ADDX has, on Nov 22, tokenised its first private credit fund.
Private credit funds are funds that make direct loans to companies or buy such loans from the secondary market.
The fund is managed by SeaTown, a wholly-owned subsidiary of Seviora Holdings. Seviora Holdings is, in turn, indirectly owned by Temasek Holdings.
SeaTown has been investing in private credit since 2012, with US$2.1 billion ($2.86 billion) worth of investments to date.
With the tokenisation, ADDX has enabled the rare fractional access to a private credit fund with over US$1 billion in committed capital.
Through ADDX, individual accredited investors can now invest in the fund with a minimum of US$20,000 from US$5 million.
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According to ADDX, the move helps diversify the investor base of private credit funds, which have traditionally been designed to serve institutional capital.
The lowering of the investment threshold was done through the issuance of security tokens with an exposure to the SeaTown Private Credit Feeder Fund LP.
These tokens make use of blockchain and smart contracts to overcome manual processes at different stages of their life cycle.
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The use of security tokens also eliminates the need for multiple intermediaries.
SeaTown Private Credit Fund is raising capital from external limited partners (LPs) for the first time. The close-ended, four-year fund is focused on extending private credit to companies in the Asia-Pacific region. To date, the SeaTown fund has deployed more than US$500 million in investments.
“SeaTown is a distinguished name in the world of private capital. SeaTown’s link to the Temasek group of portfolio companies and its extensive deal sourcing network across the Asia-Pacific region enable the fund manager to be more selective in executing deals with a good risk-return profile,” says Choo Oi Yee, chief commercial officer of ADDX.
“In the aftermath of the Great Financial Crisis of 2008, the growth of private credit funds has accelerated in part because traditional lenders such as banks have taken a more conservative stance on lending.”
“Amid this expansion, we can see the private credit fund space maturing and attracting a deep pool of professional talent. Giving individual investors access to this burgeoning asset class resonates strongly with ADDX’s mission of democratising the private markets. It is not feasible for an investor with a net worth between US$2 million and US$20 million to enter a private credit fund with a minimum ticket size of US$5 million. But at a US$20,000 minimum, that same investor is able to take part in this previously-inaccessible asset and benefit from the enhanced portfolio diversification,” she adds.
