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The founders of hedge fund giant Coatue Management have called on large private companies to step out of the shadows and go public.
Speaking to the “BG2 Pod” podcast that aired on Friday, Thomas and Philippe Laffont said that large companies should be more transparent.
“I happen to believe that all these companies should go public,” said Thomas Laffont.
He framed the issue as partly ideological, saying there’s a “democratic element” to going public as “wealth creation belongs to the public market.”
His comments counterpoint a dominant trend in recent years: Companies, fueled by billions in private equity, venture capital, and private credit, are staying private for far longer.
While private companies are subject to less regulatory oversight, going public can benefit them beyond access to public money.
“It could be a brand-defining event for a company, for your product, for your employees, giving the level of transparency to your customers that you’re well funded, that you have a fortress balance sheet, you can withstand the regulatory scrutiny that comes,” he said.
Philippe Laffont agreed, even as he acknowledged the imperfections of public-market mechanics like mark-to-market accounting.
He said that the balance between public and private markets is healthy, but only up to a point.
“I just think that these super, super large private companies, if you’re not willing to submit yourself to the sunshine and ray of light of the public markets, you’re going to get it through a regulatory agency,” he said.
Not all investors are coaxing private companies into an initial public offering or other public market debut.
Peter Singlehurst, the head of private companies at British investment management firm Baillie Gifford, said on a March podcast that companies can build better businesses by staying private for longer.
“You can have people owning your shares for all sorts of reasons that are misaligned with what you’re trying to do as a company,” Singlehurst said. Like Coatue, Baillie Gifford has a variety of public and private investments.
“All your competitors get to know pretty much everything about your business because you have to tell your shareholders pretty much everything about your business,” he said.
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