Republic Europe, formerly Seedrs, has partnered with the London Stock Exchange to provide access to an investment opportunity through the Private Intermittent Securities and Capital Exchange System (PISCES). The PISCES initiative is relatively new and part of the UK’s push to facilitate private capital formation and trading.
The move by Republic Europe follows a similar collaboration with competitor Crowdcube, which took place earlier this year.
In a blog post, Republic stated that “while this was the first step, it represents a broader shift in how private market opportunities can be accessed.”
The offering was for Tradable Private Equity (TPE) via a structure called a TPEIC (Tradable Private Equity Investment Company), representing shares in Oxford Science Enterprises (OSE).
The partnership between LSE and Republic aims to facilitate liquidity for private-company investors and employees, allowing them to trade shares in a regulated environment without the company going public. Investors registered on the Republic Europe platform will gain access to an asset class typically only available to professional and institutional investors. While OSE is the first PISCES offering, more are expected to follow.
Other investment platforms are partnering with LSE and the PISCES platform, like Prosper, which aims to serve more affluent investors.
PISCES marketplaces remain under the watch of the UK Financial Conduct Authority (FCA) and its Financial Markets Infrastructure (FMI) regulatory sandbox. Currently, there is a 5-year observational period during which the project is under review and may be adjusted.
Overall, the PISCES initiative is part of a broader trend in which private securities are becoming more like public securities. Technology facilitates the trading or transfer of assets, supporting liquidity and capital formation for private firms. The advent of tokenization should further streamline the issuance and secondary transfers processes.
While these securities may hold higher risk than publicly traded shares, the fact that promising private firms strive to remain private for as long as possible, due to the cost and excessive regulation, means that value creation happens before a firm goes public – if ever. It also means that smaller investors may be cut out of the capital gains opportunities for firms experiencing rapid growth.
In the US, a similar phenomenon is underway, and the current leadership at the Securities and Exchange Commission wants to improve both private and public marketplaces.
