We’ve previously reported on Mitsui & Co Digital Asset Management’s (Mitsui) issuance of digital securities backed by Japanese real estate. After tokenizing four funds last year, in November 2022 it started pre-registering investors for its Alterna consumer-targeted investment platform and now has 10,000 people signed up. So far, Mitsui has Yen 230 billion ($1.7 billion) in assets under management in readiness for digital securities, although it has only issued tokens for a fraction of that value.
Mitsui is aiming to tap the large amount of cash deposits held by Japanese citizens, with around half of Japanese wealth held in cash. Its objective is to enable small investments through the ability to operate real estate funds at a relatively low cost. The pre-registration period closes next week. Where some funds are popular, early adopters will get preferential treatment in lottery applications.
The four security tokens issued last year totaled Yen 6.5 billion ($48 million) and were distributed via SBI Securities and Nomura Securities with minimum investments of around Yen 500,000 ($3,694). However, Mitsui is now targeting direct sales to investors with the latest Alterna platform. Cutting out the middleman will help to reduce costs.
Since the fourth token issuance, Mitsui has ramped up its real estate acquisition, preparing the funds for digital securities issuances. According to an announcement earlier this month, it acquired another 22 properties worth Yen 33 billion ($240 million), bringing the total assets under management (AUM) to Yen 230 billion ($1.7 billion). There was mention of 13 funds, compared to four where digital securities have been issued already.
Three of the four tokens were deployed on MUFG’s Progmat blockchain network, with the fourth using Nomura’s BOOSTRY and its ‘iBet for Fin’ DLT platform. These are the two major tokenization platforms in Japan.
Meanwhile, Mitsui & Co Digital Asset Management is a joint venture between Mitsui & Co (53%) and LayerX (36%), with minority interests from SMBC Nikko Securities, Sumitomo Mitsui Trust Bank and JA Mitsui Leasing. However, Mitsui is also an investor in LayerX.
Specialist real estate firm Kenedix has also been active with security tokens, announcing a $25 million issuance backed by a hotel this week. It also used MUFG’s Progmat network.