A quant trading firm with a big presence in stock listings is finding a way to link wealthy clients and large investors to new investments before they go public.
Electronic market maker GTS has started a digital trading venture called ClearList, with backing from hedge fund titan Paul Tudor Jones’s investment firm, according to a statement.
“We want to make private investing as easy as public investing, the private markets are bigger, by notional value,” GTS Chief Executive Officer Ari Rubenstein said in an interview. “We also have an enormous digital network of the largest family offices over the country and institutions that will be accessing these platforms.”
Initial public offerings have largely stalled during the coronavirus pandemic, while companies have for years been waiting longer to go public. Rubenstein cited Covid-19 as evidence of the need for greater liquidity in markets as firms and investors find it harder to sell shares. While there are also other ventures helping startups trade stock in limited amounts in private markets, pricing has tended to be opaque — and often set by the startups themselves.
“It’s going to give a transparent pre-IPO valuation to private companies,” Rubenstein said. Because investors will have a better understanding of a private firm’s price, it could help them determine a public market valuation more easily and help in an IPO process.
The move comes as the U.S. Securities and Exchange Commission has been seeking to open up unicorn firms — startups valued at more than $1 billion — to a greater array of investors. ClearList will focus on so-called accredited investors who have the ability to buy into riskier deals.
ClearList has signed up its first client, plant-breeding technology company Cibus Corp. In a statement, Point72 Asset Management’s Steve Cohen — who is trying to raise a new vehicle for private market wagers — endorsed ClearList as having an “innovative approach.”
Others working to provide more liquidity to private markets include Nasdaq Inc., which has a private markets venture. Also, startup Carta Inc. is seeking to raise $200 million in a new funding round as it aims to build a private stock market.