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Selling an investment in the secondary market: at par, at a premium or a discount


Selling an investment on the secondary Inverse market can serve to boost investments in the primary market

When we were kids, we traded trading cards, marbles and other items. Sometimes the swap was done with stickers of equal value. At other times, we would give up a card we had for another one that, even if it was worth less, we still needed to own. And in the most advantageous situations, we took advantage of the fact that we had a card that everyone wanted to get many cards in exchange. This child’s play, an initiation to the world of investments, allows us to observe how an investment can be sold on the secondary market of invoices on the Inversa marketplace.

The exchange of stickers of equal value perfectly exemplifies the purchase and sale of bills of exchange at par.

The exchange of one sticker for another of lesser value can be compared to trading securities at a discount.

While the exchange of a single sticker for a set of stickers that add up to more value is similar to the sale of investments at a premium.

What if we move from simile to reality? In this article, we will explore the different ways to selling an investment on the Inversa Invoice Market’s secondary invoice market: at a premium, at par and a discount.

Why go to the secondary invoice market?

Online alternative financing platforms such as Inversa aim to help companies to finance themselves and enable investors to monetize their savings. Crowdfactoring, crowdlending, or crowdequity marketplaces reconcile the interests of companies with those of people willing to invest in them.

Therefore, it is evident that the bulk of the operations in lnversa occur in the primary market, where companies raise their invoices yet to be collected to anticipate the income of their amounts and to have liquidity in the short term.

But in addition to this primary market, the Inversa platform has a secondary market for invoices. In this market, investors can sell and purchase bills of exchange previously traded in the primary market. In other words, investors can selling an investment and obtain liquidity to continue investing.

Or, viewed from the other side of the relationship, investors have a second opportunity to invest their savings in a particular bill or company in the real economy.

How can an investment be sold on the secondary market, and can the investor take a discount to make his investment attractive? Conversely, could the investor sell the bills at a higher price than he originally acquired them?

Inversa’s secondary bill market enables three different options for selling an investment.

Selling an investment at a premium

Thoughtful people tend to do well in life. Staying on top of investment products and options is crucial in the financial market. Good investments fly.

If an investor has acquired some particularly interesting securities, he can try to make his investment profitable a second time. What do we mean by this?

In the Inversa marketplace, when an investor finances an invoice, he receives the committed return in advance once the invoice is fully financed. While the money he has invested is recovered on the invoice’s due date, and the company that has to pay the invoice pays the corresponding amount.

In the meantime, the investor can decide to sell his investment and obtain a new return. How? By selling it at a premium.

So the seller offers his investment for the price of the investment plus a premium. So, for example, if the original investor has invested 1,000 euros in financing an invoice, he proceeds to sell it on the secondary market for that price plus a 5% premium. This would mean that the investment would amount to 1,050 euros.

This implies that the investor who sells adds to the original profitability obtained, the amount of the premium for which he sells his investment. In addition, of course, to obtain liquidity to make other investments before the original investment is returned to him.

What does the investor who buys gain? Acquiring a particularly interesting investment, for example, because of the prestige and reputation of the company behind it. As well as other issues related to ethical investment.

By selling an investment at par, the investor sells it for the same price at which it was acquired

Transacting an investment at par

In some cases, investors do not wish to sell an investment to obtain a premium but only seek to sell it to obtain liquidity in the short term so that they can continue to invest.

Therefore, they do not bid it in the secondary market at a premium, but rather at par. What does this mean?

If the investment is worth 1,000 euros, the investor sells it at that price. So the investor who buys it will have to pay you 1,000 euros.

Acquiring an investment at a discount

The third method available in Inversa for selling an investment in the secondary market is at a discount.

With this option, investors who want to sell an investment seek to increase its attractiveness in the market by adding a discount to the price at which it is offered.

If the investment has a value of 1,000 euros, they may decide to apply a discount of 5% so that the investment price is 950 euros.

In this way, the investor who sells sacrifices part of his profitability to achieve liquidity in the short term. While the investor who acquires the investment achieves profitability that will become effective when the company that has to pay the invoice receives the money and all the investors who financed it recover the investments made.

Thus, if investors can achieve immediate profitability in the primary market, they can achieve such profitability in the secondary market, but they will do so when they recover their investments.

Selling an investment at a discount is an interesting option for investors who need liquidity as soon as possible. In addition, acquiring this kind of investment can be very interesting for those investors interested in the securities being offered but who could not acquire them in the primary market.

Greater freedom to manage investments

The possibility of selling an investment on the secondary market strengthens one of the pillars of a crowdfactoring platform such as Inversa: to provide investors with greater freedom.

Why? Investors can decide in which companies they invest, how much money they allocate to each investment and when they carry it out, having at their disposal all the necessary financial information: invoice amount, profitability, risk, credit rating, and maturity date… And at the same time, they also have at their disposal the possibility of:

  1. Sell the investments they have made. This means they can obtain liquidity to continue investing, thus feeding the primary invoice market.
  2. Acquire bills of exchange that are no longer available in the primary market. This allows investors to get hold of bills of exchange that interest them, but they missed when they were available in the primary market.
  3. Obtain an extra return on their money. Selling an investment at a discount or a premium allows an investor to get a return on their money beyond what is paid in the primary market. Thus, investors who sell at a premium make immediate extra money by marketing their investment. At the same time, investors who buy at a discount will achieve a return once the investment amount is repaid.

Given the above, we can see how the secondary invoice market contributes to increasing investors’ autonomy and capacity for action, boosting investment and, therefore, the financing of companies in the real economy. Moreover, selling an investment is possible and can benefit multiple investors.

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