Nasdaq Seeks More Participation in Private Markets Platform by Spinning it Out
Posted on 07/24/2021
As platform technology propagates, building private investment platforms to critical mass remains a challenge even for the large exchange players. Nasdaq Private Market, LLC is being spun out from Nasdaq Inc. and will be used as a contribution to a joint venture that will be owned by other major market participants who are engaged in owning shares of private companies. The trading of pre-IPO shares has increased in recent times as startups and unicorns have waited longer to go public.
Nasdaq, SVB Financial Group (SVB and owner of Silicon Valley Bank), Citigroup Inc, Goldman Sachs Group Inc, and Morgan Stanley are part of this private markets platform joint venture. Nasdaq Private Market will be contributed to a standalone, independent company and will receive strategic investments from the other parties. Nasdaq would remain the largest shareholder in the platform joint venture.
Nasdaq Private Market was formed in 2013 as a joint venture between Nasdaq and SharesPost, an online marketplace for trading pre-IPO shares. A key goal of the platform is to provide liquidity solutions for private companies.
SecondMarket (originally known as Restricted Stock Partners, Inc.) was founded in 2004 by Barry Silbert to provide liquidity for restricted securities in public companies. Facebook’s private shares drove most of SecondMarket’s trading until Facebook went public in 2013. In 2015, NASDAQ in a joint venture with SharesPost acquired Second Market Solutions, which was a competitor to NASDAQ’s Private Market initiative. NASDAQ rebranded Second Market Solutions as NASDAQ Private Market. SharesPost had sold its stake in the Nasdaq Private Market just ahead of the SecondMarket deal, which the deal was estimated to be at least US$ 10 million.
Nasdaq hopes the JV will accelerate their opportunities in the private company secondary trading market and establish the standard for technology-driven operational efficiencies, compliance and execution.
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.
In 2020, Forge, which was founded as Equidate in 2014, and SharesPost, founded in 2009, merged under the Forge brand after agreeing to a US$ 160 million cash-and-stock deal.