One of Wall Street’s most exclusive investment products is
inching toward the mainstream.
Private
equity funds — vast pools of
capital that buy and sell entire companies — may become more accessible to smaller
investors under a plan being contemplated by the company that runs the Nasdaq stock exchange, a person briefed on
the matter said on Friday. The plan, still in its preliminary stages, envisions
a market where investors in private equity funds can sell their stakes to
individuals whose net worth falls far below the usual threshold for such
investments.
It
is uncertain whether the new market will pass muster with regulators. Any
effort to sell stakes in private equity funds to smaller investors raises a
number of thorny legal questions, private equity lawyers said. The Nasdaq OMX
Group is aware that the Securities and Exchange Commission may not approve the plan, and the
relevant paperwork has not yet been filed, the person briefed on the matter
said.
Whatever the outcome, the plan points to a desire among some of
the giants of private equity — like Kohlberg
Kravis Roberts, the Blackstone
Group and the Carlyle Group — to allow smaller investors into
their funds.
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