Digital securities exchange ADDX has tokenised an allocation from a private equity fund managed by Partners Group, a leading global private markets investment firm. The allocation from the Partners Group Global Value SICAV Fund is the first from a major private equity firm that has been tokenised, with the aim of allowing individuals to participate in a space traditionally dominated by institutional investors.
Most private equity funds require an investment of US$100,000 or more to gain access. Due to the efficiencies of tokenisation, the new private equity fund line of products on the ADDX platform is available to international accredited investors at a minimum ticket size of US$10,000.
Launched in 2007, the EUR-5.5-billion Partners Group Global Value SICAV Fund provides immediate exposure to a globally diversified private equity portfolio, without the J-curve effect that impacts newly-formed private equity funds. The fund has exposure to more than 500 underlying companies and assets and is broadly diversified across a variety of industries and vintage years. The fund’s assets are distributed globally, across North America (43%), Europe (40%), Asia Pacific (13%), and the rest of the world (4%)3. By financing stage, the largest share of the portfolio is in buyouts (79%), followed by special situations (16%) and venture capital (5%)3.
Tokenised 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.. Annualised performance since the inception of this share class is 16.7% p.a.3. The open-ended fund allows 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 can also trade them daily on the ADDX exchange.
Victor Jung, Head of Distribution Partners and Liquid Private Markets Asia, Partners Group, said: “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, said: “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, a world-class name in private market investing.”
Ms Choo added: “The benefits of tokenisation cut both ways, as fund managers are getting access to investor capital not available to them previously. When capital is allowed to flow unimpeded to the best-performing opportunities, the markets are in an optimal state. 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 democratise access to private investments. Digital securities are also known as security tokens or tokenised securities. They are issued using blockchain and smart contract technology 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 technology 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.
Founded in 2017, ADDX, previously known as iSTOX, is a full-service capital markets platform with MAS licenses for the issuance, custody and secondary trading of digital securities. The financial technology company raised US$50 million in its Series A round in January 2021. Its shareholders include Singapore Exchange, Temasek subsidiary Heliconia Capital and Japanese investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan (DBJ).
Since 1996, Partners Group has invested over US$150 billion in private equity, private real estate, private debt and private infrastructure on behalf of its clients globally. The SIX Swiss Exchange-listed firm (symbol: PGHN) has US$119 billion in AUM as of end-June 2021.
1 SICAV stands for Société d’investissement à Capital Variable (SICAV). It refers to an open-ended investment
fund structure offered in Europe.
2 The Singapore regulatory regime that ADDX operates under defines an accredited individual investor as an
individual whose net personal assets exceed in value S$2 million (or its equivalent in another currency), or
whose financial assets (net of any related liabilities) exceed in value S$1 million (or its equivalent in another
currency), or whose income in the preceding 12 months is at least S$300,000 (or its equivalent in another
3 As of 31 July 2021
4 Gating provisions refer to conditions under which the fund manager can limit redemptions.
5 Other ADDX shareholders include Korea’s Hanwha Asset Management, Japan’s Tokai Tokyo Financial Holdings and Thailand’s Kiatnakin Phatra Financial Group.