India's Innoven fractionalises venture debt fund
India’s Innoven Capital, a joint venture between UOB and Temasek Holdings-owned Seviora Holdings, has fractionalised a USD 50m venture debt fund using blockchain and smart contracts.
It extends a string of similar moves in recent months, including Fullerton Fund Management tokenising a private equity fund-of-funds and Seatown Holdings International following suit with an Asia-focused growth equity fund. Both are Singapore-based subsidiaries of Temasek, with Seviora serving as a holding company for Fullerton.
Temasek is often a common denominator and the government-controlled investment fund is considered a leader in the broader theme of opening private equity to retail investors. Its flagship program in this respect is Azalea Asset Management, which has experimented with tokenised private equity bonds.
Blockchain and smart contract technology has proven indispensable in solving challenges around minimum thresholds, network connections, data access, and paperwork among other issues plaguing retail investment in private markets.
Innoven’s fund, anchored by Seviora and UOB, will provide a combination of fixed-income and equity returns with annual cash distributions. It has a minimum subscription size for individual accredited investors of USD 20,000. This compares to USD 5m in previous vintages.
The Seatown fund allowed commitments as small as USD 100,000, while the Fullerton fund went as far as USD 10,000. Partners Group, considered the first major private equity firm to move on this trend, launched a fund in September last year accommodating commitments of USD 10,000.
Singapore’s ADDX, a digital securities exchange that provides fund tokenisation services, facilitated the latest Innoven fund, as well as funds from Fullerton, Partners Group, UOB, Azalea, Investcorp, and Hamilton Lane. Seatown has used technology from ADDX and a competitor called Kristal for various vehicles.
ADDX, formerly known as iStox, has raised more than USD 120m in private funding since its inception in 2017. This includes a USD 58m pre-Series B round last May featuring UOB, Hamilton Lane, and the Stock Exchange of Thailand among others. Heliconia Capital, another Temasek subsidiary, has also invested in the company.
“Private debt as an asset class is on the rise, with assets under management forecast to increase from USD 1.2trn in 2021 to USD 2.7trn in 2026,” ADDX CEO Oi-Yee Choo said in a statement, referring to the new Innoven fund.
“As blockchain technology lowers the barriers to entry for individual investors – by as much as 250 times, as in this case – we take the view that a significant share of the projected growth in private debt will come in the form of new, mass affluent investors getting access for the very first time.”
Innoven was established in 2008 as SVB India Finance, the India arm of US-based Silicon Valley Bank. Temasek bought the business in 2015 and then sold a 50% stake to UOB. It has deployed around USD 1.2bn across more than 560 debt transactions involving over 300 companies in Asia.
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