For the first time ever, an allocation from a major private equity firm has been tokenised for trade on a blockchain-based platform, broadening investor access.

Singapore-based digital securities exchange ADDX has tokenised the offering from Swiss-based global private equity firm Partners Group Holdings, which has US$119 billion in assets under management.

Tokenised fund units are being offered in Partners Group’s €$5.5 billion Global Value SICAV Fund, which has exposure to 500 underlying companies and assets across a variety of industries around the world. The fund has offered 16.7 per cent returns since its inception in 2007.

The tokenisation means the units are being offered to international accredited investors at a minimum ticket size of US$10,000, rather than the usual minimum of at least US$100,000 or more for access to a private equity fund.

Regulated by the Monetary Authority of Singapore, ADDX uses a permissioned platform based on Ethereum technology for the trading of digital securities.

Redistributing wealth to individuals

“Private equity funds help investors achieve diversification from the public markets,” said Oi Yee Choo, ADDX’s chief commercial officer.

“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.”

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.”

‘Democratisation’ of private markets

Victor Jung, head of distribution partners and liquid private markets Asia with Partners Group, said that tokenisation “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 ‘democratisation’ of private markets, which is a dominant trend that is here to stay.”