InvestaX is a Singapore-based licensed digital securities investment and trading platform that specializes in private market investments, including private equity and real estate. InvestaX supports public and private blockchains, offering global products to local and international investors.
We are excited to announce that we have begun working closely with relevant industry stakeholders on tokenizing Singapore's Variable Capital Company (SVCC) legislation structure. The SVCC is a new corporate structure launched in January 2020 with the aim to encourage more investment funds to be domiciled in Singapore, enhancing the city-state's value as an international fund management centre. This is a consequential development for the adoption and growth of digital securities for private markets, because the SVCC is a game-changing legislation for many global asset management businesses. PwC and its Singapore-based resident SVCC expert Armin Choksey conducted a webinar here for our community to explain the benefits as well as the many applications of the SVCC (.pdf download here).
Specifically, the SVCC is a new Singapore on-shore investment vehicle that is on a par -- and arguably better -- with offshore fund jurisdictions, such as the Cayman Islands and the British Virgin Islands. These offshore jurisdictions are reportedly becoming more difficult to use as an investment holding structures, as has been extensively covered by the press: (1) EU bans Cayman on tax haven blacklist, and (2) Denmark and Scotland refusing bailouts to companies registered in offshore jurisdictions.
As you can see from PwC's chart above, the enactment of the SVCC legislation enhances Singapore’s competitiveness as a domicile for investment funds by introducing a number of special features and by dispensing with the many elements of the existing Companies Act aspects that are not conducive to investment funds. In other words, the SVCC is a corporate-form fund that could be:
- Regulated under or exempted from the SFA
- Set up as an open-end or as a closed-end fund
- Used for mutual fund-type strategies meant for retail investors, and alternative investment fund strategies for accredited investors
- The re-domiciliation of foreign corporate funds to Singapore as SVCC
The SVCC was designed to support all asset classes, and match or better comparable structures available in the popular fund jurisdictions of the world. In 2018-19, the Cayman Islands held almost US$4 trillion worth of Cayman-domiciled funds. Singapore will now capture much more of this important and large, revenue-generating component of the investment management industry in Asia.
Dominant global economies are turning their backs on offshore jurisdictions, so this new structure offered by a city known for its robust judiciary comes at the right time, given Singapore's push to be the leading digital finance centre for Asia. With the strong regulatory support from the Monetary Authority of Singapore (for e.g., investing a further $250M into the FinTech industry to boost innovation), the successful completion of Phase 5 of Project Ubin recently, and now the creation of the SVCC, we are confident that Singapore will eventually become the leading global capital markets jurisdiction for digital securities issuance, trading and custody, for global digital assets products.
So, why is this important?
To date, there were three serious bottlenecks for the growth of digital securities in the private markets to take off:
- Poor quality offerings at industry launch in 2017/18
- Lack of the necessary capital markets infrastructure (broker-dealers, exchanges, custodians, etc.) in 2018/19
- Dual jurisdiction-issues between fund issuance platform and fund managers with offshore structures as the dominant vehicles for investments
With the availability of the SVCC, especially in a jurisdiction that is highly supportive of digital securities and platforms like InvestaX, all three of the aforementioned issues have solutions. We believe that the security token markets will begin to scale up, so understanding and implementing the SVCC is critical for companies already involved in capturing value from the the digital securities industry. Many leading capital markets institutions have launched their first digital securities to invest in the technology and process flow to determine where the value is for their organization and their people.
The latest MAS 2019 Asset Management Survey estimates that the total assets managed by Singapore-based asset managers grew by 15.7 per cent to S$4 trillion in 2019, in line with the global trend driven by strong market performance and net inflows from investors. Singapore continues to serve as the Global-Asia Pacific gateway for asset managers and investors. In 2019, 76% of AUM originated from outside of Singapore, and 69% of AUM was invested into the Asia Pacific region. The Asia Pacific remained a key source region with net inflows from clients increasing by 21% in 2019, and funds invested into the Asia Pacific region saw growth of 24% in 2019.
InvestaX and our network of partners provide the key infrastructure required to digitize the private markets. Licensed by the Monetary Authority of Singapore, our digital securities platform offers end to end solutions for the issuance, trading, and custody of digital securities for all private market securities, including real estate and private equity. We have a proven track record, having issued more than 28 private equity offerings jointly valued at over US$ 1B and made 13 successful exits thus far.