Fintech platforms offer funds for individual investors to access unicorns in private equity, real estate markets
Several start-ups in Asia are using fintech to help individual investors get a piece of the action in the US$97.7 billion market for alternative assets, access that typically requires an outlay equivalent to the value of a sea-view luxury villa in Hong Kong.
One such example is German start-up Moonfare, which has 13,000 users on its digital platform that aggregates small individual tickets into a feeder fund, which in turn invests in private equity or credit vehicles. Hong Kong-based Altive is also distributing a new fund for professional investors to get into the same sphere.
"Investing via a fund offers diversified exposure to various early-stage companies," said Kenneth Chan, partnerships manager for Asia-Pacific at Moonfare, which plans to launch up to 20 funds annually. "Family offices in Asia have shown an increasingly strong appetite for investing directly in early stage companies."
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The private market is traditionally a domain of pension funds and other institutional investors, and funds managed by the likes of KKR and Carlyle are often off-limits to high net worth individuals. Platforms managed by Moonfare and Altive could level the playing field and ease access for professional investors, or those with at least HK$8 million (US$1.03 million) of wealth under local market definition.
ByteDance is the parent company of video sharing app TikTok. Photo: AFP alt=ByteDance is the parent company of video sharing app TikTok. Photo: AFP
This means some of the world's biggest unicorns, such as ByteDance, the owner of TikTok, are now open to such investors. These fintech platforms have lowered the minimum outlay to US$100,000, with potential savings in upfront fee compared to those charged by private banks.
Fidelity International took a minority stake in Moonfare in March as the fund manager overseeing US$700 billion of assets expanded into private markets. A distribution partnership will also give family offices, their advisers and banks access to funds through Moonfare's digital platform.
Funds that invest in the private markets raised a US$97.9 billion in Asia last year, a third straight year of decline, according to a McKinsey & Co report.
Altive, which counts Pacific Century Group and Alibaba Hong Kong Entrepreneurs Fund as backers, has raised over US$300 million from investors through its platform.
Last Friday, Altive announced that it will distribute a new fund focusing on private credit through a partnership with US private equity firm Carlyle. This added to other funds that invest in real estate and pre-IPO companies.
"We are already well-penetrated into pre-IPO deals and unicorn investment opportunities," said Nick Wong, managing partner of Altive, adding that pre-IPO deals were especially sought after by Chinese investors.
Still, any intermediaries facilitating investors' entrance must have stringent know-your-customer and anti-money-laundering scrutiny in place, said Nick Xiao, chief executive of Hywin International, part of Hywin Wealth, a Nasdaq-listed independent wealth manager in China.
"Any facilitation platform should avoid selling private market assets to investors who cannot assess the risks properly, or are actually 'retail' in their wallet size or in their mindsets," Xiao said, adding that Hywin is currently engaging some of these fintech platforms as external advisers.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.
