A regular briefing for the alternative asset management industry.
It is no surprise that liquidity featured prominently on the agenda at our 4th annual Alternative Insights Summit in London yesterday. Fundraising challenges are compounded by low levels of distributions. Alternatives to continuation vehicles and NAV loans are highly sought after. In particular, we discussed "private IPOs” and the UK's new “PISCES” market – which offer supposedly novel routes for investors to find liquidity ahead of a portfolio company’s full sale or IPO.
But while the headlines might suggest that these are new, Travers Smith partners Phil Bartram and Aaron Stocks suggested that the reality is more evolution than revolution.
The traditional private capital playbook – whether in private equity, venture, or infrastructure – has been to exit through an outright sale or a public listing. Today, however, those routes are difficult. Dealmakers face unpredictable public markets, uncertain valuations – and frustrated investors wanting distributions.
For companies, especially the new crop of unicorns and founder-led businesses, the narrative is different too: many want to remain private for longer, achieve liquidity and raise capital – without completely selling out.
Set against this landscape, new frameworks are emerging – at least, they are new in name.
Investors with deep pockets – especially sovereign wealth funds and pension funds – are increasingly willing to take direct positions in private companies, especially if they believe they can avoid the fees of intermediated funds. And, as companies resist the IPO route, secondary market transactions – changing the make-up of the shareholder register without “exiting” in the traditional sense – are back in fashion.
The essence of these transactions is simple: they move capital between investors without a full public float. For some, it’s about releasing employee equity or giving restless limited partners a way out; for others, it’s simply marking a new valuation milestone. While the headlines use the “private IPO” moniker, in practice these are often little more than structured placements, matched trades for large blocks, or mini-M&A processes – familiar tools with fresh branding.
These transaction types are already familiar in the United States, where private trades are facilitated by platforms like NASDAQ Private Markets, aided by a deep pool of institutional buyers and (importantly) an accommodating legal environment.
Even mid-market companies, sometimes ignored by this sort of innovation, are increasingly participating – sometimes with debt trading on public venues, even when equity remains private. Asset managers are noticing too; witness the evolution of listed funds like the Schroder British Opportunities Trust into vehicles for minority, unquoted holdings.
Policymakers have been watching carefully. In Britain, there are concerns about the slow IPO pipeline and declining public markets. Seeking to tackle the perceived problem of illiquidity, the UK government, the regulator (the FCA) and the London Stock Exchange have given birth to the Private Intermittent Securities and Capital Exchange System – unsurprisingly known by its acronym!
But what is PISCES?
Ostensibly, it’s the official embrace of platforms to allow secondary trading in private shares – quarterly, twice yearly, or whenever the appetites of buyers and sellers align. The idea is for a regulated, multilateral trading system to catalyse liquidity, encourage price discovery, and offer a lifeline to companies not ready for, or interested in, the scrutiny of an IPO. Other platforms already exist – AssetMatch and JP Jenkins, for example – but PISCES offers a recognised, regulated wrapper, and a stamp duty advantage for good measure. (You can read our detailed explainer here.)
