PhillipCapital launches digital securities backed by Bordeaux wine for accredited investors
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The move provides an opportunity to invest in rare wines without the risk of having to negotiate with buyers and sellers.
PHOTO ILLUSTRATION: UNSPLASH
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SINGAPORE – Local stockbroker PhillipCapital has issued a digital token that lets accredited investors own prime Bordeaux wines such as Lafite Rothschild, Haut Brion and Mouton Rothschild.
The move provides an opportunity to invest in rare wines without the risk of having to negotiate with buyers and sellers, while also avoiding the onerous tasks of storage and documentation, said Mr Seh Huan Kiat, fintech director at PhillipCapital.
Each token will represent an asset-backed security that gives holders ownership of a parcel of 36 bottles of 16 wine labels.
The Straits Times understands that each security will be backed by one bottle of wine and valued at a discount based on prevailing market prices for similar wines.
The wines will be bottled and sold in 2023, when holders can opt to redeem their security tokens for cash when the wine is sold, or take possession of the physical bottles.
They can also redeem the tokens for cash upon a sale or collect the bottles in 2026, when the security tokens mature.
The tokens can be traded by accredited investors of PhillipCapital on Alta, a private, blockchain-powered securities exchange licensed by the Monetary Authority of Singapore, between now and 2026.
PhillipCapital and Alta have collaborated on other listings, including the launch of South-east Asia’s first whiskey-based security tokens in early 2021.
These tokens were listed on Hg Exchange, which was acquired by Alta in September. Alta’s shareholders include Phillip Securities, which is a member of PhillipCapital.
Alta says that since 2016, it has completed more than 1,000 transactions valued in excess of US$600 million (S$808 million) and has created access for investors to invest in more than US$22 billion worth of mandated opportunities globally.
Mr Luke Lim, managing director of Phillip Securities, said the emergence of digital asset-backed security tokens using the blockchain has given high-net-worth investors and family offices access to rare and limited-edition luxury investments.
“This is part of our efforts to understand the changing needs and preferences of our clients and develop new investment opportunities for them,” he added.
Mr Seh said the risk of trading tokens backed by alternative assets such as wine is poorer liquidity due to the limited number of accredited investors. However, he added that PhillipCapital’s security tokens represent just one option to wine investing amid rising demand.
A 2022 report by real estate agency Knight noted that the value of fine wine as an investment class has appreciated 137 per cent over the past decade.
In November, private market exchange ADDX announced that it would enable the trading of tokens based on a portfolio of French wines.
The portfolio was digitalised and broken down into fractions, or tokens – a process known as tokenisation – to enable a wider pool of accredited investors to put their money in.
The portfolio comprises 359 bottles of wine worth more than $1 million in total. Primary subscriptions for the tokens were completed at 83 cents each at a minimum subscription size of 1,000 tokens, or $830.
This means investors can own a fraction of the portfolio of wines for as little as $830.
