Tokenization comes to private debt

• The token matures in 18 months and has a fixed annual interest rate of 14% 

• The product complies with the Swiss Distributed Ledger Technology (DLT) framework

October 27 (Preqin News) – Sygnum Bank, in partnership with Float and Fasanara Capital, will be releasing a new tokenized private debt instrument, the first product of its kind giving access to private debt. 

The token is to be launched by Float on the Polygon blockchain to optimize for high transaction speeds and low costs. Fasanara, a London-based private capital fund manager with $4bn of assets under management (AUM), will act as the primary lender and the product will only be available to customers of Sygnum Bank.

There has been rising interest in tokenization for private markets, where interest in private debt has also grown. In its Money, Tokens, and Games report, published in March 2023, Citi estimated that the future value of tokenized private markets assets could reach almost $4tn by 2030, an 80x increase from today. 

The token will allow investors to invest with Fasanara in the private debt markets, with diversified exposure to SME loans made to European SaaS and technology companies. Francesco Filia, CEO of Fasanara, said: ‘This partnership is a breakthrough for tokenization and we are dedicated to bringing even more debt on-chain.’ Fasanara has a strong focus on fintech and is currently in the market to raise $1bn with Allianz Trade to invest in fintech and B2B e-commerce. It closed a crypto and fintech VC fund on $350mn in 2022. 

Sygnum is a venture-backed company focused on developing financial services and is backed by investors including Animoca Brands, Polymorphic Capital, and SBI Digital Asset Holdings. 

Thanks to Float’s infrastructure, investors can benefit from on-chain proof of ownership and a minimum ticket size of CHF 1,000, as well as have more flexibility when it comes to transferring their assets. While the minimum investment is low, private qualified investors need to deposit a minimum of CHF 100,000 to open an account with Sygnum.

Whereas digital asset regulation is a contentious topic in the US and the EU, the DLT framework makes it easy for companies to launch products, and securities can be launched directly on-chain. The token will be available to trade on Sygnum’s end-to-end tokenization solution comprising Desynate and SygnEx, but it won’t be possible to trade it on decentralized exchanges such as Uniswap. 

'Via tokenization, investors can access the Float token’s yield with ticket sizes as low as CHF 1,000,' Fatmire Bekiri, Head of Tokenization at Sygnum Bank told Preqin News. 'This is key to opening up access to private debt markets – which are often seen as hard-to-access – and making them more investible and accessible. While the risk/return profile of tokenized private debt is not necessarily different from traditional private debt investments, the Float token investors also benefit from its tradability and liquidity on our secondary market. This project is only the first step in Sygnum’s strategic roadmap for private markets, with more such innovative asset token issuances to follow.'

_{The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.}