Singapore Private Market Stock Exchange ADDX and China Construction Bank (Chongqing and Singapore branches) have entered into a partnership to help domestic investors in China participate in the country’s official offshore investment program.
The financial institutions announced on Thursday the signing of a memorandum of understanding (MOU) that paves the way for them to work together on the custody and distribution of a $200 million quota allocation under the Qualified Domestic program. Limited Partnership (QDLP).
The duo said in a statement that the MoU allows ADDX to operationalize the QDLP program for investors through collaboration with China Construction Bank.
Under the memorandum of understanding, the bank could be appointed to act as the custodian bank for the $200 million in investments made on ADDX through the ICHAM fund. China Construction Bank (Chongqing branch) could also distribute the fund’s shares to its wealthy clients under the QDLP allocation.
Launched in 2012, the QDLP allows sophisticated investors in China to participate in renminbi-denominated funds focused on overseas investment opportunities. Unlike other offshore programs such as QDII and Wealth Management Connect, the QDLP allows offshore investments in a wider variety of assets – not just public market products, but private market ones as well.
Last year, ADDX struck a deal with Singapore-regulated wealth and fund management firm ICHAM, which received a $200 million allocation as part of the government’s $5 billion QDLP global quota. from Chongqing.
Under the agreement, ADDX will be a key location for ICHAM fund investments in China authorized to raise capital from Chinese institutions and individuals.
The ADDX will provide these Chinese investors with access to private market opportunities issued in the form of digital securities, covering a wide range of asset types, including private equity funds, venture capital funds, real estate, hedge funds, pre-IPO equities, bonds and structured products.
“As Asia’s largest private market exchange, ADDX is eager to bring global investment opportunities to our platform in China, Asia’s largest wealth management marketplace. By allowing domestic capital to buy high-quality offshore assets, China is ensuring that its investors can build globally diversified portfolios that are best placed to preserve and grow the gains from opening the country’s economy in recent decades,
“The potentially improved returns from such a move will in turn boost economic growth in China, as capital gains from investments flow back into
China to create new jobs and strengthen the purchasing power of Chinese consumers. In enabling these investments, ADDX is privileged to work with China Construction Bank, a respected and globally leading financial institution,” said Oi-Yee Choo, CEO of ADDX.
Founded in 2017, ADDX uses blockchain and smart contract technology to automate manual processes that have so far made it inefficient to distribute private market securities to large numbers of investors. The efficiency of tokenizing these securities allows ADDX to reduce the minimum investment size from $1 million to $10,000.
ADDX has listed over 30 transactions to date, involving blue chip names such as Hamilton Lane, Partners Group, Investcorp, Singtel, UOB, CGS-CIMB, as well as Temasek subsidiaries Mapletree, Azalea, SeaTown and Fullerton Fund Management . The fintech company has raised a total of $120m in funding since its inception in 2017, including $50m in its Series A round in January 2021 and $58m in its pre-series round B in May 2022.
Its shareholders include the Singapore Stock Exchange (SGX), the Stock Exchange of Thailand (SET), Temasek subsidiary Heliconia Capital and the Development Bank of Japan (DBJ).
China Construction Bank is one of China’s leading banking groups, with a network of 14,510 branches and over 351,000 employees. The bank’s market capitalization at the end of 2021 was $175 billion, making it the sixth most valuable bank in the world.
ADDX is Singapore’s first financial institution to recognize crypto assets from accredited investors