BNP Paribas and Peter Thiel-Backed Company Team Up to Sell Unicorn Shares
April 03 2019 - 9:14AM
Dow Jones News
By Justin Baer
A financial-technology firm backed by billionaire Peter Thiel
and a giant European bank are teaming up to sell shares in pre-IPO
companies, giving employees of valuable startups another chance to
cash out early.
Forge Global Inc., a five-year-old company that matches private
companies and their employees with investors, plans to raise as
much as $1 billion in the next year through the sale of a series of
structured notes linked to the shares of startups. French bank BNP
Paribas SA will offer the derivatives to both institutions and
wealthy individuals in Europe and Asia, the companies said.
Forge and BNP Paribas aim to tap demand for shares for Silicon
Valley's most promising startups before they go public. Those
investors are finding willing sellers. Companies such as
ride-hailing giant Uber Technologies Inc. are staying private
longer, delaying the potential windfall awaiting employees and
other insiders. A 2018 selloff in publicly traded tech stocks has
added a note of urgency to cash out before the cycle turns.
BNP Paribas's clients outside the U.S. have long sought to
invest more heavily in emerging Silicon Valley companies but may
not have the resources to research individual companies or access
the venture-capital funds that own them. "For them it was really
about accessing private tech as an asset class as opposed to
picking individual names," said Benjamin Kieffer, BNP Paribas's
head of equity-derivatives structuring.
Private tech stocks will invariably go through downturns, but
they will endure as a viable investment option in part because
these companies are no longer racing to go public as once were, Mr.
Kieffer said. Today's privately held companies are bigger and the
pool of available cash to fund them is much greater, he added.
The bank will select the shares included in the basket based on
a set of criteria, including minimums on disclosures, valuations
and the number of funding rounds the company has raised.
The initial structured note, which is slated to close in June,
will draw from the 300 or so private companies valued at more than
$1 billion. private companies valued above $1 billion are known in
the industry as unicorns.
Nearly $2 billion -- and the private shares of tech stalwarts
ranging from music-streaming company Spotify Technology SA to Uber
rival Lyft Inc. -- changed hands since Forge launched its exchange
in 2014. The company expects to hit $3 billion in total trading
volume by the end of this year.
Forge's backers include German insurer Munich Re and Mr. Thiel,
a venture capitalist. It raised $85 million from BNP Paribas and
other investors in its latest funding round earlier this year.
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
April 03, 2019 08:59 ET (12:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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