Hamilton Lane to tokenize funds with Securitize – Ledger Insights

Today, investment manager Hamilton Lane announced a deal with digital asset securities firm Securitize to tokenize three of its funds. Hamilton Lane has $835 billion in assets under management, and the funds to be tokenized include unlisted stocks, private credit and secondary transactions.

The news follows the announcement last month that Securitize would use blockchain to tokenize a portion of KKR’s Health Care Strategic Growth Fund II.

Historically, Hamilton Lane funds have been limited to institutional investors. New tokenized feeder funds will be created in Q4, giving a wider investor base access to the funds. Clients must still be accredited, which means a net worth of more than $1 million or income over $200,000.

But from an asset manager’s perspective, this group is a huge market. And one that can be clearly measured.

According to the Federal Reserve’s 2019 Survey of Consumer Finances, the top 10% of families have incomes above $236,000. This group owns 71% of total personal wealth or $68.4 trillion in assets. The figure rises to $82 trillion if you include defined benefit pensions. Not all of this should be invested in funds. Pensions, property and business ownership make up significant shares of the assets. Yet these accredited investors held $22 trillion in financial assets in 2019, excluding pensions.

“This collaboration with Securitize is our latest step towards providing access to the strong returns and performance opportunities generated in the private market to a newer set of investors, while increasing ease of use and transparency through the use of blockchain technology,” said Victor Jung, Head of digital assets on Hamilton Lane.

Converting funds into security tokens therefore enables these private investors to place money in assets that were previously only available to institutions. It reduces the costs of issuance and administration, and enables shared ownership.

Securitize has several subsidiaries that are responsible for various parts of the process. The company’s digital transfer agency performs tokenization. The feeder funds are managed by Securitize Capital, the digital asset management arm. And its broker-dealer Securitize Markets enables secondary market trading.

While tokenization of funds has been widely discussed for years, and several blockchain platforms have been developed, this year sees the start of some momentum. In other jurisdictions, companies such as ADDX are active in Singapore, and the UK, top 5 asset manager, abrdn has recently invested in digital asset exchange Archax.