iSTOX Lists World’s First Unicorn Fund To Launch In Digitised Securities Form
by Matthew Chihwai | News Reporter
2020 Leading global digitised securities platform iSTOX announced today that it has listed the first unicorn fund in the world to launch in digitised securities form. The ICHAM Unicorn Opportunity Fund concluded its initial offering period earlier this month after raising close to US$20 million that it aims to invest in billion-dollar companies globally.
Unicorn funds – like many other private funds – have hitherto done traditional, non-digitised launches, with investors typically having to meet high minimum thresholds of US$100,000 to US$1 million. This is due to inefficiencies under the traditional issuance method that make it impossible for a fund to handle large numbers of smaller investors.
With the use of blockchain and smart contract technology, iSTOX enables the tokenisation and fractionalisation of securities – in this case, units in the unicorn fund. The creation of security tokens allows manual processes to be automated and minimum investment ticket sizes to be reduced to US$20,000. This expands participation in unicorn investing to all accredited investors/
iSTOX is a financial technology company regulated by the Monetary Authority of Singapore (MAS) as a platform for the issuance, custody and secondary trading of digitised securities. The mission of iSTOX is to democratise the private capital markets, putting previously out-of-reach investments in the hands of underserved investors. iSTOX is backed by Singapore Exchange (SGX) and Temasek Holdings subsidiary Heliconia Capital Management.
The fund has launched at a time when unicorns – defined as private start-ups valued at USD 1 billion or more – are delivering robust returns to investors. Between 2017 and 2020, unicorns that filed for initial public offerings (IPO) saw valuations rise by 45 per cent on average compared with their most recent private funding round. Global assets under management (AUM) in the private markets also rose 170% between 2010 and 2019 to hit an all-time high of US$6.5 trillion.
The ICHAM Unicorn Opportunity Fund will invest in unicorns by buying equity from existing shareholders in the secondary market. The fund will build a diversified portfolio of late-stage, highly-valuable unicorns in the US, Europe and Asia. Specifically, the fund will target companies with:
- A well-defined business model
- Demonstrated sustainable growth
- Proven disruptive impact in their chosen fields, and
- 24-to-36-month visibility of an exit event, such as an IPO
The fund manager is ICHAM, a Singapore-regulated wealth and fund management company chaired by the former Finance Minister of Thailand Dr Uttama Savanayana.
Choo Oi Yee, Chief Commercial Officer of iSTOX, said, “Unicorns are one of the most promising and in-demand investment types. However, access to unicorns has traditionally been limited to institutional investors, angel investors and other ultra-high-net-worth individuals. iSTOX is excited to help launch the ICHAM Unicorn Opportunity Fund, which transforms unicorn investing by extending a seat at the table to all accredited investors. A lower investment threshold through the tokenisation of securities makes unicorn investing fairer and more democratic, which is important when we consider that unicorns experience their fastest growth in the pre-IPO phase. In the long run, unicorns benefit too because their stocks are worth the most when they can be purchased by the biggest possible group of investors. The enlarged pool of potential funds also enables unicorns to stay private for longer and to focus on the growth of their business rather than the short-term profits that public markets will require.”
Archan Chamapun, Chief Executive Officer of ICHAM, said, “We are delighted to be able to offer unicorn investing opportunities to all investors on board the iSTOX platform. Unicorns constitute a new and growing asset class that investors need to allocate funds to, as part of a balanced portfolio. What the ICHAM Unicorn Opportunity Fund can offer investors is access to unicorns in small bite-size units, to enable better portfolio construction. The fund’s portfolio is in turn curated by our fund management team with a proven track record, longstanding experience, good networks and strong commitment. Given the ultra-low interest rate environment and the fact that stock prices of public tech companies have rallied to record highs, we believe investors can find risk-adjusted investment returns from unicorns that are difficult to find anywhere else.”
The fund has an initial charter period of four years. Thereafter, the ICHAM board of directors can extend the fund for up to two years. Investors who have subscribed to the ICHAM Unicorn Opportunity Fund will also have access to the proprietary exchange iSTOX has built to allow the secondary buying and selling of securities among the fund’s investors, enhancing the liquidity and value of those investments.
Founded in 2017, iSTOX was accepted into the MAS Fintech Regulatory Sandbox in 2019 and graduated from the sandbox as a fully-regulated platform in February 2020. Besides SGX and Temasek subsidiary Heliconia, iSTOX investors include Tokai Tokyo Financial Holdings (Japan), Hanwha Asset Management (Korea) and Kiatnakin Phatra Financial Group (Thailand). In November 2020, iSTOX signed a memorandum of understanding with the Chongqing monetary authority to set up a digitised securities exchange in China, marking the company’s first overseas expansion.
MAS defines an individual accredited investor as someone whose net personal assets exceed SGD 2 million (or its equivalent in a foreign currency), or whose net financial assets exceed SGD 1 million (or its equivalent in a foreign currency), or whose income in the preceding 12 months is at least SGD 300,000 (or its equivalent in a foreign currency).
According to data compiled from Crunchbase
According to a February 2020 McKinsey report