Nasdaq, LODAS, and Harrison Street Plan Auction Venue for Interval Fund Interests
Nasdaq Fund Secondaries, LODAS Markets, and Harrison Street Asset Management said Aug. 24 they are collaborating on a managed transaction environment that will let interval fund investors trade fund interests through periodic auctions, outside scheduled repurchase windows. The auction begins Aug. 28 and ends Sept. 18.
The collaboration divides responsibility three ways. Nasdaq Fund Secondaries will supply the private-markets trading technology and, through its NFSTX LLC affiliate, the alternative trading system on which the auction will run. HSAM, through an affiliated investment adviser, will be the first fund manager to authorize transfers of interval fund interests through the system. LODAS Markets will act as broker for any resulting transactions and provide the technology for trading, clearing, and settlement, along with access to its investor network, according to the companies. The associated HSAM fund that will participate is Harrison Street Real Estate Fund LLC.
The collaboration is aimed at a structural gap in how interval funds work. The funds offer investors periodic repurchase opportunities – typically quarterly, and typically capped at a percentage of net asset value – but give investors and financial advisers few options when liquidity needs arise between those windows. That gap has become more visible as redemption demand across semi-liquid alternative funds has climbed: Cliffwater capped withdrawals on some of its credit funds amid rising redemption requests, and Saba Capital has pushed its activist tender-offer strategy into nontraded business development companies and interval funds specifically because scheduled repurchases haven’t kept pace with investor demand for an exit. A standing secondary-auction venue will give interval fund investors a third option beyond waiting for the next repurchase window or accepting a discounted tender offer.
“This collaboration brings together the trust, technology and market expertise required to establish a credible auction environment for interval fund investors,” Patrick Adrian, vice president of Nasdaq Fund Secondaries, said in a statement. “By creating a transparent and purpose-built venue, we aim to give investors and advisors greater flexibility while supporting the continued evolution of the semi-liquid fund ecosystem.”
“LODAS built infrastructure to address the liquidity and transparency issues that have long constrained private markets,” said Brian King, LODAS Markets’ founder and chief executive officer. “Now, working with Nasdaq Fund Secondaries and HSAM, we can leverage that infrastructure at scale to deliver additional optionality for investors.”
Bill Fuhs, a partner at Harrison Street Asset Management, framed the arrangement as an extension of the firm’s product development rather than a response to any specific liquidity strain. “HSAM has a long history of developing innovative investment solutions around the evolving needs of our clients. As the semi-liquid alternatives market continues to develop and mature across cycles, shareholders’ objectives will become more diversified and unique.” The collaboration, he said, reflects HSAM’s commitment to exploring new ways to provide advisers with greater choice and flexibility to meet their clients’ needs.
The companies described the arrangement as “a scalable foundation” that could extend to other interval funds and semi-liquid vehicles beyond HSAM’s, though none of the three named other prospective participants. Harrison Street Asset Management manages roughly $109 billion in real estate, infrastructure, and credit strategies for more than 1,100 institutional investors and 300 registered investment advisers, according to the company, with offices in Chicago, Toronto, London, and elsewhere. Nasdaq Fund Secondaries is Nasdaq’s technology and liquidity platform for private-market participants, built to help general partners, limited partners, and advisers manage secondary transactions. LODAS Markets operates two SEC-registered platforms, LODAS Securities and LODAS Transfer, covering secondary trading and transfer-agent functions for private investments.
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