JPMorgan Chase (JPM) Forms Team To Trade Shares Of Private Companies Nearing IPO Process

By Amit Chowdhry ● September 11, 2020
  • JPMorgan Chase & Co. (NYSE: JPM) has launched a new team for trading shares of companies that are close to having highly anticipated initial public offerings

JPMorgan Chase & Co. (NYSE: JPM) has launched a new team for trading shares of companies that are close to having highly anticipated initial public offerings (IPOs) such as Airbnb, Robinhood, and SpaceX, according to CNBC. JPMorgan’s global co-head of cash equities trading Chris Berthe said that the new team will be connecting buyers and sellers for private company shares. To lead the team, Berthe also brought on Andrew Tuthill, who was a senior VP from trading platform Forge Global.

“Many of our clients are looking at this as the next frontier,” said Berthe via CNBC. “What do you do when markets get so high? You’re going to keep looking at value down the chain, and maybe that means getting involved in companies at earlier stages of their lifecycle.”

Along with receiving requests from investors to gain access to “unicorn” companies, JPMorgan said that it received more demand from company founders, venture capitalists, and wealth management clients to sell their stakes as well.

Currently, the market for trading stock in private companies is run by services like Forge, SharesPost, and EquityZen. But JPMorgan is believed to be the first major Wall Street bank that is setting up a team focused on trading private shares. Goldman Sachs and Morgan Stanley also have been facilitating trades in private companies, but sources say that those major financial firms do not have dedicated teams built around the service. After trades are negotiated in private companies, JPMorgan has to transfer legal ownership of contracts and have to receive clearance from the startup. This process could take weeks.

“The shares are not listed, so whenever an investor buys into those companies, there’s different share classes,” added Berthe.

Many companies also have a “right-of-first-refusal clause and they can block a transaction between a buyer and a seller for various reasons.” The reasons often include the price or concerns with the buyer.

Tuthill is responsible for connecting buyers and sellers across JPMorgan like investment banking clients and trading teams.