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OCBC Bank has joined forces with global private market exchange ADDX to introduce a tokenized equity-linked structured note aimed at accredited investors.
The fixed coupon note, which became available in early May, paves the way for a long-term partnership between OCBC Bank and ADDX, focused on offering a wider range of investment products, an announcement on Wednesday said
The newly launched note is linked to shares in a prominent US-listed tech giant, serving as the underlying asset. ADDX has made the product available on its platform, with a minimum investment size of US$50,000.
Fixed coupon notes, such as this one, are equity-linked structured notes that offer regular distributions at predetermined intervals, subject to specific conditions outlined in the note's terms. They provide investors with the opportunity to generate additional cash flow while gaining potential exposure to the underlying security or securities.
OCBC said this partnership aligns with its strategy of working with with innovative digital players and strengthening its relationships in high-growth and emerging sectors. By tokenizing the fixed coupon note, OCBC Bank aims to increase accessibility for accredited investors, enabling them to participate in this product.
Kenneth Lai, OCBC Bank's head of global treasury, expressed his enthusiasm for this innovative partnership and the opportunities it presents. He emphasized OCBC Bank's commitment to innovation and finding new channels for their products.
Asset tokenization growth
Blockhead previously reported the growing interest in asset tokenization – the process by which an issuer creates digital tokens on a distributed ledger or blockchain to represent either digital or physical assets – as crypto winter is prompting capital to focus on more viable blockchain use cases.
The projected growth in asset tokenization is driven by demand from a wide range of investors for greater access to private markets, as tokenization and fractionalization of assets lower barriers to investment in private markets by reducing minimum lot sizes.
A 2022 Blockhead survey of 25 investment advisors, asset managers, and analysts at research firms noted that investment management firms, private markets investment firms and crypto exchanges have jumped into the bandwagon of tokenized funds, with large investment management firms and crypto exchanges considering different products for such investors.
Headquartered in Singapore, ADDX leverages blockchain and smart contract technology to democratize private markets and reduce manual interventions in the issuance, custody, and distribution of private market products. The platform's utilization of digital securities enhances efficiency, enabling fractionalization of investments in a scalable and commercially viable manner.
ADDX has listed over 70 deals on its platform and is collaborating with names such as Hamilton Lane, Partners Group, Investcorp, Singtel, CGS-CIMB, and various Temasek-owned entities, including Mapletree, Azalea, SeaTown, and Fullerton Fund Management. The platform covers diverse asset classes, including private equity, hedge funds, venture capital, private credit, real estate, debt, and structured products.
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