ADDX-Tokai Tokyo alliance boosts investment prospects in Japan

147

ADDX, the private market exchange along with its partner Japan’s Financial services company Tokai Tokyo Financial Holdings, have announced an alliance for offering up much required boost for private market investment prospects for Japanese investors.

Tokai Tokyo had announced securing of security tokens and hence it will boost up investment prospects for both firms on issuances by Japanese real estate companies and banks.

Tokyo Stock Exchange-listed Tokai Tokyo is the holding company for a leading securities brokerage1 in Japan. The firm offers investment, trading services to investors via its network of 144 offices in Japan. It holds consolidated net assets worth US$1.4 billion, having a firm base of US$38 billion of client under assets management.

As per the reports, the previous month, Tokai Tokyo had acquired license from the Japanese regulator – the Financial Services Agency (FSA) – that empowers firm to deal in security tokens, also known as digital securities. With the latest license, Tokai Tokyo and ADDX plan to team up on security token issuances by Japanese real estate firms and banks.

These future deals will be tokenised on the ADDX platform before being circulated by Tokai Tokyo to sophisticated investors in Japan. In addition, Japanese investors will be able to trade the digital securities on the ADDX secondary exchange through Tokai Tokyo.

As per the interim reports are concerned, with this latest business alliance, ADDX assumes a substantial growth to its revenue from the Japanese market. Under the tie-up, Tokai Tokyo will be the initial Japanese firm to deliver security tokens that are tradeable on a secondary exchange. It will also be the initial one in Japan to deal in security tokens for non-liquid assets2, as previous security token licensees received regulatory approvals for liquid assets3.

As per the announcement, by both the firms, Tokai Tokyo and ADDX, alliance commenced in 2019 when Tokai Tokyo made its initial investment in ADDX, previously known as iSTOX. Tokai Tokyo was also a lead investor in the US$50 million Series A fundraising round by ADDX in January 2021.

Other ADDX shareholders comprises of Japanese investors JIC Venture Growth Investments (JIC-VGI), Development Bank of Japan (DBJ), Singapore Exchange (SGX) as well as Temasek subsidiary Heliconia Capital4.

Statement from Yuji Ban, Senior Managing Executive Officer, Tokai Tokyo Financial Holdings

Yuji Ban, Senior Managing Executive Officer, Tokai Tokyo Financial Holdings, stated that: “It took a long time to get to this point, but we now have a license for security tokens. Our future collaboration with ADDX will be key to establishing an innovative business model in Japan, where a digital security exchange like ADDX does not exist yet.”

He further added that, “We and many others in Japan eagerly anticipate working with ADDX to create investment opportunities for Japanese investors and new financing options for issuers. We look forward to working with ADDX on a variety of security token projects in the near future.”

Statement from Oi Yee Choo, Chief Commercial Officer of ADDX

Oi Yee Choo, Chief Commercial Officer of ADDX, stated out that: “Japan has one of the most forward-thinking regulators on the issue of digital securities – alongside those in a handful of other jurisdictions, including Singapore. This prevailing view has once again been validated by the Japanese regulator’s latest move to grant a new security tokens license. As Japan embraces innovation in the capital markets, individuals will, no doubt, be the chief beneficiaries.”.

She also added further that,  “The community of individual sophisticated investors in Japan is deep and sophisticated. Historically, they have shown a strong interest in real estate investments. But the opportunities open to them – whether in real estate or other asset types – are curtailed because of the high minimum investment sizes in the private markets. Digital securities can fractionalize investments, helping individuals to diversify their portfolios and to invest with a strategy and asset-mix closer to that of family offices or institutions. This promises several positive knock-on effects – from better retirement adequacy to a fairer distribution of wealth.”

She explained out further that: “Tokai Tokyo is one of the oldest and most trusted financial companies in Japan, with roots dating back to 1908. We expect this partnership to yield multiple deals over the next few quarters. The possibilities are exciting and limitless, given how the two companies share the same vision on innovation in the financial services and bring complementary strengths to the table.”

ADDX is a full-service capital markets platform with Monetary Authority of Singapore (MAS) licenses for the issuance, custody, and secondary trading of digital securities. Individual accredited investors5 utilizing the ADDX platform that recently commenced from Asia Pacific, Europe, and the Americas (excluding the US).

Digital securities are securities issued utilizing the blockchain, smart contract technology and as per the statistics, they are more efficient to control, as an outcome to the technology, it curbs the requirement for intermediaries, automating manual processes.

They are also regulated and backed by real-world assets. The productivity of blockchain empowers out minimum ticket sizes for private market products to be compacted from US$1 million to US$10,000, intensifying access for accredited investors to previously out-of-reach assets, including funds, bonds and pre-IPO equity. Issuers benefit from lower fees, the ability to reach a larger investor base, a lower fundraising threshold, as well as a faster speed-to-issuance.

____________________________________________________________________

[1] Tokai Tokyo Securities Co., Ltd.

2 Examples of non-liquid assets include collective investment schemes and trust certificates.

3 Examples of liquid assets include listed securities and listed bonds.

4 Also among ADDX shareholders are Korea’s Hanwha Asset Management and Thailand’s Kiatnakin Phatra Financial Group.

5 The Singapore regulatory regime that ADDX operates under defines an accredited individual investor as an individual whose net personal assets exceed in value SGD 2 million (or its equivalent in another currency), or whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or its equivalent in another currency), or whose income in the preceding 12 months is at least SGD 300,000 (or its equivalent in another currency).

Press Release received on mail from ADDX

LEAVE A REPLY

Please enter your comment!
Please enter your name here