KKR Tokenizing Part of its Private Equity Fund on Avalanche Blockchain
Nicholas Otieno Sep 14, 2022 02:40
KKR plans to tokenize part of its second Health Care Strategic Growth Fund to expand individual investors’ access to private investment vehicles.
KKR & Co. Inc, a New York-based global investment firm offering alternative asset management, capital markets, and insurance solutions, announced on Tuesday that it has put some part of its private equity funds on the public blockchain.
The US-based investment manager said it has put its Health Care Strategic Growth Fund available on the Avalanche blockchain through a partnership with Securitize Capital, a digital asset management platform offering a blockchain-based tokenization platform.
Securitize will tokenize part of KKR's second Health Care Strategic Growth Fund on the blockchain platform.
KKR, which had $479 billion in assets under management at the end of the first quarter this year, is working with Securitize, which will be responsible for onboarding new investors.
Customers can invest in KKR's healthcare fund through a tokenized feeder fund on the Avalanche blockchain provided by Securitize.
KKR said the tokenized healthcare fund would offer individual investors a more accessible investment vehicle.
Interested parties must create a digital wallet and sign up with Securitize. The fund allows retail investors to invest smaller amounts than institutions would usually require.
After a year of holding the security, investors can sell it to other qualified individuals on the secondary market.
Dan Parant, the Managing Director and Co-head of U.S. private wealth at KKR, commented on the development: "With its ability to digitize operational inefficiencies and increase ease of use for individual investors, blockchain technology has the potential to play an important role in the future of private markets."
Unlocking wider Access to Alternative Investments
According to a new report, asset tokenization is projected to grow 50-fold to expand into a $16.1 trillion business opportunity by 2030. This growth comes as the ongoing crypto winter prompts capital to focus on more viable blockchain use cases.
Traditional finance companies are still entering the crypto sector this year despite a market plunge that has seen the Bitcoin price crash by more than 50%.
Last month, Wall Street clearinghouse Depository Trust & Clearing Corp. launched a private blockchain to settle trades more quickly for clients.
In May, venture-capital firm Andreessen Horowitz doubled down on its crypto investments despite the market downturn by establishing a fourth crypto fund worth $4.5 billion.
Tokenization is the process of bringing existing rights and assets to the blockchain. While today, tokens are mainly crypto assets like Bitcoin, tokenization of other investment assets such as debt, equity, bonds, other securities, all kinds of support, and the Euro, are rapidly getting traction.
The growth in assets is driven by demand from a wide variety of investors seeking greater access to private markets. Tokenization and fractionalization of assets lower barriers to investment in private markets by significantly reducing minimum lot sizes.
Assets being fractionalized and tokenized on platforms like Securitize can reduce minimum investment sizes from millions of dollars to just thousands of dollars.
In the past, investments of this kind were only available to institutions. Tokenized investments now allow investors worldwide (without boundary limits) to invest in markets they previously could not access.
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