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This content was paid for by SDAX and produced in partnership with the Financial Times Commercial department.

Democratising private investment through blockchain innovation

A Singapore-based investment platform is driving a new blockchain paradigm of asset-backed digital securities, opening up a rarefied world of opportunities while mitigating risk.

In the new normal of extreme financial market volatility, it can be hard for investors to make sound decisions. A new blockchain-based model of investment looks to offer digital securities backed by real assets — opening up a world of institutional-grade investment for sustainable wealth management and growth.

Singapore-based SDAX is leading this new paradigm that brings private investment — once the preserve of major players such as sovereign wealth and pension funds — into the reach of discerning retail investors. By merging investment banking acumen with Web 3.0 innovation, the platform offers reliable, risk-adjusted returns even in stormy times.

In the past year, even traditional asset classes such as equities and debt have been prone to gut-wrenching turbulence. SDAX offers both opportunities and protection by delivering hitherto prohibitive institutional avenues for higher yield and lower volatility.

Licensed by the Monetary Authority of Singapore, SDAX democratises private investment with innovative blockchain technology, giving ordinary investors access to high-value, hard-to-trade assets while mitigating risk. In doing so, the platform also drives a broader, environmental and social impact mission, fostering positive change for a net-zero world.

“Our mission is to allow a broader base of investors to gain access to assets that traditionally have not been available to most people, as these were only offered to ultra-high-net-worth individuals and Institutions,” says SDAX chief executive Raymond Poh.

“We’re closing the gap, and as more industry players get involved in the private markets from both the perspective of traditional finance and Web 3.0, we will see more robust innovations in the space that will benefit investors and continue to raise the bar for the financial industry.”

Forging collaborative partnerships with leading industry innovators is key to creating opportunities that optimise the investing experience, Poh adds. SDAX is therefore working with other exchanges and specialists such as Ownera — whose stated mission is “to enable a digital private market, by interconnecting the global financial industry” — to develop interoperability infrastructure that raises the standard of the industry and ultimately benefits investors.

Fractional empowerment

In the SDAX model, investment banking professionals securitise real assets in the primary market, then tokenise them on the platform’s blockchain exchange for wider access. The assets are structured to facilitate fractionalisation, such that securities and assets that would normally require a minimum outlay of tens of millions of dollars are divided into small, accessible units.

In this way, SDAX is able to democratise access to private equity, private credit and private real estate, introducing less familiar asset classes such as precision engineering, data centre real estate, next-generation sustainable construction and alternative investments such as art.

The SDAX team comes from an investment banking base with diverse backgrounds, structuring securities to raise capital for debt or equity issuance with an innovative edge. Poh, for example, has over three decades of engineering and banking experience at GE and JPMorgan.

Armed with both a capital markets services and recognised market operator licence, SDAX operates similarly to a boutique investment bank, identifying premium investment prospects and turning the assets into marketable securities. But with a twist.

SDAX also operates as a blockchain-powered exchange, offering these exclusive products to ordinary investors by fractionalising them into units as small as $5,000 and tokenising them for trading on the marketplace. This facilitates the development of a secondary market for private assets that previously did not have one.

A key aspect of levelling the playing field, says SDAX chief regulatory officer Rachel Chia, is educating investors in the pros and cons of the high-level financial instruments. “We're trying to demystify this complex investment space,” she says.

Exclusive opportunities

Here are some of the lesser-known investment opportunities that SDAX brings to the wider investment community:

  • Affordable social housing: Key focuses of investment products available on SDAX’s platform are real estate and impact investing. SDAX is working with a UK affordable social housing fund to optimise both. The fund is working to plug a chronic lack of social housing inventory by investing in projects that are 100 per cent backed by the government. The fund therefore takes on no construction or maintenance risk, while delivering an above-average yield with none of the market volatility that characterise REITS.
  • Precision engineering: SDAX proactively seeks out highly specialised midsize businesses that are best-in-class in manufacturing critical niche components in key industries. Few people have heard of these companies that may be No. 1 in their domestic markets — enjoying double-digit profit margins — while seeking capital to grow into multinationals. Through curated offerings that normally come to the attention of only private investment players, SDAX can offer powerful avenues for superior yield and protection from market volatility.
  • Collectible masterpieces: To further spread exclusive investment opportunities, SDAX is actively pursuing alternative vehicles such as art, wine and supercars that can be expected to appreciate in value. Up to now, acquiring a Rembrandt or a classic Lamborghini has been the domain of the super-rich or corporations. Although one cannot buy one-tenth of a painting or car, SDAX’s blockchain exchange enables such items to be structured as fractionalised securities and sold to a wider public.

A commitment to the future

Driving the SDAX mission forward is a commitment to bringing unique opportunities with ESG impact to investors while also delivering competitive returns. As an enabler of the transition to a net-zero future, SDAX is offering opportunities that contribute to this goal that normally go unnoticed by ordinary investors, such as biodiversity restoration projects.

According to Bee Lay Tan, SDAX’s chief sustainability officer, this vision is pushed forward by the three tenets of impact, returns and measurability, with Web 3.0 innovations enabling this strategy, especially in the field of measurability. “Our blockchain technology serves our ESG mission as an excellent tool,” says Tan. “We need to monitor the performance of ESG assets, and our blockchain methodologies enable that.”

For Poh, the SDAX mission of thought leadership and investor education can be a strong driver of change, as the platform builds an investment ecosystem for yield and measurable impact.

“Financing the net-zero transition is so important,” says Poh. “We need to educate the public a lot faster. What we're doing today is enabling people to be better equipped to choose investments that make a real difference.”

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