Globacap has been recognised as one of the UK’s fastest growing tech firms by Deloitte, with revenue growth of almost 600% since 2019. Globacap ranked…
Published on: October 27, 2022
‘Saturation point’ closing in on stock exchanges, driving bold strategic choices
Globacap has today released its latest report uncovering an impending ‘saturation point’ facing stock exchanges globally, forcing them to evolve their business models faster and more fundamentally than ever before.
Over the last twenty years, key exchanges in developed markets globally have seen a 40% decline in listings (the U.S. has fallen by 50%, the U.K. by 60%, and Europe by 20%). And it is getting worse, with 2022 on track to be the worst year for US IPOs for more than 30 years, as stated by Renaissance Capital.
This is a stark illustration of the challenge facing all exchange groups, highlighting the saturation occurring in public markets, coining the term ‘saturation point’.
Myles Milston, Co-Founder and CEO at Globacap, comments: “With a significant decline in listings, this saturation point is clear. Private capital AUM is forecast to double in the next five years, and at the rate innovation is progressing, it is unsurprising that exchange groups are considering the options open to them to remain relevant. The data clearly shows the line between public and private markets blurring.”
In fact, private markets AUM has increased by $4 trillion over the last ten years. This represents an increase of 170%, in contrast to a mere 100% increase in public markets capitalization, as stated by McKinsey in its Private Markets Annual Review.
With in-depth case studies and extensive data analysis, the report discusses the causes and consequences of the changing relationship between public and private markets, highlighting private capital being a genuine competitor to public markets, while analysing exchange responses including diversification, horizontal and vertical integration, foreign and dual lists, and other strategies.
Milston adds, “For some security types, private markets are now entirely digital and frictionless, resulting in easier liquidity facilitation and therefore lowering investment risk, enabling asset managers to allocate a larger portion of their portfolio to private markets.”
“However, an opportunity is still available to exchanges and public markets. This report highlights the opportunities open to exchanges willing to evolve their business model.”