By Oi-Yee Choo, Chief Commercial Officer of ADDX
Here’s a scenario we may be quite familiar with in the new pandemic normal: You need a new laptop or coffee machine. Or maybe even some fresh fruit and vegetables. The first option that comes to mind is no longer the nearby shopping mall or specialty store, but perhaps an e-commerce platform.
The logistics scene has become much more efficient. Your apples arrive in 30 minutes and you’re unboxing your laptop within 24 to 36 hours. With the jump in online consumer demand brought on by the pandemic, companies have also made larger investments to ensure a consistent supply.
In the fourth quarter of last year, ADDX investors who subscribed to the Elite Logistics Fund experienced first-hand the changing dynamics in the logistics real estate sector. The two-year, closed-end fund became the first on ADDX to approach the end of its fund life. Elite sold its entire portfolio of 18 European warehouses to US private equity giant Blackstone Group for EUR 520 million.
The investment paid off – robustly – for ADDX investors, as the fund achieved annualised returns more than double its 12% per annum target.
Accounting for the better-than-expected performance, Elite’s portfolio director Enoch Tan noted that e-commerce had been a rapidly growing segment of the real estate markets even before the pandemic. With supply chain disruptions and the spike in e-commerce purchases from early 2020 due to COVID-19 concerns, companies had to further increase their level of inventory, which meant they needed a lot more warehouse space. The fund’s portfolio properties were fully tenanted and achieved 100% rent collection throughout the pandemic, even as European office and residential rent collection fell below 50%. Over time, wealth portfolios also rebalanced in favour of logistics real estate assets, which led to an appreciation in the value of the fund’s holdings.
Celebrating the first fund on ADDX reaching maturity was just one of several big milestones in Q4 for us as a securities exchange.
In November, ADDX investors could for the first time buy into cryptocurrencies indirectly – through investments in an institutional-grade digital asset fund with exposure to a basket of crypto coins. This came shortly before the new Monetary Authority of Singapore (MAS) rules disallowing public advertising for digital payment tokens services, which stem from concerns that the traditional investor may not be appropriately assessing the risks pertaining to this new digital asset class. The launch of the fund on ADDX was timely, because it was designed to allow investors to participate in crypto investing via ADDX’s regulated platform, while leaving investment decisions such as the diversification across cryptocurrencies and market timing to expert fund managers.
Also in Q4, our Japan partner, Tokai Tokyo Financial Holdings, was granted a security tokens license by the Japanese regulator. This allows ADDX and Tokai Tokyo to collaborate in helping Japanese issuers list tokenised products on ADDX that are distributed to sophisticated Japanese investors.
We also listed our first private credit fund, one that was managed by the Temasek-owned SeaTown, reducing the minimum investment size for investors to USD 20,000, from USD 5 million if they were to go to the fund direct or deal through private banks and other fund distributors. Private credit is an asset class that has seen accelerated growth since the end of the 2008 global financial crisis.
Last but not least, we completed our first deal with a bank. UOB and ADDX collaborated on a sustainability-linked bond by Sembcorp. The SGD 50-million bond allocation of a larger SGD 675-million bond was digitised and custodised on the ADDX blockchain. At a quarterly results briefing in November, UOB CEO Wee Ee Cheong described the UOB-ADDX tie-up as a “strategic alliance”.
As these new deals were being launched, we continued to track the performance of past tokens. The following tokens made noteworthy gains in 2021:
- Hanwha’s Global ESG Innovators Fund saw annualised returns of 8.5% from the time of its listing in June 2021 to the end of the year. This is an actively managed, long-only fund that invests in the equity securities of public companies with ESG-centric businesses.
- In private equity, the Partners Group Global Value SICAV Fund, which listed in September 2021, made annualised returns of 8.3% (as of 30 November 2021).
- Ternary Cypress, a hedge fund focused on scarce, real assets, saw annualised returns of 38.5% between 1 January 2021 and 30 November 2021.
Achieving Our Mission: Long Strides in 2021
Looking back on 2021, our first full year of operations, we are heartened by the progress made towards achieving our mission of democratising private market investing.
To help investors diversify their portfolios, we launched new asset and product types last year, such as venture funds, crypto-related funds and private credit funds. The platform is now enabled not just for closed-end funds but open-end ones as well – which means we can onboard just about any fund in the market. We successfully rolled out our first structured product. ADDX’s partners secured licenses or regulatory approvals that will allow more investors from China and Japan to take part in offerings on ADDX.
As a company, we also became stronger, with our USD 50 million Series A fundraising round announced in January 2021. This was quickly followed by a rebranding exercise from iSTOX to ADDX – accompanied by the launch of a mobile app that allows investors to view their investments and subscribe to new ones on the go.
Our progress is gaining recognition globally. Blockdata, a CB Insights company, ranked us among the top nine tokenisation platforms in the world – the only one in Asia to make the list. We were also awarded Best Blockchain-Based Capital Markets Platform 2021 by Alpha Southeast Asia.
As we start 2022, ADDX serves more investors than we ever have. Our investor base grew by 120% in 2021. They come from 27 countries, across Asia Pacific, Europe and the Americas (except the US).
This year, we are not taking our foot off the pedal. There is an unprecedented opportunity to scale the platform and bring the benefits of the private markets to millions of mass affluent investors worldwide. As access to investment opportunities broadens, wealth will be redistributed from institutions to individuals. As barriers are lowered, capital can be allocated to the most worthy projects, generating economic growth and creating jobs.
The thought of the good we can do drives us forward. We are only getting started.