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Nasdaq Inc. Shares Rise on Plan to Spin Out Private Market

Nasdaq's new entity, where private shares trade, includes investors like Goldman Sachs, Morgan Stanley, Citi and Silicon Valley Bank's parent.
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Nasdaq Inc.  (NDAQ)  shares rose on Tuesday as the financial-exchange company said it would spin out its market for shares of private companies.

That market, called Nasdaq Private Market, is where investors can buy stock in companies that aren’t yet public. 

Only accredited investors may put their money down on this exchange. The Wall Street Journal says that includes people whose net worth excluding their homes exceeds $1 million or have annual incomes above $200,000.

Goldman Sachs  (GS) , Morgan Stanley  (MS) , Citi  (C)  and SVB Financial  (SIVB) , parent of Silicon Valley Bank, are investing in the new entity. Terms weren’t disclosed.

Nasdaq recently traded at $181.93, up 2.7%, and has gained 28% in the past six months amid hefty trading volume in financial markets. On Tuesday it touched a record $182.72.

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Nasdaq said it would continue to be Nasdaq Private Market’s largest shareholder, Dow Jones reports.

In May, Morningstar analyst Michael Miller put Nasdaq Inc.’s fair value at $134.

“Nasdaq has a narrow economic moat that we think will allow it to continue to earn returns on invested capital above its cost of capital,” he wrote.

“While Nasdaq remains a leading firm among equity and options exchanges, the company’s moat is defended primarily by valuable intangible assets.”

The company “has created substantial recurring revenue sources through the value of its data offerings as well as the strength of the Nasdaq brand name,” Miller said.

Meanwhile, Nasdaq announced an agreement in February to sell its U.S. fixed-income business for $190 million cash to an affiliate of electronic marketplace operator Tradeweb Markets  (TW)

The Financial Times reported that Nasdaq bought a business called eSpeed in 2013 from BGC Partners  (BGCP)  to enter electronic trading of U.S. Treasury securities.