July 20, 2021 - Nasdaq, SVB Financial Group (“SVB”), Citi, Goldman Sachs, and Morgan Stanley today announced a joint venture to establish an institutional-grade, centralised secondary trading venue for issuers, brokers, shareholders and prospective investors of private company stock.
Nasdaq Private Market will be contributed to a standalone, independent company, which will receive strategic investments from SVB, Citi, Goldman Sachs, and Morgan Stanley.
Nasdaq Private Market’s existing technology, client relationships, and regulatory infrastructure will provide a strong foundation for the joint venture to develop a full suite of liquidity solutions for private companies. Private companies, brokers and investors will be able to access, connect, manage and execute their private company stock transactions through a global marketplace and customised technology solutions. These tailored solutions allow private companies, brokers, and investors to have increased transparency into their program and trade criteria. The platform will continue to manage and support private company stock transactions including tender offers, buyside book-building, auctions, investor block trades, company directed windows of liquidity and pre-direct listing continuous trading. In addition, the platform will provide end-to-end settlement process management and an inter-broker global marketplace through its existing alternative trading system for all customers from employees to institutions to access and transact.
These new capabilities will help fulfil unmet market demand and provide a more transparent and efficient offering for private companies, their employees and investors looking for access to private assets. The platform will build a unique distribution network, leveraging the joint venture partners’ strong relationships with private companies and investors. In addition, institutional investor participation will be enhanced through the platform’s broker-sponsored and broker-neutral design, which is open to qualified broker-dealers.
“Since we launched Nasdaq Private Market in 2014, we have created a trusted platform for private companies resulting in a strong track record and robust pipeline of secondary transactions,” said Nelson Griggs, President, Nasdaq Stock Exchange. “This joint venture will accelerate our opportunities in the private company secondary trading market and establish the standard for technology-driven operational efficiencies, compliance and execution.”
“The private markets are anything but standard and have become more diverse than ever,” added Eric Folkemer, President, Nasdaq Private Market. “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.”
“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,” said Greg Becker, CEO of SVB Financial Group, parent company of Silicon Valley Bank. “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.”
“Today’s announcement highlights our optimism about the evolution of the private markets,” said representatives at Citi, Goldman Sachs and Morgan Stanley. “We have a long history of jointly supporting market structure innovation and fostering liquidity in the secondary markets.”
Joint Venture Highlights
The joint venture will serve a large and growing market for private company secondary liquidity and will build upon Nasdaq Private Market’s existing franchise and technology so clients can use one platform to transact with confidence:
Platform with customisable transaction rules and structures to manage and support private company share transactions including tender offers, auction programs, block trades, and continuous trading.
End-to-end settlement process management, including electronic agreements, issuer consent, approval and transfer, trade confirmations and flow of payments.
A single venue for complete management of changes to equity and equity-linked compensation programs including option extension, repricing and execution; RSU liquidity; dividends and payment disbursements.
Issuer and shareholder direct engagement via an inter-broker network of institutional investors offering technology functionality such as bulletin board and secondary order book-building.
A continuous trading offering to drive price discovery and centralize secondary market activity for eligible shareholders and employees in advance of an issuer’s direct listing or IPO.
Nasdaq Private Market’s core operating team will remain in place with its bicoastal presence in New York and San Francisco. The team has a unique knowledge base, extensive regulatory management expertise, and has grown Nasdaq Private Market into the leading provider for private company tender offer liquidity over the last five years. Team members have cultivated close relationships with more than 250 leading private companies worldwide, facilitated 477 private company transactions serving 59,000 shareholders, and have executed more than $30 billion in transaction volume for many of the world’s largest private companies. The team is expected to invest to add additional expertise in key growth areas.
Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Nasdaq. Morgan Lewis & Bockius LLP served as legal advisor to SVB, Citi, Goldman Sachs, and Morgan Stanley.
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