By Manya Saini
(Reuters) -Morgan Stanley launched a dedicated private company research page on Tuesday, according to an internal memo seen by Reuters, as investors' interest in high-growth startups rises.
Wall Street heavyweights have increasingly ventured into research coverage on privately held companies this year as some of the world's most valuable startups, including ChatGPT-parent OpenAI and Elon Musk's SpaceX, have stayed away from going public for longer than similar companies in the past.
In July, JPMorgan Chase, the largest U.S. bank by assets, began publishing research notes on prominent private companies shaping industries, and rival Citigroup followed days later with a focus on rapidly growing tech firms.
"While we have been publishing on private companies since 2017, we are now expanding our private company coverage to deliver deeper analysis, broaden our reach, and stay ahead of client demand," Morgan Stanley's Global Director of Research Katy Huberty said in the memo.
NEW FRONTIER
Privately held companies were once overlooked by Wall Street analysts because limited financial disclosure meant traditional research frameworks did not account for them, but their scale now makes them hard to ignore.
The AI boom has been central to this shift. At its current valuation of $500 billion, OpenAI would be bigger than all but the top 15 companies in the equities benchmark S&P 500 by market value.
Institutional investors are increasingly looking to private markets, where emerging companies are building products and technologies that influence long-standing industry leaders.
Morgan Stanley signed a deal in October to buy private shares platform EquityZen. Charles Schwab also agreed to buy its rival Forge Global for $660 million earlier this month.
"Private companies have long been fundamental to research, and client interest in these markets continues to grow as companies stay private for longer," Huberty said.
As of October 1, there were over 1,500 active unicorns, or companies valued at $1 billion or more, globally, according to PitchBook data. These companies have raised roughly $1 trillion in venture capital funding.
(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
