Nasdaq today is set to launch a new, private stock market called the Portal Market for super-wealthy investors with $100 million or more in assets, the Washington Post reports.
However, unlike other stock markets where listed companies are public and subject to federal regulation, those that list on the Portal Market will remain private. The market is set to open with 500 listings.
This comes at a time when private equity firms are making it difficult for mutual funds and other institutional investors because the private equity firms are taking public companies private. In fact, more money, $162 billion, was spent on acquisitions by private equity firms last year than on initial public offerings on Nasdaq, the New York Stock Exchange and the American Stock Exchange.
“One of the problems that business faces in America today is what I would call ‘short-termism,’” said Howard S. Marks, chairman of Oaktree Capital, which is listed on a private market organized by Goldman Sachs. “There’s a lot of expense and complication associated with being a public company today. Now it is possible to gain most of the advantages of being public while sidestepping the disadvantages.”
Nasdaq predicts that within only a few years, initial private offerings will by far exceed initial public offerings. “It’s a transformational development in the capital markets,” said John Jacobs, executive vice president at Nasdaq.