Nasdaq Spins Out Pre-IPO Exchange to Form Joint Venture with Banks

Citi, Goldman Sachs, Morgan Stanley and SVB will be the partners in the joint venture.

Nasdaq has teamed up with several private banks, SVB Financial Group, Citi, Goldman Sachs, and Morgan Stanley, to form a joint venture to establish a secondary trading venue of private company stocks.

Nasdaq will spin out its existing Nasdaq Private Market, which will offer existing technology, client relationships and regulatory infrastructure, into a separate entity to form the joint venture. 

Though the terms of the deal were not disclosed, Nasdaq will remain a majority shareholder in the joint venture while SVB, Citi, Goldman Sachs, and Morgan Stanley will be strategic investors.

Demand for Pre-IPO Shares Is Increasing

The new platform will offer customizable transaction rules and structures. Also, it will allow several types of transactions, including tender offers, auction programs, block trades and continuous trading. The issuer and shareholder on the platform will engage directly via an inter-broker network of institutional investors offering technology functions, such as bulletin boards and secondary order book-building.

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“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,” Nasdaq Stock Exchange President, Nelson Griggs, said.

The press release further elaborated that the platform will allow private companies, brokers and investors to ‘access, connect, manage and execute their private company stock transactions through a global marketplace and customized technology solutions.

Its primary function is to increase secondary market liquidity for private company stocks. However, only accredited investors in the United States will be allowed to participate in purchasing pre-IPO company shares.

“The private markets are anything but standard and have become more diverse than ever,” said 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.”

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