Liquidnet Close to Launching Trading in Private Shares
February 21, 2013
Companies now, though, say private longer, regard IPO markets as less hospitable, are less interested in putting their fate in the hands of ‘strategic buyers’ and generally want to control more of their destiny, said Kelly.
So Liquidnet’s platform will be a way to create what it is known for in block trading: liquidity.
This "will enable the companies themselves to manage and facilitate the sale of private shares from existing investors or employees to institutional investors,'' he said.
Liquidnet’s customers include 700 mutual funds and other asset managers which control more than $12 trillion in stock.
“We've created a mechanism that provides a differentiated institutional scale solution that matches up with a very specific, well articulated need of the buyside community,’’ Kelly said. “How do I capture that alpha, pre-IPO and how do I avoid the problems of trying to buy stock in an IPO?”
No approval from the Securities and Exchange Commission is needed for Liquidnet to proceed, he said. These will be agency-brokered transactions under existing rules for moving unlisted shares.
Liquidnet, however, is adhering to all relevant SEC and Financial Industry Regulatory Authority regulations, in the launch.