(Bloomberg) — JPMorgan Chase & Co. is expanding research coverage to private companies in the Wall Street bank’s latest effort to capitalize on the rapidly growing field.
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The coverage will begin with sectors where private companies play a bigger role in shaping industry dynamics and innovations, such as AI and software, according to a person familiar with the matter. In its first move, the bank launched coverage on OpenAI on Friday.
Unlike traditional equity research on public firms, the new offering won’t include ratings, price targets or estimates on private companies, Hussein Malik, JPMorgan’s head of global research, said in an internal memo seen by Bloomberg. The goal is to provide investor clients with structured information and tracking, he said.
“Private companies are increasingly pivotal in shaping the growth and outlook of industries,” Malik said in an external note to clients. “Understanding their impact is and will remain crucial for both public and private market investors to make informed investment decisions.”
Professional investors have been increasingly turning to private firms, which are drawing an ever-larger share of capital. Elon Musk’s SpaceX hit a valuation of $350 billion last year, a number that would place it among the 25 largest companies in the S&P 500. At least three of Bytedance Ltd.’s major investors have marked up the TikTok-owner’s valuation to more than $400 billion, Bloomberg reported in February.
Nearly 1,500 startups across the world have a valuation of $1 billion or more, according to data by PitchBook. These firms typically fall through the cracks of Wall Street analysts due to limited financial information and a focus on public markets, though several banks are ramping up their coverage.
For instance, UBS Group AG started private company research in mid-2022, and its analysts have published profiles on over 1,300 firms across sectors, according to a spokesperson for the bank.
“I think the convergence of public-private is really important for the investment community,” Marta Norton, chief investment strategist at Empower, said in an interview with Bloomberg TV. “For us to really understand the dynamics of the public market we have to have a better understanding of the private market.”
