Private Capital Markets

The information above refers to public capital markets, which receive more media coverage and attention. Publicly-traded securities can be traded to anyone, and there is full disclosure on a public company’s operations. However, there is also a large private market where securities are held privately.

There is less attention and information on private companies, making it difficult to invest in them, especially for smaller investors. In the private markets, there is less liquidity, meaning that it is more difficult to buy and sell securities. It leads to longer time horizons for investors; in public markets, you can sell a security in a matter of seconds, but in the private markets, it can take much longer to find a buyer.

Investors are compensated for the lack of liquidity and lack of information. There are usually much greater returns from private capital markets. From the company’s perspective, they can raise capital without the scrutiny and regulation that comes with being publicly listed.