Hamilton Lane, Securitize to Tokenize Funds, Expanding Access to Private Markets

Securitize, a digital asset securities firm, and Hamilton Lane (NASDAQ: HLNE), a global private markets investment firm, announced a partnership “to expand investor access to Hamilton Lane’s funds through tokenization.”

Through this partnership, qualified U.S.-based investors will be “able to more easily access three distinct Hamilton Lane funds, which will be available through new tokenized feeder funds.”

The component funds provide exposure “to direct equities, private credit and secondary transactions, and will be tokenized by Securitize‘s digital transfer agency, managed by Securitize’s digital asset management arm, Securitize Capital, and be available for investment on its broker-dealer, Securitize Markets in Q4 2022.”

Carlos Domingo, CEO of Securitize, said:

“Hamilton Lane offers some of the best-performing private markets products available, but historically they have been limited to institutional investors. Tokenization now makes it possible for individual investors to participate in private equity value creation for the first time in a digitally native way. We are at the beginning of a process through which individual investors can access the same kinds of opportunities as university endowments or sovereign wealth funds, and that is very exciting.”

Victor Jung, Head of Digital Assets at Hamilton Lane, commented:

“Since our firm’s inception, we’ve been committed to servicing our clients and to providing enhanced financial wellbeing for those who depend on us. This collaboration with Securitize is our latest step toward enabling access to the strong returns and performance opportunities generated within the private markets space for a newer set of investors, while increasing usability and transparency through the use of blockchain technology.”

These new tokenized funds “highlight Hamilton Lane’s commitment to expanding ease of access to the private markets through the utilization of blockchain,” and illustrate the convergence of four important trends:

Private market alternative investments “historically outperform public markets.”

The number of private companies “with revenues over $100 million dwarfs the number of public companies with revenues in that range, with roughly 95,000 private companies globally falling into this bucket, compared to 10,000 public companies.”

The larger private markets opportunity set, “a U.S. IPO market that has significantly slowed, and consistent outperformance of the private markets have together piqued the interest of a growing number of individual investors.”

Hamilton Lane data “shows the majority of private equity funds have outperformed their public market equivalents in 19 of the last 20 years.”

Individual investors are “seeking access to better investment opportunities.”

With inflation over 8%, the S&P 500 in the red year-over-year, and over $500 billion in wealth being transferred between generations annually, investors “need meaningful returns in order to generate wealth.”

Investors are “more interested in and open to alternative and digitally-native investments than ever.”

Investment firms’ growth will “increasingly be driven by individual investors.”

Private equity investments “have historically been most accessible to institutional or ultra-high net worth investors and least accessible to individual investors.” Blockchain technology “makes expanding access to individual investors possible.”

Over 10% of American households “are accredited investors, holding about $75 trillion in wealth.” As private market investing becomes more accessible to individual investors, Morgan Stanley “estimates total assets under management can grow by $3 trillion over the next three years.”

Technological and structural changes have “enabled individual investors access to products previously available to institutional investors.”

Historically, individual investors “faced multiple hurdles in gaining access to the private markets.”

Today, there are structures available that “provide lower investment minimums, remove the burdensome traditional capital call process, allow for the option for liquidity and offer easier tax reporting.”

At the same time, the advancement of blockchain technology has “made private market opportunities more easily accessible through digitizing paper processes, providing more creative structures, and enabling fractional ownership via tokenization, all in accordance with U.S. laws.”

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