Opinion Source Information:
From this article:
John Jacobs, executive vice-president of Nasdaq, denies that market activity is moving away from the public domain.
“Capital formation has just become more targeted. The 144A market is simply a way to specifically target an institutional investor base that such issuers want at the moment.”
Nasdaq’s Mr Jacobs also denies that the private market takes anything away from the public market. He argues instead that the growth in private placements simply represents a shift in how companies raise capital.
“Companies are just making greater use of a facility that already existed,” he says.
He maintains that the private placement market is a transitional one, and that a private market issue is generally a prelude to a public market listing.
“Increasingly, companies are using the 144A market to specifically tap the institutional market before they transition to the retail market,” he says. “The development of the private placement market has added another stage into the funding cycle, which you could see as three distinct stages: the first comes at the earliest stages of a company’s development, when they seek venture capital or angel funding; the second stage sees them tap the professional institutional market; finally, companies raise capital in the broader retail market.”