MSCI has launched two indexes to help provide transparency on the performance of private assets globally. The MSCI All Country Venture Backed Private Company indexes calculate the performance of venture-backed private company shares based on secondary market transaction data.
Private companies that receive funding from venture capital investors often operate in high-growth, technology-driven industries. While such companies do not trade on centralised exchanges, over-the-counter secondary markets play a key role in providing liquidity and facilitating price discovery.
Recent trends have grown the asset class and expanded the availability of market-based pricing data, enabling MSCI to develop the MSCI All Country Venture-Backed Private Company Top 20 Equal Weighted Index and the MSCI All Country Venture-Backed Private Company Top 20 Equal Weighted Vintage Index.
These two new index solutions are the first offered by MSCI that seek to measure the performance of private markets at the company level.
“With growing investor interest in private markets, high-quality data and consistent, independent performance measurement of private companies and funds alike are crucial for the entire investment ecosystem,” said Jana Haines (pictured), head of index at MSCI.
Venture-backed companies are staying private for longer periods, with the number of publicly listed companies in the US dropping by nearly half between 1996 and 2022, World Bank data cited by MSCI shows.
The number of private venture-backed companies with valuations of more than $1bn has also grown tenfold in the last decade, according to CB Insights. Large venture-backed private companies with secondary market activity may be eligible for inclusion in the indexes.
In constructing and calculating the indexes, MSCI uses secondary market data sourced from specialist firms Caplight and PM Insights. Both firms operate broker contributor networks to collect and analyze data across a broad cross-section of market participants. Using this secondary market data, MSCI applies a research-driven, rules-based methodology focused on trading activity, size and other parameters.
In addition to these new offerings, MSCI also calculates the MSCI Private Capital Indexes. Launched in July 2024, they calculate closed-end fund-level performance from a broad universe of private capital funds with over $11tr in capitalisation.
Last week, MSCI also announced its partnership with Moody’s Corporation to jointly create a way to provide independent risk assessments for private credit investments at scale, promoting transparency and strengthening investors’ private credit asset allocation strategies.
