American stock exchange operator Nasdaq has stated that it had partnered with major US banks such as SVB Financial Group, Citigroup, Goldman Sachs Group, and Morgan Stanley in order to create a separate trading venue for stocks of private companies.
Nasdaq Private Market, a platform on which private firms raise capital and manage secondary transactions, will become a standalone company. The spin-off will receive strategic investments from the group of banks.
The new venture intends to establish an institutional-grade, centralized secondary trading venue for issuers, brokers, shareholders, and prospective investors of private company stock. The venture’s financial terms were not disclosed.
“Innovation companies are staying private longer and need the ability to offer their employees a safe and easy way to generate liquidity while they are building their businesses. Together with Nasdaq and this impressive consortium of leading banks, we are establishing a secondary trading venue for private company stock that will offer our clients a path to employee retention in an environment where access to talent is one of the biggest challenges.”
The stock exchange added that the platform will manage private company stock transactions such as tender offers, auctions, and investor block trades, among others.
“Using the scale and distribution of our joint venture partners alongside our market-leading technology and markets experience, Nasdaq Private Market will become the go-to marketplace that connects and manages the need of the entire private ecosystem through one platform,” said Mr. Eric Folkemer, president at Nasdaq Private Market.
According to the exchange operator, the new company will help fulfill the unmet market need by offering a global marketplace where companies, brokers, and investors can access, connect, manage, execute, and settle their private company stock transactions using a single technology platform.
Since its launch in 2014, Nasdaq Private Market has built relationships with over 250 private firms throughout the world, supported 477 private company transactions serving 59,000 shareholders, and transacted more than $30 billion in volume.