Morgan Stanley offers pre-IPO share trading to wealth clients

MORGAN Stanley’s wealth administration arm is giving its purchasers an opportunity to purchase and promote coveted shares of personal firms earlier than they’re accessible to the broader public, as startups weighing preliminary public choices (IPOs) more and more stay non-public for longer.

The financial institution’s Private Markets Transaction Desk will help Morgan Stanley Wealth Management purchasers searching for to put money into the extremely fragmented and opaque marketplace for non-public shares, based on an announcement on Monday (Mar 4). Shares in additional than 1,000 so-called unicorns – non-public firms valued at over US$1 billion – should not accessible to most people, the assertion confirmed.

Private market trades let staff and a few institutional buyers promote their stakes to accredited buyers. Though the shares are inherently riskier resulting from their relative illiquidity, buyers have been drawn to them as a approach to seize the expansion of firms resembling Reddit, which is about to go public this month after practically 20 years as a personal agency.

“There’s been increasing pressure over the past number of years to get into these companies while the value creation is occurring rather than having to wait until the IPO,” mentioned Kevin Swan, head of personal markets options at Morgan Stanley Wealth Management. “When investors have a need for liquidity we want to be there to have a solution for them.”

The providing is not going to be aimed toward competing with platforms that already allow buyers to purchase and promote shares of nonetheless non-public firms resembling Forge Global Holdings and Rainmaker Securities. Instead, Morgan Stanley will take an “open and agnostic approach”, working with exterior platforms in addition to its totally different inside arms to finish trades based mostly on every state of affairs, Swan mentioned.

Private firms resembling OpenAI and Elon Musk’s SpaceX have seen their valuations surge, a stark distinction with an IPO market that has been quiet for greater than two years. Just US$44 billion was raised on US exchanges over the previous two years, a bit greater than one-tenth of the proceeds raised by way of new choices in 2021 alone, information compiled by Bloomberg present.

As the marketplace for startups recovers after the Federal Reserve’s interest-rate mountain climbing marketing campaign, the hole between what non-public sellers and would-be consumers are searching for has narrowed, based on Michael Gaviser, head of personal markets at Morgan Stanley Wealth Management.

“As that happens you will see an exponential increase,” Gaviser mentioned. “What drives the market going forward? That narrowing of the bid-ask spread and people getting more comfortable with the state of the marketplace.” BLOOMBERG