Fidelity Investments is looking into more privately owned tech companies to get a leg up on investments as large, successful companies are staying private longer, according to a top investor with Fidelity.
"There are companies that are exciting, innovative, and of a size that are appropriate for our investment but are staying public," said Andrew Boyd, head of global equity capital markets for Fidelity. "We're finding a lot of attractive investments in private companies, particularly in tech."
Fidelity led a $1.2 billion investment in Uber Technologies last summer, and took part in a $1 billion investment in SpaceX announced last week. Fidelity has also invested in Pinterest, Airbnb and several other private tech companies, according to the company's mutual fund data.
"We come across private companies that we think are very interesting and can be a great investment for our shareholders," Boyd said.
Still, Boyd and Fidelity are not working off of any master plan to invest in more private companies.
"It's not that we are coming down the evolutionary scale or the growth scale of companies. These are companies that we would have invested in had they existed 10 years ago, but they would have gone public 10 years ago," Boyd said.
He said Fidelity has more investments in private companies than 10 years ago, but they are still a very small percentage of Fidelity's investment portfolio.
Matthew Wong, a research analyst at venture capital tracking firm CB Insights, said Fidelity is not the only mutual fund company investing more in private companies.
"A lot of the big funding that went to venture funding in 2014 was not from venture capital, we're definitely seeing that trend more now," Wong said.
According to CB Insights data, mutual fund companies Fidelity, BlackRock, T. Rowe Price and Janus made 29 investments in private tech companies in 2014, after making only 16 in 2013 and nine in 2012.
He said the stock market success of companies such as Facebook has encouraged mutual funds.
"Mutual funds and other firms are seeing that and thinking that a better strategy might be instead of investing in these companies when they're public, get in pre-IPO," Wong said.
Boyd said Fidelity is also able to prepare the companies for the expectations that come with being publicly traded and subject to analysts' scrutiny.
"We treat them like a public company, and they need to answer questions from our analysts, and they're probing questions, and this is what they need to get used to for earnings calls," Boyd said.
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