KEY INSIGHTS
Liquidity innovation: "Private IPOs" and the UK's PISCES platform offer much needed liquidity in private markets.
Market shift: Traditional IPO and sale routes are tough, pushing investors and company founders towards secondary trading platforms and structured placements – though these are more evolution than revolution.
Uncertain impact: While the new UK trading platform, PISCES, promises progress and regulatory experimentation, its long-term effect on genuine market liquidity and capital-raising is still unclear.
A regular briefing for the alternative asset management industry.
It is no surprise that liquidity featured prominently on the agenda at our 4th annual Alternative Insights Summit in London yesterday. Fundraising challenges are compounded by low levels of distributions. Alternatives to continuation vehicles and NAV loans are highly sought after. In particular, we discussed "private IPOs" and the UK's new "PISCES" market – which offer supposedly novel routes for investors to find liquidity ahead of a portfolio company's full sale or IPO.
But while the headlines might suggest that these are new, Travers Smith partners Phil Bartram and Aaron Stocks suggested that the reality is more evolution than revolution.
The traditional private capital playbook – whether in private equity, venture, or infrastructure – has been to exit through an outright sale or a public listing. Today, however, those routes are difficult. Dealmakers face unpredictable public markets, uncertain valuations – and frustrated investors wanting distributions.
For companies, especially the new crop of unicorns and founder-led businesses, the narrative is different too: many want to remain private for longer, achieve liquidity and raise capital – without completely selling out.
Set against this landscape, new frameworks are emerging – at least, they are new in name.
Investors with deep pockets – especially sovereign wealth funds and pension funds – are increasingly willing to take direct positions in private companies, especially if they believe they can avoid the fees of intermediated funds. And, as companies resist the IPO route, secondary market transactions – changing the make-up of the shareholder register without "exiting" in the traditional sense – are back in fashion.
The essence of these transactions is simple: they move capital between investors without a full public float. For some, it's about releasing employee equity or giving restless limited partners a way out; for others, it's simply marking a new valuation milestone. While the headlines use the "private IPO" moniker, in practice these are often little more than structured placements, matched trades for large blocks, or mini-M&A processes – familiar tools with fresh branding.
These transaction types are already familiar in the United States, where private trades are facilitated by platforms like NASDAQ Private Markets, aided by a deep pool of institutional buyers and (importantly) an accommodating legal environment.
Even mid-market companies, sometimes ignored by this sort of innovation, are increasingly participating – sometimes with debt trading on public venues, even when equity remains private. Asset managers are noticing too; witness the evolution of listed funds like the Schroder British Opportunities Trust into vehicles for minority, unquoted holdings.
Policymakers have been watching carefully. In Britain, there are concerns about the slow IPO pipeline and declining public markets. Seeking to tackle the perceived problem of illiquidity, the UK government, the regulator (the FCA) and the London Stock Exchange have given birth to the Private Intermittent Securities and Capital Exchange System – unsurprisingly known by its acronym!
But what is PISCES?
Ostensibly, it's the official embrace of platforms to allow secondary trading in private shares – quarterly, twice yearly, or whenever the appetites of buyers and sellers align. The idea is for a regulated, multilateral trading system to catalyse liquidity, encourage price discovery, and offer a lifeline to companies not ready for, or interested in, the scrutiny of an IPO. Other platforms already exist – AssetMatch and JP Jenkins, for example – but PISCES offers a recognised, regulated wrapper, and a stamp duty advantage for good measure. (You can read our detailed explainer here.)
"Some may welcome the steady advance towards transparency and liquidity, perhaps as a stepping stone to a full IPO; others will hesitate, preferring to do bespoke deals the old-fashioned way."
In theory, PISCES could pave the way for a British market in private shares, complete with a sandbox for regulatory experimentation. But it does not allow companies to raise new capital directly – so, at best, it is a halfway house, not a rocket boost for British entrepreneurship. Still, there are sweeteners, notably the promise that buyers won't pay stamp duty on these defined trades, and the option for employers to offer liquidity via PISCES without tripping longstanding tax reliefs.
Will this catch on? The UK government certainly hopes so – it has been pushing it hard – but the jury is out, and it is fair to say that not everyone is positive. For now, PISCES feels more like evidence of political ambition (not to be sneezed at) than a burning market need. Companies will still have to contend with legal and operational costs, and wary counterparties. Some may welcome the steady advance towards transparency and liquidity, perhaps as a stepping stone to a full IPO; others will hesitate, preferring to do bespoke deals the old-fashioned way.
As discussed at our Summit, none of this is truly new. The building blocks of secondary liquidity have been on offer (under different names) for decades. When markets are strong, they drift out of favour; in tougher times, as now, they come roaring back. If there is innovation, it is in the willingness of more actors to play in this semi-public middle ground – and in regulators' readiness to help.
For now, the promise of PISCES and similar schemes will undoubtedly appeal to policymakers anxious to arrest the decline in the public markets. And while its success is not yet assured, private capital firms will look hard at the opportunities that PISCES offers – for them, their management teams, and wider employee base.
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