Schwab muscles its way into private markets, buying Forge Global for a hefty premium

Charles Schwab is acquiring Forge Global for $660 million, paying a 72.3% premium to expand its private-market offerings for wealthy clients. This move follows Morgan Stanley's recent acquisition of EquityZen, as both firms aim to tap into the growing interest in alternative investments. Schwab's deal will enhance access to private companies for qualified investors, despite concerns over higher fees and lack of transparency. The private markets are projected to grow significantly, with individual holdings expected to rise to $13 trillion by 2032. Schwab advises investors to seek professional advice before investing in these illiquid markets.

By Steve Gelsi An expected surge in private-market exposure by individual investors is motivating Schwab to pay $660 million for Forge Global, a specialist in trading shares of non-public companies Charles Schwab said it's buying private-markets platform Forge Global just a week after Morgan Stanley said it would buy EquityZen, as the two rival firms expand their offerings into the growing realm of alternative investments. Charles Schwab Corp. is moving to offer its millionaire clients access to potential windfalls generated by private companies before they go public, as investor interest for alternative investments - those outside of traditional stocks and bonds - continues to grow. Schwab (SCHW) said Thursday it is buying Forge Global Holdings Inc. in a deal valued at $660 million. It is paying $45 a share for Forge's outstanding shares, which represents a 72.3% premium over Wednesday's closing price of $26.12. Schwab's deal, announced Thursday, to purchase the publicly held San Francisco-based company (FRGE), which operates a private-market stock-trading platform for "qualified investors," comes about a week after Morgan Stanley (MS) said it was buying privately held EquityZen, a private-shares trading platform. Qualified investors are defined by regulators as clients that meet certain wealth thresholds, including $1 million in net household worth outside the value of their primary residence. Private markets are a realm that venture capital and private-equity firms typically dominate, along with institutional investors and corporate-backed investors - essentially everyone except retail investors. They can offer big returns if the companies do well, before individual investors have a chance to invest. Opening up wider access to this world is often described as democratizing private markets, though some argue that it's not a great place for individual investors due to higher fees, compared with more widely held products such as exchange-traded funds or stocks, and since private companies aren't required to make public disclosures about their businesses. Also read: 'I am highly alarmed by the proposed changes to retirement accounts': I don't want bitcoin or private equity in my 401(k). What can I do? Nevertheless, it's a rapidly growing world as more private-wealth capital is allocated to alternative asset classes. Holdings in this bucket by individuals are expected to increase to $13 trillion by 2032 from $4 trillion in 2025, according to estimates provided by Schwab. It's still not clear if some of that increase could come from 401(k) retirement money - a move that has drawn support from the Trump administration but has drawn criticism from industry experts. Even Schwab cautioned that private markets are "highly illiquid," and recommended investors do their homework, including seeking independent professional advice, before committing money. Also read: Opinion: Private equity and private credit may fit your 401(k) retirement plan - but here's what you need to know. Forge's stock soared 67.7% in recent morning trading, to put it on track for its highest close since Jan. 4, 2024. Prior to Thursday's rally, the stock had already run up more than 25% since Morgan Stanley said before the Oct. 29 opening bell that it was buying EquityZen. Schwab said its acquisition of Forge Global will speed its effort to "deliver fully integrated private markets capabilities to retail and advisor clients." For its part, Morgan Stanley has been building up its Morgan Stanley at Work program, which offers company employees among the bank's roster of business clients its wealth-management services, along with the ability to sell their privately held stock. New York-based EquityZen, which was founded in 2013, operates the private shares marketplace with "streamlined operational processing" that Morgan Stanley plans to grow. At last check, EquityZen had more than 800,000 registered users and has handled transactions with more than 450 private companies, the companies said. Morgan Stanley said its 20 million clients have signaled rising interest in private-markets exposure. EquityZen Chief Executive Atish Davda said the deal will allow it to scale up its mission to bring "private markets to the public." Morgan Stanley's stock has rallied 31.4% in 2025, while Schwab's stock has climbed 27.7%. The S&P 500 SPX has gained 15.2% this year. -Steve Gelsi This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 11-06-25 1031ET