Accessible Pathway for Financial Backers to Expand in Emerging Private Markets
Private Capital Markets: A Viable Alternative for Scale-Up Funding
The landscape of funding for start-ups and fast-growing businesses has witnessed a shift, as many bypass the stock market and high street banks in favor of private markets. Numerous options, such as debt funding, seed and venture capital, minority stakes, and buyouts, are now available in this growing sector, particularly for companies with strong growth potential.
Private capital markets have become formidable competitors to public markets, aided by the volatility and illiquidity that have affected stock exchanges. As the challenges escalate for listed companies, the allure of staying or moving to a private market increases. Listed companies face additional costs, the obligation to maintain full transparency, and the risk of a stagnant share price. Furthermore, the attractive discounts on listed companies make them enticing targets for buyouts.
Two notable investments channels into the growth and profitability of private markets are Intermediate Capital—offering a range of private funding options including debt, mezzanine finance, and private equity—and Petershill Partners, a Goldman Sachs subsidiary providing capital and expertise to private capital managers.
Investment trusts have historically invested in private markets, with examples like Pantheon International, focusing on private equity assets, and Scottish Mortgage, allocating a portion of its portfolio to unquoted companies. However, lucrative returns are not guaranteed, and the increasing competition in this market introduces additional risks. Prudence is advised to prevent overexposure and thorough research is necessary to navigate the various options.
Recent trends in private capital markets show an increase in deal values, a growth in the mid-market segment, and the rise of semi-liquid funds. Impact-driven sectors such as Pharmaceuticals, Biotechnology, and HealthTech are leading the deal flow, demonstrating a focus on impact-driven investments. The private markets have shown resilience in the face of economic uncertainty, employing adaptive strategies and leveraging technology to drive value creation.
In summary, private capital markets offer strategic advantages to start-ups and scale-up companies in terms of flexibility, control, and access to resources and expertise. These features make them a viable alternative to public markets, contributing to their growing popularity among businesses seeking funding.
- For start-ups and fast-growing businesses, private capital markets provide a viable alternative to stock markets and high street banks, offering options such as debt funding, venture capital, and buyouts.
- The allure of staying or moving to a private market increases as listed companies face additional costs, the obligation to maintain full transparency, and the risk of a stagnant share price.
- Investment in private markets can be made through channels like Intermediate Capital, which offers a range of private funding options, and Petershill Partners, a subsidiary of Goldman Sachs.
- To navigate the growing competition in private capital markets, research is necessary to find the best options and prevent overexposure, especially when seeking impact-driven sectors like Pharmaceuticals, Biotechnology, and HealthTech.
