JPMorgan Chase announced the launch of equity research on private companies, marking its first coverage of this sector. The initial report focuses on OpenAI, demonstrating the increasing dominance of private firms in the market. Companies are opting to remain private longer, with median years before going public rising significantly. The surge in funding due to private equity and venture capital is a major factor behind this trend. The memo cited the increase in unicorns and emphasized the importance of understanding private markets for evaluating public companies.
"This new offering aims to expand our coverage and research into private companies, where we continue to see growing influence and interest from our clients," Hussein Malik, the bank's head of global research, said in an internal memo.
"Importantly, private companies are becoming increasingly relevant to various industries, especially in the new economy space," the memo said.
"With approximately 1,200 private companies in the US achieving unicorn status between 2020 and 2023-a notable increase from around 330 between 2016 and 2019-their growing influence on the economy and markets is clear," Malik said in a separate memo to clients.
"Understanding their impact is and will remain crucial for properly assessing publicly traded companies," Malik stated.
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