IRA services, a trust company that provides custodial services for retirement accounts managed by individuals and mid-to-large sized Institutions, is reportedly getting acquired by Forge, the marketplace for trading private company shares formerly known as Equidate, for an amount of $55 million.
Tasked with security services, a custodial company essentially works by holding onto (or in this case, maintain custody of) a client's securities, keeping it safe and secure from any potential external complications. This includes problems such as theft or misplacement.
There are other custodian companies like IRA services that provide administrative services. This includes collecting the actual dividend payments made to the owner of a stock, as well as advisory services, helping clients navigate their way through investments and spending.
Primary marketplace
Forge was initially established back in 2014, the company has been one of the primary marketplaces in the industry ever since, giving employees and early investors the chance to monetize their privately-held shares without the usual waiting that comes with either an IPO or liquidity event.
Furthermore, the company is also responsible for providing some of the world's leading institutional investors and equity holders with high-demand access to top pre-IPO companies.
And as a way to support offerings for private market securities, Forge then acquired IRA services, giving it the means to move one step closer to becoming a one-stop shop for private market investors in the space, especially those that will no longer have to transfer shares.
A sensible acquisition
According to Patrick Hughes, who's president for IRA Services, "Investors across asset classes want the ease, transparency, and security provided by a seamless investing experience from trading through to settlement to custody. In bringing together Forge and IRA Services, we look to deliver an unparalleled end-to-end investing experience for private markets investors."
What sets IRA apart from other custodian companies however, is that it has already specialized in deals that involved alternative and non-traded asset classes. This means that the company already has systems in place that are structured in such a way that it can easily deal with private securities, as well as other associated complexities.
At the moment, the combined entity is pending necessary agency approvals but also intends to register itself as broker-dealer and separate non-fiduciary trust company.
