Morgan Stanley will give you a piece of a hot start-up – for $20 million
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America’s largest household wealth manager promises clients stakes in hot private start-ups with the potential for returns that make publicly traded stock gains look like winnings at a night of bingo in the ‘church.
But there’s a catch: They want $20 million in assets up front to get in the game.
With stock indices trading at all-time highs and bond yields not paying much, there is a scarcity of bargains in the markets these days. So some investors have become eager to jump into private start-ups with the potential to become the next Tesla.
Starting next year, Morgan Stanley will let people do just that (well, people with $20 million in assets), giving them an a la carte buffet of select stocks from the best start-ups, according to reports. senior executives who spoke to The Wall Street Journal. Here is the world they will have access to:
- Tech start-ups take an average of 12 years to go public these days (triple the time it took in 1999), giving Morgan Stanley a slew of private companies it could offer traders daily.
- According to McKinsey and Co, private stocks have grown twice as fast in value as the value of listed companies since 2002.
On your marks, get set, sell (focus is on set): There are a handful of smaller private equity exchanges, like EquityZen and Forge Global, but many start-ups don’t participate because trading can interfere with the valuation they get from fundraising. Morgan Stanley plans to circumvent this by allowing companies to fix the price of stocks which it will then sell to its super-wealthy clients.
Past performance: This isn’t Morgan Stanley’s first attempt to give its wealthiest clients a leg up on private stocks, but all previous efforts haven’t worked well. A blind investment pool for bank customers offered Uber stock at $48 in 2016 — it’s currently worth $45. Damn this price spike.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.