High-Frequency Trading Technology in Capital Markets and Pre-IPO Investment Opportunity: Liquidity Trading
This week, we continue our informative series on Pre-IPO funds, which offer investors the chance to invest in companies going public, with a focus on financial technologies. These funds, often chosen with the philosophy of "buying the future today," are not yet widespread in Turkey, but there are many successful global examples. For instance, early investors in tech giants such as Airbnb, WhatsApp, and Google were able to share in their remarkable financial success.
This week, we continue our informative series on Pre-IPO funds, which offer investors the chance to invest in companies going public, with a focus on financial technologies. These funds, often chosen with the philosophy of "buying the future today," are not yet widespread in Turkey, but there are many successful global examples. For instance, early investors in tech giants such as Airbnb, WhatsApp, and Google were able to share in their remarkable financial success.
This week, we would like to share information about the LT Pre-IPO Venture Capital Investment Fund (GSYF) established under BV Portföy, and the company it will invest in, Liquidity Trading (LT).
Liquidity Trading’s (LT) Highlights
Operating at the forefront of the financial technology sector, Liquidity Trading develops high-frequency trading (HFT) technologies and stands as a pioneer in statistical arbitrage both in Turkey and globally. HFT is a strategy and technology that uses computer algorithms and high-speed trading systems to execute trades at lightning speed in financial markets. Leveraging this technology, LT is well-positioned to compete on the global stage.
The company’s founders, Burak Şenyuva, Mustafa Çetin, and Hikmet Kaya, each have over 15 years of experience at leading companies in Turkey and around the world. With a team of 35 experts holding master’s and doctoral degrees across various disciplines, LT’s knowledge and expertise have positioned it as a leading player in the financial technology industry.
Financial Performance and Goals
Currently, LT provides statistical arbitrage and high-frequency trading infrastructure for funds with a combined value of approximately 2 billion TL. In 2022, these funds ranked among the top three performing funds out of 20 statistical arbitrage funds traded on Borsa Istanbul. This success clearly demonstrates LT’s competence and potential in the sector.
Building on its achievements in Turkey, Liquidity Trading plans to use its pre-IPO investment to secure prime brokerage agreements with major exchanges such as Eurex, Saudi Arabia’s Tadawul, ADX, and Nasdaq, becoming a distinctive partner in global markets. Following this, LT aims to expand by conducting direct transactions with top-tier banks such as Goldman Sachs and JP Morgan. Financial projections estimate that the LT Pre-IPO Fund could achieve a 7x increase in valuation under an average scenario and up to 10x in an optimistic scenario, with a projected net IRR of 65% for investors.
Advantages for Investors
The LT Pre-IPO GSYF offers investors the opportunity to invest in Liquidity Trading. Beyond contributing to the growth of Turkey’s financial technology sector, the fund also provides investors with a unique opportunity. Detailed information can be found on our website.
In addition, gains from GSYF investments in Turkey are exempt from both income tax and corporate tax. For corporations, there is the added benefit of deducting GSYF investments from taxable income within certain limits, thereby reducing corporate tax obligations. Specifically, companies can allocate part of their declared income or profit to venture capital funds, provided the amount does not exceed 10% of corporate income and 20% of equity. These amounts, once allocated as venture capital funds, can be deducted from corporate income tax returns, provided they are shown separately. This highlights Turkey’s strong policy incentives supporting GSYF investments.
Fund Issuance Dates
To allow institutional investors to take advantage of these tax benefits, we have set January 15 as the issuance date for the Liquidity Trading Pre-IPO GSYF, along with another Pre-IPO fund, the Joygame Pre-IPO GSYF. This date was chosen to enable investors to make strategic decisions and diversify their portfolios early in the year.
Investor Profile and Strategies
Pre-IPO funds typically provide early access to companies with long-term growth potential. These funds are ideal for investors with high risk tolerance, advanced financial knowledge, and strategic thinking capabilities. One of the greatest advantages of Pre-IPO investments is the ability to invest at a company’s lower pre-IPO valuation, offering significant upside potential once the company goes public or advances to later stages.
Through these funds, investors can participate in the growth stories of technology and innovation-driven companies. Industries such as financial technologies, artificial intelligence, biotechnology, and renewable energy stand out with high growth potential. Companies like LT, focused on HFT and algorithmic trading technologies, offer attractive opportunities thanks to their adaptability to rapid market changes.
Opportunities for Qualified Investors
Only investors defined as “qualified investors” under regulations may invest in the fund. These are typically high-net-worth individuals with investment experience and knowledge of financial markets. Through Pre-IPO funds, qualified investors gain access to a wide range of opportunities in capital markets, including investments in innovative, fast-growing companies both locally and globally.
Conclusion
Liquidity Trading stands out as a pioneering company in the fields of financial technology and HFT, both in Turkey and worldwide. The LT Pre-IPO GSYF, established under BV Portföy, provides investors with an early opportunity to invest in this innovative company. The fund’s tax benefits and strong return potential make it a highly attractive opportunity for investors.
For more information or to discuss investment opportunities, please contact us at [email protected]. You can also explore all of our “Disruptive Innovation” focused investment funds on our website.