Why private markets will expand faster than their public counterparts

July 22, 2019 | Alternative Investments

Private markets are growing at twice the rate of the traditional markets

In recent years, an interesting trend has appeared. Whereas earlier the public markets shouldered the responsibility for raising capital and liquidity for businesses, in recent times the private markets have taken the lead.

Increasingly larger sums have been coming the way of private markets from diverse, ‘alternative’ sources such as hedge funds, wealth funds, corporate investors, venture capitalists, PE players and mutual funds.

Why private is more attractive

  • Lesser regulatory compliance, better control
  • With new sources of funds now available, the IPO is not the only route for financing
  • Companies are therefore staying private for longer
  • Investors are therefore able to hold onto the high growth phase for longer
  • Investors are now international
  • With the increasing trend towards disruption, investors are willing to shoulder early stage losses in return for the longer term gains flowing from market leadership

The bottom line

“Private capital transactions have increasingly become critical in helping businesses to drive innovation, scale internationally and fund strategic ambitions, while providing financial flexibility to founders and shareholders.”

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