10.18.2011
By Terry Flanagan

Liquidnet Adds Trading of Private Companies

Dark pool operator Liquidnet becomes the latest platform for institutions to trade shares of privately-held companies.

Liquidnet has announced that it will begin offering a global institutional platform for the trading of private company shares.

“It’s a natural extension of our block trading business,” said Steve Greenblatt, head of Liquidnet’s Equity Capital Markets group. “We can leverage the power of the largest asset managers in the world. It’s an opportunity for asset managers in what is essentially a new asset class.”

The new Private Shares group will be a part of Greenblatt’s Equity Capital Markets group.

The company has appointed industry veteran Lou Kerner to head up the private company shares trading team. Prior to joining Liquidnet, Kerner served as vice president of equity research at Wedbush Securities, covering the social media and e-commerce sectors. He has also been a part of the entrepreneurial efforts behind ventures such as Bolt Media and The tv. Corp. Kerner will be reporting to Greenblatt.

The trading of a private company’s shares is one that will benefit new investors as well as stakeholders in the privately held company.

“If you’re a private company you want as much liquidity for your shares as possible, both in the primary and secondary market,” said Kerner. “You also want investors who will be long term holders, and who will be in the position to support an additional round of funding or an IPO. The best folks to have on your capitalization total are institutional investors.”

Initially, the company will focus on the trading of “second internet” companies, or companies which have emerged out of the transformational social media and mobile advancements in recent years. These companies include Facebook, Twitter and Groupon.

“In the beginning, our focus is on second internet companies,” said Kerner. “These include social media companies and other new platforms. Over time, that will expand into a broader range of private companies. The most active now is Facebook, which is trading today at an $80 billion market capitalization.”

Liquidnet projects a 50 percent growth in the private share asset class this year to about $7 billion.

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