Temasek subsidiary Fullerton tokenises PE fund of funds on ADDX
Private market exchange ADDX has partnered with investment specialist Fullerton Fund Management to list Fullerton’s private equity fund of funds on its digital platform. The Fullerton Optimised Alpha Fund is a closed-end fund targeting 8% to 12% in returns per annum over its fund life of seven years .
The fund will be invested in a portfolio of six to eight private equity and private credit funds. From a field of over 20,000 funds, Fullerton arrives at the final list of funds following a rigorous and proprietary method of fund selection that focuses on blue-chip managers with a proven track record of consistent investment strategy and performance across market cycles.
The underlying assets of the fund will be diversified by geography, across North America, Europe and Asia, and by strategy, across buyout, growth, secondaries and private or distressed credit. The fund will focus on thematic sectors, such as defensive, tech-enabled, new economy, post-COVID-19 dislocation and recovery as well as ESG-aligned sectors.
As a result of efficiencies from tokenisation, accredited individual investors on ADDX were able to access the Fullerton fund at a minimum size of US$10,000, instead of the US$250,000 required through traditional, non-tokenised channels. A liquidity option in the form of quarterly gated redemptions is available to investors.
Tokenisation is the digitisation of an asset, in this case a traditional security, using blockchain and smart contract technology. By reducing the need for intermediaries and manual work, tokenisation makes it easier to administer the security, with benefits seen across different stages of its life cycle, including issuance, distribution and custody. Tokenisation allows ADDX to serve a much wider segment of investors at lower minimum sums – which the traditional private market infrastructure is not designed to do.
ADDX CEO Oi-Yee Choo said: “Globally, private equity has outperformed public equity, whether one is looking at a 5-year, 10-year or 25-year timeframe. Adding a private equity allocation to one’s portfolio has been demonstrated to enhance overall returns while reducing volatility. This is why institutional investors like pension funds typically have 20% to 30% of their capital in the private markets. By bringing down the barrier to entry, ADDX is contributing to a fair and level playing field for individual investors. At a time when rising inflation is a source of anxiety worldwide, strategies that help investors to better preserve and grow their wealth are needed more than ever.”
Fullerton manages assets across public and private markets for a wide range of clients including government entities, sovereign wealth funds, pension plans, insurance companies, private wealth and retail clients. Its commitment to delivering investment excellence to investors through accessible, innovative solutions formed the foundation for this partnership.
Fullerton Chief Business Development Officer Mark Yuen noted: “The partnership between Fullerton and ADDX is unique and synergistic. By leveraging the ADDX platform, we can provide wider access to our private market expertise. Our private equity team has on average 21 years of experience, and a deep understanding of markets with strong risk management in place to ensure that we can deliver the best outcomes for our investors. Through ADDX we can reach a broader base of investors to help them achieve well-diversified portfolios that can match their long-term investment objectives.”
Ms Choo added: “Fullerton Fund Management is a world-class name with strong experience and expertise in the private equity space. Through its parentage, ecosystem and fund manager relationships, Fullerton is able to provide access to tier-one deal flow and can invest in funds that are near-impossible for individuals to reach. ADDX is excited to list a Fullerton fund on our platform and we look forward to exploring with them other opportunities for our investors.”
ADDX became licensed by the Monetary Authority of Singapore (MAS) as a private market exchange in February 2020. Since then, ADDX has listed 30 deals on its platform involving blue-chip names such as Hamilton Lane, Partners Group, Investcorp, UOB, CGS-CIMB, as well as Temasek-owned entities Mapletree, Azalea and SeaTown. Asset classes available on ADDX include private equity, venture capital, private credit, real estate, hedge funds, funds with cryptocurrency exposure, and structured products. ADDX offers issuers access to previously untapped capital pools and reduces both the cost and minimum threshold of fundraising projects.