JPMorgan Chase (JPM +0.7%) is putting together a new team to match sellers and buyers in the growing market for private company shares, CNBC reports, citing Chris Berthe, JPMorgan’s global co-head of cash equities trading.
He’s brought in Andrew Thuhill, a senior vice president from trading platform Forge Global, to lead the new team.
As the equities markets continue to reach new highs, and with many pundits warning of asset bubbles, investors are turning to companies that haven’t yet gone public.
Also, with many companies waiting longer before they turn to the publicly traded equity markets, investors are seeking to get in earlier.
The trend for startups to wait longer before conducting an IPO also means, in some cases, shares aren’t going to climb the way they would had they gone public earlier. For example, shares of Uber are still trading below their IPO price from over a year ago. Uber’s early venture capital investors, meanwhile, made billions from their investments.
That’s spurred institutional investors, including hedge funds, to ask JPMorgan to source stock in private companies including Elon Musk’s SpaceX (SPACE), Airbnb (AIRB), Robinhood (RBNHD), Palantir (PLTR), and TikTok, Berthe said.
The investors demand is coming at the same time that company founders, venture capital funds, and wealth management clients want to sell their stakes in private companies, he added.
Berthe believes that JPM is the first big Wall Street bank to create a team dedicated to trading private shares. Goldman Sachs and Morgan Stanley have been facilitating such trades in this market for years, but don’t have teams dedicated to that activity, according to people with knowledge of the two firms’ operations.
The market for trading shares of private companies is dominated by mostly boutique brokerages located on the West Coast, such as EquityZen, SharesPost, and Forge.
“Companies are staying private for longer and that dynamic doesn’t look like it’s changing anytime soon,” Berthe said. “The more the market rallies, the more people are going to want to look at alternatives.”