Monday, September 20, 2021
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Editor's PickSingaporean private capital exchange exploring Shariah compliant tokens

Singaporean private capital exchange exploring Shariah compliant tokens

IFN Fintech has learned that private capital exchange ADDX is keen on offering Shariah compliant digital securities on its platform. This follows its latest partnership with Bahrain-based Investcorp which saw the tokenization of the latter’s Islamic private real estate fund.

“ADDX is on a mission to bring private market access to the broadest possible spectrum of investors. In line with this mission, ADDX has been actively exploring the possibility of offering Shariah compliant tokenized investment products and deals on our platform,” Choo Oi Yee, the chief commercial officer of ADDX, told IFN Fintech.

ADDX, formerly known as iSTOX, is a fintech capital markets platform owned and operated by ICHX, which holds a capital market services license and has been approved by the Monetary Authority of Singapore (MAS) as a recognized market operator.

The platform last week signed a long-term partnership with Bahraini alternative investment manager Investcorp to expand the use of digital securities in the private market space. The first product offered under this collaboration was the Investcorp Sunbelt Multifamily Portfolio, a US private real estate fund which has raised US$150 million. The Shariah compliant fund invests in multifamily apartment complexes in Texas, Arizona and Georgia.

The issuance of the digital tokens was conducted through Prometheus-4, an SPV established for this purpose. It is perhaps worth noting that while the fund is Islamic, its tokenization exercise on the ADDX platform has not been certified Shariah compliant.

Investcorp, which manages US$37.6 billion in assets as of the 30th June 2021, has a robust Islamic fund portfolio. Present in 12 countries, the asset manager was the third-largest cross-border buyer of US real estate and fourth-largest cross-border seller over the full years of 2019 and 2020, according to Real Capital Analytics.

ADDX, on the other hand, currently serves accredited investors from 27 countries. A MAS Sandbox graduate, the digital securities platform has a growing product repertoire including funds and bonds. It is also backed by Singapore Exchange, Temasek subsidiary Heliconia Capital and Japan government-backed investors JIC Venture Growth Investments and the Development Bank of Japan.

This makes the Investcorp–ADDX partnership an interesting one. As partners, the two entities will explore possible joint projects in private equity, credit management, absolute returns investment, infrastructure, strategic capital and real estate. In a joint statement, the companies shared that Investcorp could potentially make more opportunities available on ADDX, especially since the asset manager is expanding its Asian footprint, having invested approximately US$500 million into the region over the last 18 months. “The beauty of this new partnership lies in the fact that Investcorp and ADDX are both experts in the private markets — and yet we do have different geographical and commercial focus areas. When we combine our strengths, there is a fresh dynamism — an exciting, invigorating prospect. Individuals and companies that work with us will have an assurance that their capital is put to work in a smart way and in high-quality products. In the case of the Sunbelt Multifamily Portfolio, the efficiency gains from digital securities meant investors on ADDX could take part in the fund with a minimum amount of US$20,000 — significantly lower than the US$500,000 typically required for private real estate funds,” explained Choo.

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