Side Letter: Tokenised PE; EMPEA takeaways; CalSTRS’ new CEO

A Singaporean platform is using blockchain to help bring PE one step closer towards democratisation. Plus: dispatches from this week's EMPEA conference and CalSTRS has named its first female chief exec. Here's today's brief, for our valued subscribers only.

They said it

“I don’t think it’s appropriate for us to delegate our investment responsibility to somebody else, especially when it’s going to be left up to the general manager and an outside private equity consultant. Those aren’t the appropriate people to make our investments.”

Kenneth Buzzell, vice-president of the board at Los Angeles Fire & Police Pension System, explains why it was rejecting a staff request for more power to approve secondaries transactions (registration required).

Just happened

Not a token gesture
Another day, another step towards the democratisation of PE. Today, private capital platform iSTOX, which Side Letter introduced in March, said it had rebranded to ADDX and created a mobile app as it prepares to launch a new PE product. The offering – expected later this year – will provide accredited investors with access to the secondary sale of pre-IPO stakes and new equity issuances. Both deal types would involve tokenised securities, enabling the shares to be fractionalised (sold in smaller units).

Digital securities always include economic rights, meaning the buyer receives dividends equivalent to the fraction of the security owned, and can be traded with other ADDX users at a price decided by demand and supply. Whether the token would include voting rights depends on the issuing company.

Singapore-based ADDX is part-owned by Temasek subsidiary Heliconia Capital and the Development Bank of Japan. It forms part of a growing number of firms offering individual and retail investors access to private markets, including Vanguard, which on Wednesday said it planned to launch a product in summer for qualified individual investors to invest in PE (press release here). Keep track of the latest developments in this process here.

EMPEA dispatches
Side Letter tuned into EMPEA and the IFC’s Global Private Equity Conference this week. Here are some key takeaways:

  • Stay invested: “If you can find a long-term winner, you’ve got to buy it and you’ve got hold it,” said Henry McVey, head of global macro at KKR, in his opening remarks.
  • Socialise: The pandemic has increased focus on the ‘S’ in ESG among the institutional investor community when selecting GPs, said Anita Marangoly George, deputy head of Caisse de dépôt et placement du Québec.
  • Get creative: Investors complaining about a lack of dealflow in emerging markets just “reveals a lack of imagination”, said Andrew Kuper, chief executive of LeapFrog Investments.
  • Don’t forget LatAm: The region enjoyed a record year for PE during the pandemic, with $16 billion invested across 653 deals and more than $11 billion of exits; VC investment had its second best year on record with more than $4.1 billion invested across 488 deals, per LAVCA.

California State Teachers’ Retirement System, the 10th largest PE investor in the world, has just appointed its first female chief executive. Cassandra Lichnock, who has served as COO since 2013, will take up the role on 1 July, per a statement. Lichnock will work “with the board and executives to build on the progress we’ve made on sustainability, social responsibility, diversity, equity and inclusion”. It comes as the Institutional Limited Partners Association asks LPs and GPs to lead by example on diversity.


Missed chances
German football clubs have voted against a partial sale of the league’s overseas broadcasting rights to PE buyers. Teams in Bundesliga and Bundesliga 2 – the two highest levels of the German league – decided not to continue talks at the present time, according to a Wednesday statement. The decision echoes that of clubs in Serie A, Italy’s highest division, in February. PE has fallen in love with sports in recent years; it would appear the feeling is not yet mutual.

On the Ascent
Kenyan PE firm Ascent has held a first close on its second fund (press release here). The firm has collected $100 million for Ascent Rift Valley Fund II against an $80 million target, and is plotting a final close on $120 million by year-end. LPs include CDC GroupFMOIFCProparco and Kenyan pension funds. Kenya has historically dominated East African dealmaking. You can read PEI‘s 2020 guide to the region here.

Today’s letter was prepared by Alex Lynn with Carmela Mendoza.