MARKETS

The Fuel Powering Corporate America: $2.4 Trillion in Private Fundraising

The boom is transforming how companies grow, concentrating investing in fewer hands and raising concerns about oversight

By Jean Eaglesham and Coulter Jones

http://twitter.com/jeaneaglesham
Jean.Eaglesham@wsj.com

http://twitter.com/coulterjones
coulter.jones@wsj.com

April 2, 2018 11:34 a.m. ET

When the messaging app Telegram set out to raise billions of dollars this year for a project to launch a cryptocurrency, it shunned the stock market and instead invited a select group of firms to invest in its virtual coins.

These investors would be backing a project yet to be built. Little was known about the private company’s ownership or finances. Even so, 81 investors stepped forward to pour in $850 million, with other financing rounds still to come.

It was a mark of the dramatic rise of private capital markets, which have leapfrogged public markets to become the most popular way for companies to raise money in the U.S., a phenomenon that in some ways is changing the very way companies run and operate. ... Private markets have “reshaped the financial landscape,” said Jason Thomas, director of research at private-equity firm Carlyle Group LP. “The growth of private capital is across the economy.”

With little information disclosed about money raised privately, including the identity of investors, it is difficult to get a clear picture of what’s happening in these markets. An analysis by The Wall Street Journal found they have more than doubled in size over the past decade, surpassing the growth of public stocks and bonds available to all investors.
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—Miriam Gottfried and Maureen Farrell contributed to this article.

Write to Jean Eaglesham at jean.eaglesham@wsj.com and Coulter Jones at Coulter.Jones@wsj.com