SINGAPORE - A partnership between Nasdaq-listed investment firm Hamilton Lane and Singapore digital securities exchange ADDX will make it easier for a broader range of people to invest in private markets.

The link-up involves tokenising a class of shares issued by the Hamilton Lane Global Private Assets Fund and making them available to accredited ADDX investors at a minimum ticket size of US$10,000 (S$13,500).

This compares the minimum of US$125,000 or more for investors who subscribe to the fund via traditional channels.

The move comes at a time when awareness over asset tokenisation as an alternative means to raise funds is growing, and as public market financing through activities such as initial public offerings slows amid rising volatility.

According to data provider Refinitiv, investment banking fees for raising capital via public debt and equity fell 15.6 per cent from last year's record first quarter to US$221.3 million in the first quarter of this year, based on preliminary data.

ADDX chief executive Choo Oi-Yee said: "Many investors don't realise that the private markets are much larger than the public markets. Globally, more than 90 per cent of companies with an annual turnover of US$100 million or more are private."

While many of these companies can add value to portfolios, such investments are typically inaccessible for most investors. "With tokenisation and fractionalisation, ADDX is committed to plugging that gap," Ms Choo said.

Asset tokenisation is the process of digitalising the ownership rights to an asset and then breaking it up into fractions, or security tokens, using blockchain technology.

Each token represents a proportion of the digitised asset, which could be a fund, private equity, real estate or a collectible. The tokens can be traded on an exchange like ADDX.

Tokenisation also allows the exchange to reduce minimum investment sizes to as low as US$10,000. Without tokenisation, the minimum ticket size for similar private market opportunities can be US$100,000 to US$5 million.

Asset-backed tokens are different from digital payment tokens such as cryptocurrencies, which are used for payments and can be speculative in nature.

Unlike non-fungible tokens, or NFTs, which represent verifiable ownership of a single unique asset, such as a song or art piece that cannot be replaced by another, security tokens are fungible, meaning every token is interchangeable with other tokens of the same asset.

In Singapore, raising funds via asset tokenisation is available only to accredited and institutional investors, which is limiting broader demand, as trading of security tokens is still relatively illiquid.

"The take-up rate for security tokens has been low because investors are still finding it difficult to sell such tokens," said Mr Chia Hock Lai, who leads Blockchain Association Singapore.

"Until the ecosystem is more developed and security tokens can be marketed to retail investors, liquidity will be a limiting factor for asset tokenisation."

But Mr Chia added that tokenisation will "become more important and accessible to retail investors possibly in the next three to five years".

Ms Choo said demand for private market products has increased in the past two years, adding: "(The Monetary Authority of Singapore) has been quick to identify ways to allow emerging blockchain technology to be adopted and applied for the tokenisation of traditional securities".

Besides the Hamilton Lane fund, ADDX has also tokenised a United States real estate industrial fund, a local studio that designs Batman, Godzilla and Ultraman collectibles and a short-term commercially backed credit note issued by Singapore-listed money lender ValueMax.

Since 2020, it has completed 26 token issuance deals. Last year, the accredited investor base on ADDX grew 120 per cent year on year.

ADDX, which is backed by investors including Singapore Exchange and Temasek-owned Heliconia Capital, was approved by the MAS as a recognised market operator and received a capital markets service licence in 2020.

Other regulated security token exchanges in Singapore include the DBS Digital Exchange and ECXX.