Trading platform could put price on Ikea and Bosch

mardi 28 juin 2011 14h23

By Martin de Sa'Pinto and Sam Cage

ZURICH/BUCHAREST (Reuters) - A Swiss trading platform could help put a price on private companies like furniture retailer Ikea or automotive supplier Bosch by matching potential buyers and sellers of their shares via auctions.

Valuing private companies can be difficult. Transactions are usually organized through intermediaries, with no formal market mechanism to establish prices, unlike publicly traded companies, where bids and offers are visible to buyers and sellers.

The service, called FirstPEX, is currently only available to Swiss qualified investors -- private investors with financial assets of at least 2 million Swiss francs or institutions like pension funds -- but plans to open to other users in Europe.

"If you look at big private companies like Ikea IKEA.UL or Bosch (BOSH.NS: Cotation, Profil, Recherche), there are people who want to invest and some owners who want to exit, but they cannot do so without going through an intermediary," founder Patrick Gruhn told Reuters.

"FirstPex is the first secondary market in Europe where buyers and sellers trade stakes in private companies based anywhere outside the United States, and it will bring better price transparency and liquidity to a notoriously illiquid markets," Gruhn said.

FirstPEX could boost liquidity in the market for private company ownership, which could in turn increase valuations, said Gruhn.

Potential sellers and buyers transact through a traditional auction process, eliminating intermediaries just as Google's (GOOG.O: Cotation, Profil, Recherche) initial public offering cut out the role of investment banking book builders.

"But the process is not terminated when the best offer has been made, the seller has to accept the offer," Gruhn said.   Suite...