(Bloomberg) — Morgan Stanley’s wealth management unit is offering clients the chance to buy and sell coveted shares of private companies before they open to the wider public, as startups considering initial public offerings increasingly Come more and more and stay private for longer.
The bank’s private markets trading desk will assist Morgan Stanley Wealth Management clients seeking to invest in the highly fragmented and opaque private equity market, a statement said on Monday. Stocks in more than 1,000 so-called unicorns – private companies worth more than $1 billion – are not open to the public, according to the statement.
Private market transactions allow employees and some institutional investors to sell their shares to accredited investors. Although these stocks are inherently riskier due to their relative illiquidity, investors are still attracted to them as a way to capture the growth of companies like Reddit Inc. people This month, nearly two decades after becoming a private company.
“Over the past few years, there has been increasing pressure to get into these companies when value creation is happening, rather than having to wait for an IPO,” said Kevin Swan, head of private markets solutions at Morgan Stanley Wealth Management. “ We want to provide solutions for investors when they need liquidity.”
The offering is not intended to compete with platforms that already allow investors to buy and sell shares of 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 and its various internal units to complete deals on a case-by-case basis, Swann said in a phone interview.
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Private companies such as OpenAI and Elon Musk’s SpaceX have seen their valuations soar, in stark contrast to more than two years of a quiet IPO market. U.S. exchanges have raised just $44 billion in the past two years, just over a tenth of the amount raised through new offerings in 2021, according to data compiled by Bloomberg.
Michael Gaviser, head of private markets at Morgan Stanley Wealth Management, said the gap between demand from private sellers and potential buyers has narrowed as the start-up market recovers after the Federal Reserve raised interest rates.
“When that happens, you see exponential growth,” Garweiser said by phone. “What’s driving the market forward? Bid-ask spreads are narrowing and people are more comfortable with market conditions.”
