Private market exchange ADDX has tokenised a vintage French Burgundy wine portfolio by Provenance Treasures, a licensed wholesale wine and alcohol trading company.
The wine portfolio is the first luxury asset listed by ADDX.
Provenance Treasures is a subsidiary of Singapore Exchange (SGX)-listed Intraco Limited.
According to ADDX, the wines within the portfolio are sourced from top wineries in the famed Burgundy region of France, including Domaine Coche-Dury and Domaine Leroy.
About half of the bottles carry “Grand Cru” appellations, the highest tier of wine classification in Burgundy.
The vintage years of the wines are said to fall between 2006 and 2020 with the indicative worth of each bottle ranging from hundreds of dollars to thousands.
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“The deal allows investors to own and trade coveted, top-quality wines, while earning a return through an appreciation in the value of the portfolio,” says ADDX’s CEO Choo Oi-Yee.
The primary subscription for these wine tokens were completed at 83 cents per token in September with the minimum size set at 1,000 tokens. Now, the secondary trading of tokens is live on ADDX.
According to the exchange, the investment hurdle return rate is 8% per annum (p.a.), where the portfolio manager will only receive management or performance fees when returns are above the hurdle rate.
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To date, Provenance Treasures has purchased and taken delivery of 234 bottles of wines said to be worth an indicative amount of $696,000. Provenance Treasures is expecting to take in another 125 bottles with an indicative worth of $386,000 by November.
The bottles are stored in a professional, secured wine storage facility in Singapore and insured at cost.
As portfolio manager, Provenance Treasures has the discretion to make wine-trading decisions in consultation with Domaine Wines, a shareholder of Provenance Treasures. Founded in 2014, Domaine Wines is a Singapore wine distributor that focuses on French Burgundy wine.
Provenance Treasures will take into consideration factors such as the prevailing general economic environment, consumers’ demand and wineries’ supply situation of selected wines, expected price trends and global wine consumption trends, with the goal of optimising investment returns. Provenance Treasures may also sell the bottles of wines, with investors given the first right of refusal to purchase that bottle at the prospective sale price.
The proceeds of the sales will then be returned to investors as capital. The proceeds may also be reinvested, depending on the portfolio manager’s decision.
“We have seen an acceleration in the demand for digital assets. Accordingly, Intraco is pleased to partner with Domaine Wines to launch the first Burgundy wine tokens on ADDX. The tokenisation of the wines is another step towards Intraco Group’s strategy to expand into the digital assets business. We are very encouraged by the interest investors have shown towards the wine tokens and will seek to identify more suitable assets classes in Singapore and the region for tokenisation, as alternative investment opportunities,” says Intraco’s executive chairman and director Mak Lye Mun.
“The value of fine wine as an investment class has appreciated 137% over the past decade. Wine investments can play a unique role in portfolio diversification because investment performance tends to be based on factors unrelated to the stock markets. These include weather and climate patterns, harvest yields, vineyard reputation and consumer trends,” says ADDX CEO Choo Oi-Yee.
“With heightened concern over rising inflation and market volatility, investors are increasingly re-allocating capital toward private markets as they seek resilience and diversification. This is a space in which ADDX has established itself as the market leader in Asia, offering private equity, venture capital, hedge funds, commercial papers and bonds, and now luxury investment assets,” she adds.
