Munafo contrasts that to the 1990s when growth-oriented innovative businesses would go public at a much smaller revenue level within a few years of inception. Now, the high growth technology and innovation-driven companies that are focused on disrupting the markets can stay private for up to 20 years because they don’t want to deal with the complications of going public..
“There’s been a massive amount of capital inflow into the private market, so these companies can finance themselves for much longer privately than we’ve ever seen before,” he said. “But, when you have companies growing larger with larger market caps in the private market, that means there’s less alpha generation available in the public market because the growth and capital appreciation is happening privately.
“It creates this massive disconnect where your typical advisors and their clients don’t have access to private market opportunities, so they’re missing out on substantial alpha generation.”
Liberty’s Private Shares Fund provides funds so the more than 90 primarily American companies that it contains have more liquidity and a wider group of investors have more access to them.
“Because the private markets are structurally illiquid, we can often take advantage of the pricing efficiencies and get really interesting entry points for our clients,” said Munafo. He added that provides these unique alternative strategies for more investors when they were previously only accessible to institutional-grade or highly accredited high net worth clients.
