Investors seeking to invest in digital tokens with exposure to the Astrea VI private equity bonds, may now do so with iSTOX.

The multi-asset digital securities platform, on March 22, announced that it has tokenised the bonds that were issued in March by Astrea VI through Prometheus-3.

The move reduces the minimum investment ticket by up to 10 times, lowering the threshold for accredited investors to gain exposure to the private equity bond asset class.

The digital tokens are the first such offering with exposure to bonds in the Astrea series.

The manager of the Astrea VI bonds is Azelea Asset Management, an indirectly-owned company of Temasek Holdings.

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The digital issuance covers bonds from Astrea’s Class A-2 and Class B bonds. The USD-denominated bonds have fixed interest rates of 3.25% and 4.35% per annum respectively.

From the typical US$200,000 ($268,521) minimum denomination for wholesale bonds, iSTOX was able to reduce the minimum investment size for Class B security tokens to US$20,000.

Class A-2 security tokens were also made available from US$20,000 instead of the bonds’ usual US$50,000 denomination.

Under regulations set out by the Monetary Authority of Singapore (MAS), the security tokens for both bonds were open to subscriptions from accredited individual investors and institutions.

Investors who have successfully subscribed to the tokens via iSTOX can now begin trading them, as the tokens have been listed on the exchange.

New investors can participate in secondary trading by signing up as iSTOX users.

According to iSTOX, the tokenisation process is done on a blockchain network that uses smart contracts. This enables the automation of manual processes in the issuance, distribution and post-sale management of the bond, including coupon payments.

As such, the efficiency gains make it cost effective for the bond to be offered to a larger pool of smaller investors via lower minimum ticket sizes.

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iSTOX's chief commercial officer, Choo Oi Yee. Photo: iSTOX

“Like Azalea, iSTOX aims to democratise the private markets and ensure the benefits of private equity and other private asset classes are spread more equally among smaller investors,” says Choo Oi Yee, chief commercial officer of iSTOX.

“Studies have shown that global private equity averaged returns roughly double to that of global public equity over the past 10 years. Since 2018, Azalea has offered Astrea Class A-1 Private Equity Bonds to retail investors. At iSTOX, we believe the next logical step in democratisation is to help individual investors gain access to the other two USD-denominated tranches as well – Class A-2 and Class B bonds.”

“With this latest digital token issuance, iSTOX further levels the playing field by lowering minimum investments significantly, putting these tokens within the reach of many accredited investors – hundreds of thousands in Singapore and tens of millions worldwide,” Choo adds.

Choo further commented that digital tokens have had a “profound” impact on the financial markets due to its technology being “fundamentally more efficient”.

“Over time, as issuers and investors become better acquainted with digital tokens, we expect market forces to shift much if not all of the global bond market to digital issuances,” she declares.

“The issuance of digital tokens with exposure to the Astrea VI Private Equity

Bonds is one of the most significant deals on the iSTOX platform to-date. Since the

Monetary Authority of Singapore granted iSTOX a full license in February 2020, our strategy has been to offer high-quality issuances to accredited investors, as the issuers of these securities lead the market in embracing innovation and set standards that other issuers follow.”