CapBridge Introduces Retail Investor Access to Private Equity Products in Guided and Phased Approach; Move Further Opens Up Participation in Private Markets for Retail Investors
SINGAPORE,Oct. 15,2019 -- Singapore global private markets platform CapBridge Pte Ltd ("CapBridge") today announced that it will be extending access to its private capital platform to retail investors. This comes after CapBridge received approval to extend its activities beyond Accredited Investors and Institutional Investors in order to further lower the barriers of private equity investing for Singapore investors.
The new platform has the following features:
Retail investors can now participate on the CapBridge private markets platform to invest in late stage growth and pre-IPO deals through the proprietary "Preferred Access" investment structure.
The "Preferred Access" investment model focuses on certain private equity investment deals,in particular:
Pre-IPO or late-stage growth private companies with firm exit or liquidity plans (e.g. IPO,trade sale,M&A);
Convertible or redeemable securities with a clearly-defined structure for return on investment; and / or
Co-investments alongside expert lead professional investors (typically Accredited Investors[1] or Institutional Investors) who are investing on the same terms.
Retail investors participating in "Preferred Access" deals on CapBridge do not need to be Accredited Investors,they simply need to meet CapBridge's onboarding requirements as well as declare their net assets prior to investing.
This means that Retail investors can,for the first time,view ongoing "Preferred Access" investment opportunities on CapBridge; such as ST Integrated Engineering,which has recently announced that it is raising S$4.0m and has agreed to buy back its share at 130% of the value of investment by investors during this fundraising campaign,at the end of 3 years if there is no liquidity event by then.
Investors seeking above-market returns have typically looked to investing in private companies. Such private equity opportunities are typically not accessible to individuals as these are traditionally limited to Accredited Investors.
Johnson Chen,founder and CEO of CapBridge,said,"For decades now,private investments have offered the strongest relative returns as compared to the public listed markets. Data shows that top-performing institutions have been long-time allocators to private markets,gaining from the outperformance. With technology and intelligent deal-sharing,we are now able to better offer and lower the barriers of investing so that more investors can participate in private growth opportunities. This is timely given the relatively more volatile global economy today."
In its latest report[2] on private markets,McKinsey & Company found that private equity's net asset value has grown more than sevenfold since 2002,twice as fast as global public equities. The report noted that the number of publicly traded firms in the United States fell by 16 percent from 5,100 to 4,300,with some large investors now allocating to private markets in order to get diversified exposure to global growth.
Retail investors and Accredited Investors on the CapBridge platform who opt to be treated as retail investors may now participate in private equity investments via the CapBridge "Preferred Access" structure.
Preferred Access Designed For Private Equity Investments For Retail Investors
Retail investors who wish to get exposure to private equity in "Preferred Access" deals on CapBridge do not need to be Accredited Investors.
These retail investors simply need to meet suitability requirements via clearing a "financial knowledge and experience checklist" or "suitability assessment",as well as declare their net assets and financial assets prior to investing[3].
Upon qualifying,retail investors can proceed to view and express interest in the opportunities available via the "Preferred Access" structure - either in a single deal or across multiple deals.
Unique Structure To Balance Rewards and Risks for Retail Investors
With the "Preferred Access" structure,CapBridge is able to curate a specific type and size of private equity deals that have a plan for an exit or liquidity and therefore may be more suitable for retail investors. Traditionally,private equity investments are considered more high-risk than investments in public markets,and CapBridge tackles this by using the "Preferred Access" structure to better address,but not completely remove,some of these risks,including but not limited to,'holding risk','concentration risk'and 'disclosure risk'.
The investments by retail investors will be carried out by way of a special purpose holding vehicle. This vehicle shall invest in and hold the same underlying assets as other Accredited Investors and Institutional Investors who have opted to invest in the private equity deal offered on the CapBridge platform. This structure is designed for ease of understanding by retail investors,as well as added investment protection.
To strive towards a balance between risk and potential returns,CapBridge has also set pre-determined annual investment limits for retail investors' capital exposure.
Under Preferred Access,investors may invest up to S$10,000 in each opportunity,with a maximum aggregate investment limit of S$200,000 or 10% of their net assets (whichever is lower) in a single financial year. Compared to the typical minimum investment amount of S$500,000 for private equity investments,Preferred Access now enables investors to commit smaller amounts across multiple deals to diversify their portfolios.
Johnson Chen added,"As a responsible investment platform,CapBridge is adopting a cautious and consultative approach in opening up access to this space. We recognize the growing interest from retail investors in the higher potential returns offered by the private markets,and the benefits to the overall capital markets and liquidity environment that can come from increased participation in private equity. By ensuring retail investors pass a knowledge or suitability test,setting limits to capital exposure,and adopting an investment model where professional investors take the lead or where companies provide certain downside protection,we hope to facilitate retail public access to private equity in a guided,and easier-to-understand manner."
Retail Investors Not Permitted To Trade
Private investment opportunities on CapBridge comprise private companies raising capital for the next stage of growth,such as market expansion or an IPO. These companies are typically suited to,and interested in a partial-liquidity private listing on 1exchange - CapBridge's affiliated Recognised Market Operator and Singapore's first MAS-regulated private securities exchange. CapBridge also enables retail investors to participate in the fundraising of these growth companies.
However,when these private companies undertake the private listing on 1exchange,retail investors will not have access to subsequently trade on 1exchange,unlike other Accredited Investors and Institutional Investors who have the ability to trade and the responsibility to make their own investment decisions around such trades.
For example,Singapore engineering and IT solutions firm ST Integrated Engineering (STIE) is a Pre-IPO private company currently in the process of raising S$4.0m via a private listing on 1exchange by the end of FY2019. As a commitment to its plans to IPO,the company has agreed to buy back its equity at 130% of the value of investment as per its current fundraising,at the end of 3 years if there is no liquidity event by then. In addition,STIE has accepted a 32% discount to the independent full valuation provided by valuer IHS Markit. Retail investors who meet CapBridge's suitability criteria can view this opportunity on the Capbridge platform.
Interested investors can visit www.capbridge.sg to find out more. Signing up on www.capbridge.sg gives investors access to view these private capital raising opportunities.
About CapBridge
CapBridge operates a global investment syndication platform for private opportunities. The CapBridge co-investment syndication platform serves mid-to-late stage growth companies and the funds that focus on them. Our co-investment model is built with investors in mind. We first bring opportunities to lead investors,who leverage their specific industry knowledge to conduct due diligence,negotiate value adding investment structures,and manage their portfolio positions to the desired exit.
We then open up the same opportunities to co-investors as they leverage on the lead investors' expertise in specific industry fields and diligence work. Co-investors sign with the same terms as the lead investors and realize better risk-adjusted returns and a more likely exit. Companies benefit from working with lead investors who understand their sector well and can directly value- add,as well as broadening the shareholder base with co-investors who can add network connectivity and assist towards a more successful listing further down the road.
The co-investment process is conducted electronically on our intelligent platform,which works ceaselessly to match deals with investors and facilitate the deal process.
CapBridge has a Capital Markets Services License and is regulated by the Monetary Authority of Singapore. Singapore Exchange (SGX) is a strategic partner and shareholder. For more information on the CapBridge co-investment platform,visit www.capbridge.sg
[1] An accredited investor refers to an individual whose net personal assets exceed S$2 million,whose financial assets (net of any related liabilities) exceed S$1 million or whose income in the preceding 12 months is not less than S$300,000; or a corporation with net assets exceeding S$10 million.
[2] McKinsey's Private Markets Annual Review,available from [https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/mckinseys-private-markets-annual-review]
[3] Where a Retail Investor has declared net assets of more than S$2 million,that Retail Investor will be given the option to be opt-in as an AI (as defined under the Securities and Future Act),by waiving his or her rights as a Retail Investor. In that event,the standard Know-Your-Client process for Accredited Investors will be performed by CapBridge,and no investment cap will be imposed. Where the Retail Investor has declared net assets of less than or equal to S$2 million,that Retail Investor will be subject to an investment cap of 10% of their net assets.
