98 | 36.84% | 105 | 4.91% | 14 | 285 |
| Feel as if I’m adequately providing for my loved ones | 1.29% | 4 | 21.54% | 67 | 37.62% | 117 | 35.05% | 109 | 4.50% | 14 | 311 |
| Feel as if I have the freedom to deploy capital on my own terms | 0.66% | 2 | 25.58% | 77 | 34.55% | 104 | 34.22% | 103 | 4.98% | 15 | 301 |
| Feel as if I can take action to improve my financial situation | 1.96% | 6 | 22.55% | 69 | 32.68% | 100 | 37.25% | 114 | 5.56% | 17 | 306 |
| Allocate capital to investments that will make a positive impact on the world | 2.30% | 7 | 22.62% | 69 | 38.03% | 116 | 32.13% | 98 | 4.92% | 15 | 305 |
| Provide for future generations | 1.71% | 5 | 21.92% | 64 | 35.96% | 105 | 33.90% | 99 | 6.51% | 19 | 292 |
| Enable me to contribute to my local community | 1.04% | 3 | 17.71% | 51 | 38.54% | 111 | 35.76% | 103 | 6.94% | 20 | 288 |
| Ensure I have the resources needed in the event of a death in my family or friend circle | 2.61% | 8 | 24.43% | 75 | 35.18% | 108 | 29.97% | 92 | 7.82% | 24 | 307 |
| Ensure I have the resources needed in the event of a divorce | 5.03% | 15 | 23.15% | 69 | 34.23% | 102 | 25.50% | 76 | 12.08% | 36 | 298 |
If different forms of liquidity were offered for your alternative investment, which of the following would you be most interested in based on your specific liquidity needs? Please rank all items in priority order.
| Group | % | Count |
| All cash | 16.67% | 600 |
| Bond with 4 year maturity paying 5-6% monthly cash interest | 16.67% | 600 |
| Bond with varying maturities ranging from 2 years to 10 years | 16.67% | 600 |
| Preferred equity and/or common equity of the company providing liquidity for your alternative investments | 16.67% | 600 |
| Combination of cash and bond | 16.67% | 600 |
| Bond with a 4 year maturity paying 5-6% interest with an optional conversion feature for potential equity upside into common equity of the company providing liquidity for your investment | 16.67% | 600 |
| Total | 100% | 3600 |
