Digital asset firm Securitize Capital is set to tokenize the $491 billion KKR Health Care Strategic Growth Fund II (HCSG II) to manage assets on the Avalanche blockchain.
The news was shared by KKR on September 13, with HCSG II tokenization described by Securitize Capital director Wilfred Daye as a “significant breakthrough” for individual access to private equity markets.
Tokenization allows investors to own a token representing a stake in a $4 billion healthcare-focused fund that invests in 23 companies based in North America and Europe that are adept in the pharmaceutical, medical device, and life sciences industries.
In order to purchase the HCSG II fund on the Securitization protocol, investors must present their passport, fill in personal and tax information and complete a “liveness check” to be verified. Investors are also subject to a 0.50% management fee.
Ava Labs founder and CEO Emin Gün Sirer said the tokenization of the HCSG II fund marked a “huge milestone” for the blockchain industry by enabling the movement of “real-world assets” on-chain:
Huge news: flagship fund exposure @KKR_Coone of the largest institutions in the world, is tokenized by the company on Avalanche @Secure. This is a huge milestone for blockchain on Wall Street and real-world assets coming on-chain https://t.co/03iQY8OTpl
— Emin Gün Sirer (@el33th4xor) September 13, 2022
KKR said that on-chain tokenization of real-world assets also “lowers investment minimums, improves digital investor protocols and compliance, and increases the potential for liquidity through a regulated alternative trading system.”
Related: Tokenization, explained
The potential of tokenization to capture a large share of global assets has also been recognized by Boston Consultant Group (BCG) and Raiffeisen Bank International’s Blockchain Research Hub.
BCG predicted that $16.1 trillion of illiquid assets will be tokenized by 2030, while Raiffeisen Bank International’s Blockchain Research Hub predicted this last year most securities will be tokenized by 2030.
Securitize Capital operates the Securitize protocol, which was integrated into the Avalanche blockchain in December 2020 and is aimed at “reinventing private capital markets by providing trusted end-to-end security token solutions”.