ADDX is part of a wider trend of firms using technology to make it easier for investors to enter the private markets space.
China Construction Bank (Chongqing and Singapore branches) and Asian digital private market exchange ADDX are partnering to enable domestic investors in China to use the country’s official offshore investment scheme.
The organisations yesterday signed a memorandum of understanding (MOU) that paves the way for them to work together on the custody and distribution of a $200 million quota allocation under the Qualified Domestic Limited Partnership scheme, ADDX said in a statement.
Launched in 2012, the QDLP programme allows sophisticated investors n China to participate in renminbi funds focused on overseas investment opportunities. The QDLP allows offshore investments in a greater variety of assets – not just public market products, but also private market ones. (A “sophisticated" investor must have two years of investing experience and have (a) household financial assets of at least RMB5 million ($745,000), or (b) net household financial assets of at least RMB3 million, or (c) an individual annual income, averaged over three years, of at least RMB500,000.)
The move comes at a time when ADDX, which uses digital technology to widen access to private market investments, has made a number of agreements and raised capital to sustain growth. Last year, Singapore-regulated ADDX agreed a business pact with the Singapore-regulated wealth and fund management company ICHAM, which has received a $200 million allocation as part of the Chongqing government’s overall $5 billion QDLP quota. In that case, ADDX will be a venue for investments from the ICHAM fund in China authorised to raise capital from Chinese institutions and individuals.
ADDX will offer these Chinese investors access to private market opportunities issued as digital securities, covering a broad range of asset types including private equity funds, venture capital funds, real estate funds, hedge funds, pre-IPO equity, bonds and structured products.
The MoU announced yesterday allows ADDX to “operationalise” the QDLP scheme for investors through a collaboration with China Construction Bank, it said. For example, the bank could be appointed to act as the custodian bank for the $200 million in investments made on ADDX through the ICHAM fund. China Construction Bank (Chongqing branch) could also distribute to its wealth clients the fund units under the QDLP allocation, it said.
“By allowing domestic capital to buy into high-quality offshore assets, China is ensuring its investors can build globally diversified portfolios that are best positioned to preserve and expand gains from the opening-up of the country’s economy over the past few decades,” ADDX chief executive Ms Oi-Yee Choo, said.
Founded in 2017, ADDX uses blockchain and smart contract technology to automate manual processes that in the past made it inefficient for private market securities to be distributed to investors. ADDX said the efficiencies from tokenizing securities enables it to slash minimum investment sizes from $1 million to $10,000. ADDX is part of a wider trend of firms using technology to make it easier for investors to enter the space.
ADDX has listed more than 30 deals to date, involving names such as Hamilton Lane, Partners Group, Investcorp, Singtel, UOB, CGS-CIMB, as well as Temasek subsidiaries Mapletree, Azalea, SeaTown and Fullerton Fund Management. The firm has also raised a total of $120 million in funding since its inception in 2017, including $50 million in its Series A round in January 2021 and $58 million in its Pre-Series B round in May 2022. Its shareholders include Singapore Exchange (SGX), the Stock Exchange of Thailand (SET), Temasek subsidiary Heliconia Capital and the Development Bank of Japan (DBJ).
To view a previous article about ADDX, click here.