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Peter Thiel-backed firm Forge joins with BNP Paribas to sell structured notes
By Justin Baer
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 4, 2019).
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 email@example.com
(END) Dow Jones Newswires
April 04, 2019 02:47 ET (06:47 GMT)
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