Singapore's iStox raises $50m Series A

Japan’s Mobile Internet Capital, Juroku Bank, Development Bank of Japan, and JIC Venture Growth Investments, the VC arm of Japan Investment Corporation, are among the new investors. Existing backers re-upping in the round include Singapore Exchange, Tokai Tokyo Financial Holdings, and Korea’s Hanwha Asset Management.

Singapore Exchange and Heliconia Capital Management, a subsidiary of Temasek Holdings, provided an approximately $1.5 million seed round in 2018, taking a combined 6.7% stake. Thailand’s Kiatnakin Phatra Financial Group is also an investor.

IStox facilitates the issuance, custody, and trading of tokenized securities, providing retail investors access to a range of asset classes, including private equity, private debt, hedge funds, real assets, and start-ups. Securities are fractionalized using blockchain and smart contract technology in an automated process that allows for investments smaller than $20,000.

The platform, which is regulated by the Monetary Authority of Singapore (MAS), is said to be the first-ever regulated trading service for digitized securities. It was incubated in the MAS Fintech Regulatory Sandbox with a view to helping underserved investors access out-of-reach investments. Last year, it signed a memorandum of understanding with Chongqing Monetary Authority to set up an exchange in China. There are further plans to enter Australia and Europe.

Last month, iStox helped Singapore multi-family office ICHAM launch what it calls the first unicorn fund in digital securities form. The ICHAM Unicorn Opportunity Fund has raised about $20 million and will make secondary investments in 4-8 unicorns with plans to exit within 2-3 years. ICHAM is chaired by Uttama Savanayana, formerly Thailand’s finance minister and a managing director at Thai Prosperity Advisory, a private equity firm.

“With the new financing, iStox will expand our footprint both geographically and in terms of investment offerings. We will roll out private issuances by blue-chip issuers that individual investors on our platform can subscribe to in bite-size portions," Oi Yee Choo, iStox’s chief commercial officer, said in a statement. “The digital securities space will grow by leaps and bounds in 2021.”

Tech-enabled platforms that pool retail capital for combined fund commitments are estimated to represent up to 10% of the corpus of some funds in Singapore. Caroline Baker, a Singapore-based managing director at fund administrator Vistra, told AVCJ last year that she was tracking several such vehicles and suspected there were considerably more.

“[W]e’re definitely seeing an increase in the amount of retail investors being interested in private equity, and we’re seeing more and more sophisticated platforms where they can pool their capital to invest,” Baker said. “So I think there will continue to be more retail investors looking at ways to access this market and more first-time GPs being open to having retail investors access their funds, but I don’t think it’s going to turn the industry on its head. It’s going to be a slow and steady growth.”

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• Topics
• Southeast Asia
• Financials
• Technology
• Early-stage
• Singapore
• The Development Bank of Japan (DBJ)
• blockchain
• Financial Services
• Fintech