Pre-IPO Trading: Omeed Malik Breaks Down “The New Hedge Funds”

Fully engaged with his entrepreneurial drive, Farvahar Partners founder and CEO, Omeed Malik has independently built an empire on knowledge, pertinent experience, intuition, business acumen, and integrity, the pillars of any successful business venture. Recognizing an underserved population in the niche asset management and business advisory fields, Malik’s unique experiences and innate characteristics have allowed him to flourish. For Malik, launching his own firm was a natural progression, bolstered by years of impressive experience within top-ranking global organizations.

In his role as founder and CEO of Farvahar Partners, Malik regularly presents his well-considered viewpoints in various seminars and aims to educate individuals in the realm of merchant bank investments. A veteran within this realm, Malik’s public engagements serve to educate insiders and novices interested in the world of business alike. Two recent interviews saw Malik shed light on a host of topics pertinent to the world of merchant banks.

Illuminating the World of Pre-IPO Trading

In a May 19, 2019 exclusive interview with Fox News, Malik provided expert insight into Farvahar Partners’ investments in private and public marketplaces. Speaking with Fox News’ Charlie Gasparino at the Milken Institute Conference, Malik touched upon Gasparino’s recognition of a trend he calls the “shadow market”. According to Gasparino, the trend entails the trading of pre-IPO securities, essentially allowing companies to remain private, garnering liquidity prior to having to enter the public marketplace. Though Malik somewhat agreed with the general sentiment, he dispelled the notion that these practices lay “in the shadows”. Conversely, he expressed the notion of “blurred lines”, where VC firms, hedge funds, and PE firms essentially invest in the same asset classes in the current market.

According to Malik, this market is composed of highly successful, highly valued private companies that would most likely have gone public in prior market conditions. In a vastly differing contemporary market, however, these companies have taken much longer to garner public status, or have chosen to forgo public status altogether. With the ability to gain the needed liquidity to scale their operations appropriately, these companies have been able to grow without succumbing to traditional circumstances. For example, according to Malik, Soft Bank has changed the status quo by bringing liquidity into the private market.

Upon the signing of Obama’s 2012 Jobs Act, the number of shareholders allowed within a company structure was quadrupled for private companies, from five hundred to two thousand, thus eliminating the need for an IPO with such a larger number of potential stakeholders. According to Malik, this equates to hundreds of billions of dollars readily available on the sidelines. He further explains the manner in which this concept translates to the hedge fund industry. Hedge funds, which have generally struggled to perform in the recent past, continue to seek alternative ways to generate yield and beat the market. Now, these hedge funds invest in private markets, recognizing the potential benefits of pivoting their general approach.

In an effort to provide concise examples of this type of market behavior, Malik specifically cited Lyft, whose IPO received a lot of press. The company remained private for an extended period of time, with the purchase and sale of the company by Carl Icahn preceding the company’s entrance into the public sphere. This event, according to Malik, serves as a pertinent example of the modern market, which operates along these “blurred lines.” In previous market conditions, this transaction would have been very unlikely.

Within today’s private market, however, the opportunity to buy, sell, and profit in the private sector exists, affecting all parties involved. From investors, to employees of each company, these changes in structure can potentially destabilize a company, or conversely, create vertical growth. For employees, who used to have to wait for the emergence of a company’s IPO in order to sell shares, the new private market has allowed them to partake in these activities prior to the existence of an IPO. Malik’s company, Farvahar Partners, in fact, assists employees of private companies in secondary transactions.

For Malik, recognizing the importance of SEC compliance is crucial toward maintaining successful operations in this newly emerging market. In order to partake in transactions within this space, to be an institutional provider of private liquidity, a company must be a registered broker/dealer. Farvahar Partners, Malik’s company, is registered as such, and can confidently trade in this sphere. According to Malik, Farvahar Partners was borne out of his own research, recognizing the trends occurring within the hedge fund business, dictating the future of said business. In his experience, Malik recognized the notion that hedge funds were eager to garner increased access to deals and collaborative investment opportunities, all available within the private market.

One week following the interview, Malik again provided his unique expertise within the realm of private versus public companies in an interview with Fox Business News’ Liz Claman and Charlie Gasparino. On the eve of Uber’s highly anticipated IPO, Malik spoke with the correspondents in regard to the breaking news of Uber’s share pricing within the context of pre-IPO trading.

Once again explaining the active secondary market for private companies, Malik relayed ways in which companies like Uber have been trading privately via licensed brokers prior to the company going public in the traditional market sense. Touching upon the 2012 Jobs Act, Malik tied the timing of Google’s IPO to their maximizing of the allotted investors allowed by the Jobs Act. In the same vein, he mentioned several major IPOs to watch in the future, most likely following in the footsteps of Uber, including Slack, WeWork, Peloton, Postmates, and Air BnB.

Omeed Malik’s Road to Expertise

Born in New Jersey to an Iranian mother and a Pakistani father, Malik was brought up in a culturally diverse manner, taught to respect and understand his background. Excelling throughout his formal education, Malik earned his Bachelor’s Degree in Philosophy and Political Science from Colgate University. After the completion of his undergraduate degree, Malik earned his Juris Doctor from the esteemed Emory University School of Law, graduating with honors.

Upon the completion of his formal education, Malik entered the professional workforce as a spokesperson for New Jersey’s former U.S. Representative Donald Payne. Within this role, Malik developed the interpersonal skills that he would later parlay into successful interactions with influential individuals within the realm of finance, business, and development. From there, Malik worked as a corporate lawyer for New York-based Weil, Gotshal & Manges. Working in both the private and public sector, Malik garnered pertinent experience within the realm of bankruptcy, private equity, and complicated corporate governance.

Parlaying his vast experiences within financial services, Malik joined the ranks of MF Global as Senior Vice President, where he succeeded in the all-encompassing task of revamping the company’s distribution platform on a national scale, while developing meaningful long-term relationships with institutional clients. Further developing his expertise across multiple spaces in the industry, Malik became Managing Director and Global Head of the Hedge Fund Advisory Business at Bank of America Merrill Lynch. Within this highly specialized role, Malik was solely responsible for selecting both fledgling and vastly developed hedge funds for mutually beneficial partnerships. He created uniquely customized financial strategies for these acquisitions, and oversaw the allocation of financing throughout the entire process.

These previous experiences in high ranking positions allowed Omeed Malik to develop a well-rounded approach to capital strategy. He combined these unique professional experiences with an ever-growing personal motivation for business development, and a growing entrepreneurial spirit. Borne out of this unique commitment to providing alternative growth opportunities for businesses destined for success was Farvahar Partners, Malik’s venture into business ownership. As a boutique merchant bank, Farvahar Partners works diligently with businesses to provide partner capital, liquidity, capital raising services, and even advisory services. Uniquely positioned to offer advising for business of all capacities, Malik leverages his previous professional experiences within his role as active CEO, involving himself personally in resource planning for all partnering companies.

For more information watch the FoxNews video here.

Written by Eric

37-year-old who enjoys ferret racing, binge-watching boxed sets and praying. He is exciting and entertaining, but can also be very boring and a bit grumpy.

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