NASDAQ under the symbol BENF. It's on a mission to democratize the global alternative asset investment market by providing traditionally underserved investors and general partners seeking exit options, anchor commitments, and value-added services for their funds with solutions that could help them unlock the value in their alternative assets. Happy to welcome back Brad Heppner, CEO. Nice to see you, Brad.
Thank you. Thank you.
All right. Those of us who might be new to the story, could you give a quick overview of Beneficient's business and why Beneneficient is unique in your industry?
Sure thing, Anna. Thanks for having us at the conference today. Beneficient or just Ben for short is a unique business model. We're designed to solve a large market problem for both liquidity and new primary financing in the private asset market. Simply put, we provide fiduciary products and services that deliver liquidity and primary capital for holders and managers of all types of alternative assets. Now, while these solutions exist for very large investors, the traditional process is incredibly complex, it's expensive, and very time-consuming for smaller investors. That's why we use efficient technology-enabled solutions designed for high net worth individuals and small to mid-sized institutions that have been underserved when it comes to exiting alternative assets prior to their maturity.
As this chart demonstrates, we believe this market includes an unmet demand for liquidity of over $60 billion annually for smaller investors and smaller institutions, plus another $150 billion-plus annually in general partners seeking liquidity for the limited partners through restructurings and in the secondary markets.
That's a unique market. Can you share how the company has performed this year?
Sure thing. For the nine months of our fiscal year ended December 31, 2024, Beneficient has generated positive net income. We're on a March 31 fiscal year end. As disclosed in our public filings, we recently announced new primary capital transactions with customers using our solutions. That's very exciting for us because it's how we grow and diversify the underlying collateral portfolios that we service, generating both interest and fees for service revenues. We believe these transactions are addressing the demand for primary capital in new alternative assets. As this chart shows, PEI data has indicated that it is taking an average of 18 months for GPs to raise their private equity funds. That's double what it took them just three years ago.
We expect to continue to evaluate additional platform developments to accelerate our capabilities for delivering both this primary capital solution and liquidity and prepare for the future emergence of digital alternative asset markets.
You also recently announced the acquisition of an international banking entity. Give us the background on that, please.
Absolutely. In December 2024, we announced that Beneficient entered into an agreement to acquire Mercantile Bank. Now, it's subject to certain closing conditions that we're working on. Mercantile is a Puerto Rico-based international financial entity, or IFE. It's licensed and regulated by the Office of the Commissioner of Financial Institutions of Puerto Rico. An IFE's authorized activities can include custody, clearing, and payments and related traditional and digital products and services. IFEs can also be approved to offer traditional banking services such as correspondent deposits, lending, investments, and trusts. Now, Puerto Rico is a leading jurisdiction working in conjunction with regulators to provide expanded authorization for IFE banks to engage in activities such as asset management, clearing, and digital assets.
We believe that the Mercantile acquisition can enable us to offer an expanded range of companion custody, clearing, and control account fee-based services that complement our existing businesses, but on a broader scale, our existing businesses, as you can see on this chart. Additionally, we expect the acquisition to have the potential to generate additional complementary cash flow in the near term. Longer term, we want to deliver additional custody services for international investors and digital asset investors that generally have and generate a higher fee rate structure, potentially higher margins than our traditional custody services. We also believe the proposed acquisition of an IFE has the potential to broaden our current offerings in ways that may open new international opportunities, such as alternative asset custody services that assist the holders of foreign investments in gaining access to the capital markets of international jurisdictions.
This may yield higher fee assessments than more traditional custody offerings.
We've talked a lot about private equity investments. Can you give us a little information about the private investments connected to Beneficient?
Of course. The world of private investments is some of the most exciting and innovative companies in the whole world. As of December 31, 2024, we reported investments with a fair value of $334 million, which serve as collateral for Beneficient Liquidity's net loan portfolio of $261 million. The diversification of these assets is on this current chart. We use a regulated trust structure to hold the collateral assets on this chart, and that structure is for everything related to the financings we do. Our financial model involves the receipt of interest and service-based fee revenue from these trusts. This is unique for most other publicly traded private equity managers because in those companies, we are really just participating in the management fees without exposure to the assets. We have at Beneficient has exposure to the assets.
Our portfolios are made up of a highly diversified mix of assets with a global reach that crosses many different industries, as you can see on this chart. For those in asset management, we use the endowment model of portfolio diversification, which is similar to the widely known and well-regarded investment model at Ivy League endowments. We also believe that by pursuing this diversified model, we can generate appropriate risk-adjusted rates of return over time. This is why we report our financial results in separate big business segments in our reports. Beneficient Liquidity, which generates interest revenue for financing liquidity off the balance sheet, and Beneficient Custody, which produces fee revenue for the use of the platform, trust and custody services. It is an exciting business to us, and we believe many of these companies and future innovators are industry leaders.
Wonderful. You also mentioned technology a couple of times in our conversation. How does Beneficient use technology to deliver your services to customers?
Okay. In this last chart, you can see our technology platform. This is actually a very key part of our business. Beneficient was historically designed to be a fully technology-enabled financial services business. I mentioned earlier that smaller investors struggle to find liquidity, and if they are even able to find it, the costs are often very prohibitive. Very large investors have the benefit of scale and quite often internal solutions to generate liquidity. The increasingly prevalent smaller investor base just does not typically have those same advantages. To try to solve that issue, we built AltAccess. That is our fintech platform, which serves as the centralizing hub of our business. It is an interactive, secure end-to-end portal through which our customers select among our products and services and then complete their transactions in a regulated environment all online.
As I mentioned, we expect that the Mercantile acquisition will allow us to offer additional alternative asset custody services through AltAccess that include, among other potential items, a companion line of business focused on issuing depositary receipts to assist holders of foreign investments to gain access to the capital markets of additional international jurisdictions for them. A holder of a private asset can input all of their data, and the system will generate a market-based price for them. We can also use standardized transaction documents to close a transaction. In short, we can price and close a deal in as little as 30 days if the counterparty wants to do so, whereas traditional models usually take months or even longer. We are starting to see more transaction activity in the market, so we are very excited about the potential that this 2025 holds here for Beneficient.
Wonderful. Thank you so much for this update, really thorough update here. For anyone who has more questions, they're submitting to us, and we will submit them. A great way to end our conference today. We appreciate you.
Thanks, Anna. We appreciate the time. Thank you.
All right, everyone, in just a moment, you'll be redirected to the registration page for the next conference. Please reserve your spot early. On behalf of all of us at Emerging Growth, we want to thank all of our presenters and attendees for making this such a great success. Remember, a complete replay of this conference will be on our YouTube channel, youtube.com/emerginggrowthconference, and follow us on X at EmergingGrowthC. I'm Anna Berry, and we'll see you next month. Looking forward to it, and have a great month.