The Merging of Public and Private Equity Markets

Assessing the Impact of Fintech and the Fourth Industrial Revolution on Equity Capital Markets
by John Dwyer, May 10, 2016
Industry Trends
Global

Abstract

Skillsets which were traditionally the preserve of corporate finance departments or equity capital markets are increasingly becoming democratized, while blockchain / distributed ledger technology provides further opportunity to streamline processes and thus further blur the distinction between public and private equity markets. Against this backdrop this report explores the implications for one of investment banking’s most closely guarded areas: equity capital markets.

The Merging of Public and Private Equity Markets

Private markets have grown substantially in recent years due to:

  • Inflow of capital from family offices, institutional funds, venture capital, and corporate venture capital.
  • The shortening in lifecycles of technology companies between startup, ramp-up, and maturity.
  • Seamless P2P connectivity between investors and issuers.

This is all coinciding with the new technology revolution termed the Fourth Industrial Revolution as breakthroughs emerge from fields such as artificial intelligence, robotics, IoT, and many other areas.

“These breakthroughs offer enormous potential returns to investors and the increased size and efficiency of private markets mean companies can delay the need to come to the public markets via IPO,” says John Dwyer, senior analyst and author of the report.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Baseline Understanding of Key Fintech Trends

1

 

The Fourth Industrial Revolution

1

 

Key Financing Trends

2

 

Short Path to a Billion

2

 

Implications for Incumbent Financial Institutions

2

 

High Risk, Exponential Return

2

Traditional Approaches to IPOs and Private Markets Transactions

3

 

Key Observations of IPO Transactions

3

 

Initial Public Offering Transactions

4

 

Private Market Transactions

5

 

Key Observations of Private Equity Markets Transactions

5

Private Market Trends

8

 

Private Vs. Public Markets

8

 

Equity Financing at Different Stages

8

 

Selected Fintech Trends

9

 

Key Financing Trends

10

Implications for Equity Capital Markets

11

 

The Fourth Industrial Revolution

11

 

Super-Linear Growth

11

 

Moore & More

12

 

Party Like It’s 1999

14

 

Concluding Comments

16

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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