Photo: Energetic NYC via flickr
Cantor Fitzgerald has launched a market place for the trading of private company shares, highlighting the soaring demand for pre-IPO companies among institutional investors.
Launched yesterday, Cantor Private Markets Group has been set up to connect its clients with private company stock, private real estate trusts, and private equity and hedge fund investments.
The investment bank says the platform will provide access to a range of sectors including technology, real estate and life sciences. It will focus on serving the ‘growing institutional demand for securities in the private marketplace,’ the bank states, in a release.
‘We believe Cantor will benefit accordingly from our responsiveness to our clients’ interest in this rapidly growing marketplace,’ comments Shawn Matthews, Cantor’s CEO, in the statement.
Lack of IPOs
The launch comes as interest in private company shares continues to soar. A big reason for this is that IPOs are still too few and far between.
According to the National Venture Capital Association, companies take about 10 years to go public these days, compared with the five-to-seven-year range venture capitalists prefer.
In other words, significant early investors have to wait longer than ever to see a return on their equity. The same is true for employees who receive stock as part of their compensation.
There’s also pressure from those who want to own stock in companies they think will be a big hit when they finally go public.
The pent-up demand has led to an explosion in corporate valuations and trading activity at venues such as SharesPost and SecondMarket, which specialize in the trading of unlisted shares.[Article by Erik Sherman, Inside Investor Relations]