A view of the Charles Schwab office location in Manhattan, New York, U.S., November 15, 2021. REUTERS/Andrew Kelly

By Manya Saini

(Reuters) -Charles Schwab on Thursday agreed to buy private shares platform Forge Global for $660 million, as Wall Street looks to take advantage of the fast-growing demand for access to pre-IPO companies.

Major financial institutions are expanding services that give clients access to private companies and liquidity in pre-IPO shares, seeking to tap rising investor demand for early exposure to fast-growing startups.

The per-share value of $45, represents a premium of roughly 72% over Forge Global's last close. Its stock surged 67% in morning trading.

"Companies are staying private for longer than they once did and the market for buying and selling shares of pre-IPO firms is fragmented, inefficient and ripe for democratization," Schwab CEO Rick Wurster said on a conference call.

Companies such as ChatGPT-maker OpenAI, Elon Musk's SpaceX and TikTok-parent Bytedance now hold valuations that rival or exceed several major S&P 500 companies, narrowing the gap in influence between public and private markets.

"If transactional activity in the private market grows to become even a small fraction of the public market, it will be a huge win for our clients," Wurster said.

Investors are seeking exposure to these fast-growing companies, and financial services firms are moving to cater to that demand.

"(The deal) accelerates the new product launch narrative and likely curtails angst on share erosion" for Schwab, brokerage TD Cowen wrote in a note.

Last month, Wall Street giant Morgan Stanley agreed to acquire private shares platform EquityZen.

Forge Global went public in 2021 through a blank-check deal. It operates a trading marketplace through which investors have bought and sold more than $17 billion in private company shares.

Schwab, which offers financial services, has a market capitalization of $170 billion and manages around $11.6 trillion in client assets.

The deal is expected to close in the first half of 2026.

J.P. Morgan Securities advised Schwab on the deal, while Financial Technology Partners was the financial adviser to a special committee of Forge's board.

(Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)