Online marketplace Forge Global plans $2bn Spac deal

Forge Global, an online marketplace for buying and selling shares of private firms, plans to go public by merging with a special-purpose acquisition company.

The deal with Motive Capital values the resulting company at $2bn, the companies said. If completed, the transaction would make Forge the first dedicated trading platform for private shares to become a public company.

Trading in private shares has heated up in recent years as startups have waited longer to hold initial public offerings. Such trading allows employees to cash out of their shares and lets some investors get early access to potentially fast-growing technology startups.

Most individual investors aren’t able to buy shares on Forge or other trading platforms for pre-IPO stock. Under Securities and Exchange Commission rules, such deals are typically limited to accredited investors — people who meet certain wealth criteria, such as having a net worth of more than $1m, excluding one’s home, or an annual income above $200,000.

“The public markets need an investment that is a proxy for the private markets,” Forge Chief Executive Kelly Rodriques said in an interview. “That’s Forge.”

San Francisco-based Forge said it has nearly 400,000 registered users, including more than 123,000 accredited investors. The rest of the users are mostly from the private companies selling shares and professional investment firms.

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Forge was called Equidate before rebranding in 2019. It has handled over $10bn worth of trades in more than 400 companies since it was founded in 2014, according to the company. It has brokered trades in shares of companies such as Lyft, Palantir Technologies and Robinhood Markets before they went public. Forge’s market is registered with the SEC as an alternative trading system, a more lightly regulated type of trading platform than a full-fledged stock exchange.

A number of other companies seek to bring together buyers and sellers of private shares. They include Carta, ClearList, EquityZen, Nasdaq Private Market and Zanbato. Last year, Forge acquired an older rival, SharesPost.

Many pre-IPO trading platforms don’t disclose data on their volumes or their number of users, making them difficult to compare. Nasdaq Private Market — Nasdaq’s trading platform for private shares — says it has executed over $30bn of trades in total. But unlike Forge, Nasdaq Private Market has mostly focused to date on tender offers, one-off deals in which a private company or big investor seeks to buy shares within a specified period.

In July, Nasdaq said it was spinning out Nasdaq Private Market into a stand-alone company that would receive investments from a group of banks that include Goldman Sachs Group and Morgan Stanley.

Forge’s deal with Motive Capital is expected to close late this year or in early 2022, subject to approval by shareholders and regulators, the companies said. In a Spac deal, a private firm merges with a publicly-traded shell company and gets its spot on a stock exchange.

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Motive Capital is sponsored by Motive Partners, a private equity firm specialising in financial technology. The Spac’s CEO is Blythe Masters, a former senior executive with JPMorgan Chase. She is set to join Forge’s board after the deal.

Forge expects to raise more than $500m from the deal, including cash held by the Spac and a $120m private investment in public equity, or PIPE. Contributors to the PIPE include ION Investment Group, a Dublin-based financial software and data company; Motive Partners; and Temasek Holdings, Singapore’s state investment firm.

Temasek was already an investor in Forge. Forge previously received investments from German exchange operator Deutsche Börse AG and Wells Fargo.

Write to Alexander Osipovich at [email protected]

This article was published by Dow Jones Newswires

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