The term “Private Markets” refers to investments in debt or equity instruments that are not traded on public exchanges. The debt and equity components of private markets are individually referred to as Private Debt and Private Equity.
Publicly accessible markets (both primary and secondary) exist in numerous countries for investments that qualify and register as public securities with the regulatory oversight body in each country. In the U.S., for example, securities offered in the public markets must be registered with the Securities and Exchange Commission (SEC).
Only a relatively small percentage of companies tend to be publicly held, so private markets usually consist of many more potential companies, though most are smaller than their public counterparts. According to Forbes magazine, less than 1% of U.S. corporations with employees are publicly traded.1
Private market investments are subject to local regulatory requirements, which often restrict buyers of such securities to high-net-worth individuals or institutional investors.
Private markets do not have formal, regulated exchanges and are instead transacted directly between interested parties. To achieve diversification, most private equity and debt investors purchase shares in funds that invest in a portfolio of private companies. Funds will generally contain either debt or equity positions so that investors can choose which of the two types serves them best.
*The minimums mentioned are Moonfare-specific and should not be taken as accurate for outside of Moonfare.
Private market investing involves equity and debt financings of private companies. Investors seek private market investments either directly or via funds as part of an alternative investment strategy that can diversify other public market investments.
Private market investments provide access to innovative, high-potential companies in their early stages of growth, thus offering investors a set of investment options that can complement public market assets and provide opportunities for higher long-term returns.
Institutional investors such as pension funds, endowments, insurance companies, and family offices have long been advocates of private market investing. Today, upwards of 25% or more of institutional assets are held in private market investments.2
Please note that the benefits and challenges explained here are not a complete list and are not specific to any individual.
Private markets have traditionally been difficult for individual investors to access, catering instead to institutional investors by imposing high minimum investments. Through its feeder fund program and online platform, however, Moonfare provides access to private market funds for qualifying investors with minimums as low as €50,000.
Moonfare also offers a secondary market opportunity through its online platform that provides an opportunity for enhanced liquidity twice each year.
This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Your capital is at risk.