The initial tranche of the three-month, 1% per annum notes was for S$10 million ($7.5 million), which was oversubscribed. However, over a one-year period with multiple tranches, it could issue up to S$150 million ($112 million).
Investors in the commercial paper had to be accredited individuals or corporates. Commercial paper is yet another avenue for iSTOX, which is tokenizing various investment types, including private equity, funds, real estate investment trusts, bonds and stocks. In Asia, short term funding is more typically through bank loans or even bond issuance. Whereas in the United States, according to the SEC, commercial paper is a trillion dollar sector.
One of iSTOX’s aims is to fractionalize investments through tokenization. Another is to reduce the time and cost of issuance by automating the process via blockchain, including registering transactions and ownership and managing corporate actions such as paying interest or dividends. Settlement is instant. The company also provides a secondary market, although that is not currently visible to the public since the platform operates on a private Ethereum blockchain.
CGS-CIMB noted that the issuance process took half the time compared to a conventional one. “Through this collaboration, we are keen to explore first-hand what digital assets and exchanges might hold for us as a broker in the future,” said Carol Fong, group CEO of CGS-CIMB. “Digital issuances are likely to grow and become a strong complement to traditional capital raising channels.”
The issuer offers investment products and wealth management and is jointly owned by China Galaxy Securities and Malaysia’s CIMB group. A member of iSTOX’s listing committee is Mak Lye Mun, who was previously the CEO of the Singapore division of CIMB Bank.
This is by no means the first blockchain commercial paper issuance. There have been issuances by China’s Zheshang Bank, and Euroclear has partnered on multiple projects, including with the European Investment Bank and a separate project by Rabobank.
Meanwhile, iSTOX is in the process of rebranding to ADDX and has an enviable list of investors. It recently raised a $50 million Series A round. Investors include the Singapore Exchange (SGX), Japan’s Tokai Tokyo Financial Holdings, Korea’s Hanwha Asset Management, Heliconia Capital Management (part of Temasek), and Japanese government-backed organizations, Japanese Investment Corporation (JIC-VGI) and the Development Bank of Japan (DBJ).