Citi Wants to Make Private-Company Shares Easier to Sell—Without an IPO

Why It Matters

The service creates a scalable liquidity channel for private‑company stakeholders while allowing founders to keep ownership structures simple, potentially reshaping secondary markets for venture‑backed firms.

Key Takeaways

• Citi's platform issues bank‑backed depositary receipts for private shares.
• Receipts grant economic exposure but no voting rights to investors.
• First deal executed with blockchain firm Kaleido.
• Citi holds underlying shares, simplifying cap table for founders.
• Wealthy clients can buy receipts via SIX’s digital infrastructure.

Pulse Analysis

Private‑company employees and early investors have long faced a liquidity gap, often waiting years for an IPO or a private‑company buyout to cash out. Traditional secondary markets are fragmented, costly, and can dilute founder control. Citi’s new platform addresses this by bundling private shares into digital depositary receipts, a model familiar from public markets but adapted for private equity. By acting as the nominee shareholder, Citi centralizes ownership on the cap table, allowing founders to approve buyers and set transfer rules without the administrative burden of multiple new shareholders.

The mechanics hinge on SIX’s digital settlement network, which provides a secure, real‑time infrastructure for issuing and trading the receipts. Investors purchase the receipts, gaining exposure to the underlying share price movements while forfeiting voting rights—a trade‑off that satisfies both liquidity seekers and founders who wish to retain decision‑making authority. Because the receipts are bank‑issued securities, they fall under established regulatory frameworks, offering a level of investor protection and transparency that many ad‑hoc private‑sale platforms lack. This structure also enables wealth‑management clients and institutional investors to allocate capital to high‑growth private firms with a familiar, tradable instrument.

The broader market impact could be significant. If adopted widely, such receipt‑based trading could become a de‑facto secondary market, reducing reliance on costly private‑placement rounds and potentially lowering the discount on private‑company valuations. It may also prompt other banks and fintechs to develop competing solutions, intensifying competition for private‑company liquidity services. Regulators will likely scrutinize the model to ensure it does not circumvent securities laws, but Citi’s partnership with SIX and its banking pedigree provide a solid compliance foundation. As venture capital continues to fuel private‑company growth, platforms like Citi’s could become essential tools for both founders seeking control and investors chasing returns.