With the stock market at an all-time low and volatility in the market leading to concerns for many, there are other options out there. That’s where the alternative investment comes in as an option for those looking to grow their wealth during this period.
To find out what the alternative investment market is looking like in Southeast Asia, we spoke to Kelvin Lee, CEO and Co-Founder of Alta, which was previously known as Fundnel. They recently announced the acquisition of the leading private digital securities exchange, Hg Exchange (HGX).
The acquisition will enable Alta to support the tokenization and digital custody of alternative assets, creating an end-to-end solution that makes it cheaper and faster to trade private securities, funds, and asset-backed securities like real estate, and luxury assets.
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To date, Alta has facilitated more than 600 transactions for opportunities like SpaceX, Grab, Gojek, rare whiskeys, and other alternative assets. It has generated over US$600 million in transactions and created access to over US$22 billion worth of mandated deals for its global investor community.
Since 2016, Alta has completed over 1,000 transactions valued in excess of US$600 million and has created access for investors to invest in over US$22 billion worth of mandated opportunities globally.
Congrats on your recent acquisition. Can you share what we can expect from this acquisition?
Hg Exchange’s technology infrastructure is backed by advanced blockchain technology and proven exchange solutions to enable secure and efficient cross-border listing and trading of both digital and non-digital capital market products.
This acquisition allows us to bring together all three arms of our business – private capital markets, fund management, and the exchange – together under one roof, creating a marketplace that gives everyone access to alternative asset investments.
How has the alternative investments industry grown in Southeast Asia over the last couple of years?
According to research from Capgemini, there are about 6.5 million HNWIs in Asia-Pacific with a combined financial wealth of US$22.2tn. Their wealth is expected to nearly double to US$42tn by 2025.
Separately, Opalesque wrote recently that “demand for alternative investments is set to grow by up to 46% over the next 12 months.”
However, as private markets evolve over the next few years, private markets AUM is expected to grow; Preqin forecasts that the Asia-Pacific’s private market AUM will have nearly triple from US$1.62tn in 2019 to US$4.97tn in 2025.
Anecdotally, we are seeing increased interest in alternative assets among our global investor community.
What categories have been showing the most growth and why?
The early and late-stage private equity has enjoyed multi-faceted growth.
For early-stage, investors who are comfortable with risk are seeking outsized returns by backing early-stage companies. For some, late-stage represents a comfortable balance of risk and potential.
Luxury assets like wine, whiskey, and art have shown incredible resilience in this climate. Knight Frank’s report for luxury assets demonstrates the performance of assets like rare whiskeys and art, which have provided investors with impressive returns. For example, whiskey has seen more than 550% returns over the past decade. We saw similar price action with our whiskey token, an asset-backed security token, a year after its initial issuance.
With next-generation blockchain technology, we’ve enabled investors to invest and trade in security tokens with the same confidence and convenience as public markets.
What are the challenges with developing a two-sided investment marketplace?
Being a two-sided marketplace business model, we are creating value as an intermediary platform.
Hence, it means working twice as hard to bring both sell-side and buy-side participants together.
This supports our vision and mission of making ‘alternative assets for all, part of our recent rebranded from Fundnel to Alta. And the deal with Hg Exchange also marks a new chapter in our journey to revolutionize private markets, bringing enhanced access and liquidity to alternative investments for all investors.
Where do you see growth coming from in the next 12 to 24 months?
Alternative investments have moved from the periphery of the global investment landscape into the mainstream. According to Cais’ insights, in just 15 years, alternatives grew from 6% to 12% or US$13.4 trillion of the global market in 2018, and they are expected to grow between 18-24% by 2025.
We are now in the right place at the right time – while the macroeconomic situation remains dire, alternative investments are proving to be some of the strongest asset classes that investors can put their money in.
What’s next for Alta?
We have exciting announcements coming in 2023, and one of them is to continue enhancing our platform for seamless trading and investments for all our offerings.
Over the next few months, we will be progressively launching across Southeast Asia, bringing our full end-to-end services to some of the fastest-growing markets in the world.
We will announce our plans for 2023 soon and we remain laser-focused on enhancing liquidity and access for investors in Asia and around the world.