(Bloomberg) — Morgan Stanley's wealth management arm is giving its clients a chance to buy and sell coveted shares of private companies before they're available to the general public, as startups weigh offers initial public increasingly remain private for longer.
The bank's Private Markets Transaction Desk will help Morgan Stanley Wealth Management clients looking to invest in the highly fragmented and opaque market for private equity, according to a statement on Monday. Shares of more than 1,000 so-called unicorns — private companies valued at more than $1 billion — are not available to the general public, the statement showed.
Private market trades allow employees and some institutional investors to sell their shares to accredited investors. Although stocks are inherently riskier because of their relative illiquidity, investors have been drawn to them as a way to capture the growth of companies like Reddit Inc., which is about to exit. PUBLIC this month after nearly two decades as a private firm.
“There has been increasing pressure over the past few years to get into these companies while the value creation is happening rather than having to wait until the IPO,” said Kevin Swan, Head of Private Markets Solutions at Morgan Stanley Wealth Management. “When investors need liquidity, we want to be there to have a solution for them.”
The offering will not be intended to compete with platforms that already enable investors to buy and sell shares of still-private companies such as Forge Global Holdings Inc. and Rainmaker Securities. Instead, Morgan Stanley will take an “open and agnostic approach,” working with external platforms as well as its various internal arms to complete trades based on each situation, Swan said in an interview. telephone.
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Private companies like OpenAI and Elon Musk's SpaceX have seen their valuations rise, a stark contrast to an IPO market that has been quiet for more than two years. Just $44 billion was raised on U.S. exchanges over the past two years, just over a tenth of the proceeds raised by new offerings in 2021 alone, data compiled by Bloomberg show.
As the market for startups recovers from the Federal Reserve's interest rate hike campaign, the gap between what private sellers and potential buyers are looking for has narrowed, according to Michael Gaviser, Head of Private Markets at Morgan Stanley Wealth Management.
“As that happens, you're going to see exponential growth,” Gaviser said by phone. “What drives the market forward? That narrows the supply-demand spread and people become more comfortable with the state of the market.”