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Token tech gives Asian investors access to US private equity firm

By Aaron Woolner

07:47, 30 March 2022

Buildings in Singapore's CBD
ADDX brings US private equity major onto its blockchain powered platform – Photo: Shutterstock

In yet another sign of how blockchain technology is opening up financial markets to non-traditional investors, Singapore digital exchange ADDX is launching access to US private equity firm Hamilton Lane Global Private Asset Fund. 

The private equity firm currently holds over $850bn worth of assets under management and the tie-up with ADDX was described as a “major foray in Asia” for the US firm. 

Using token technology powered by blockchain, accredited investors can now access Hamilton’s Global Private Assets Funds on a minimum ticket of $10,000 compared with a $125,000 using traditional investment approaches. 

First tokenised issue by US firm

This is the first tokenised project by the US firm and according to a statement from ADDX it is among the first wave of private equity players to tap into the investor market via token technology. 

Hamilton’s global fund was launched in May 2019, and has returned 16.11% (net) annualised since inception and has assets of more than US$1.845bn as of 31 January 2022. 

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ADDX is Asia’s largest private market exchange. Its individual accredited investors come from 39 countries spanning Asia-Pacific, Europe and the Americas (except the US), with more than half its investor base coming from Asia.

Private markets larger than public ones

According to ADDX CEO Choo Oi-Yee the majority of investors do not realise that the private markets are much larger than the public markets. The CEO says that across the globe more than 90% of companies with an annual turnover of US$100m or more are private. 

For any investor, leaving private equity out of your portfolio essentially means turning one’s back on the vast majority of investment opportunities in the market. At a time of unprecedented volatility and declining returns in the public markets, diversification into the private markets is more important than ever,” she said in today’s release.

ADDX became licensed by the Monetary Authority of Singapore (MAS) as a private market exchange in February 2020. Since then, ADDX has listed 26 deals on its platform involving names such as Investcorp, UOB, CGS-CIMB, as well as Temasek-owned entities Mapletree, Azalea and SeaTown.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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