Digital securities exchange ADDX reveals that it has tokenized an allocation from a private equity fund that is being managed by Partners Group, an international private markets investment company.
As mentioned in a release shared with CI, the allocation from the Partners Group Global Value SICAV Fund is “the first from a major private equity firm that has been tokenized, with the aim of allowing individuals to participate in a space traditionally dominated by institutional investors.”
The announcement further noted that most private equity funds “require an investment of $100,000 or more to gain access.” Because of the efficiencies of tokenization, the new private equity fund line of products on the ADDX platform is “available to international accredited investors at a minimum ticket size of $10,000.”
Established in 2007, the EUR-5.5-billion Partners Group Global Value SICAV Fund offers immediate exposure to “a globally diversified private equity portfolio, without the J-curve effect that impacts newly-formed private equity funds.”
The update also noted that the fund has exposure to over 500 underlying firms and assets and is diversified across industries and “vintage years.” The fund’s assets are distributed internationally, across North America (43%), Europe (40%), Asia Pacific (13%), and the rest of the world (4%). By financing stage, the “largest share of the portfolio is in buyouts (79%), followed by special situations (16%) and venture capital (5%).”
As stated in the release:
“Tokenized fund units in this ADDX offering are part of the latest USD share class launched in January 2019, with a year-to-date performance of 12.7% p.a.. Annualized performance since the inception of this share class is 16.7% p.a..”
The open-ended fund enables investors to subscribe for or redeem units “on a monthly basis, subject to gating provisions, an unusual characteristic for a traditionally illiquid asset class.” Investors who participated through digital tokens on ADDX are also able to trade them daily via the ADDX exchange, the announcement confirmed.
Victor Jung, Head of Distribution Partners and Liquid Private Markets Asia, Partners Group, stated:
“Tokenization marks another important milestone for the private markets industry. Partners Group has always been at the forefront of providing innovative private markets solutions to different types of investors and the story continues today, underpinned by strong demand from the accredited investor universe. We are excited to be working with ADDX to further facilitate access to private market investments and contribute towards the ‘democratization’ of private markets, which is a dominant trend that is here to stay.”
Oi Yee Choo, Chief Commercial Officer of ADDX, remarked:
“Private equity funds help investors achieve diversification from the public markets. They are a useful tool for lowering volatility while improving the long-term returns of a portfolio. But higher investment thresholds make it difficult for individuals to benefit – which is why we were determined to reduce the minimum buy-in to US$10,000, in line with ADDX’s mission of opening up private market opportunities to more investors. We are doubly pleased that this first private equity fund allocation on ADDX is managed by Partners Group.”
Choo added that the benefits of tokenization “cut both ways, as fund managers are getting access to investor capital not available to them previously.”
Whenever capital is “allowed to flow unimpeded to the best-performing opportunities, the markets are in an optimal state,” Choo explained while adding that “in the long run, we will see this new technology enhancing capital flows from the public markets to the private markets and redistributing wealth from institutions to individuals.”
Regulated by the Monetary Authority of Singapore (MAS), ADDX is a digital securities exchange that aims “to democratize access to private investments.” Digital securities are also referred to as security tokens or tokenized securities.
They’re issued using blockchain and smart contract tech in order “to automate the error-prone and manual processes that have hitherto made it inefficient for private market securities to be distributed to a large number of investors,” the announcement explained.
The tech “completes corporate actions in a quicker and less costly manner – including actions like fund unit redemptions, dividend and coupon payments, cap table management as well as secondary trading. ”
Established in 2017, ADDX, previously doing business as iSTOX, is “a full-service capital markets platform with MAS licenses for the issuance, custody and secondary trading of digital securities.” The Fintech firm secured $50 million via its Series A back in January of this year.
Its shareholders reportedly include Singapore Exchange, Temasek subsidiary Heliconia Capital and Japanese investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan (DBJ).