Accessing The Private Markets As An Accredited Investor – SDAX

[Liz Seyi]

Amidst the continued volatility of the global economy exacerbated by various macroeconomic events, investors have been increasingly venturing into alternative investments. Alternative investments do not typically correlate to movements in the stock markets, which means they can be used to diversify portfolios and hedge against volatility. Driven by this rising demand, Preqin, in its Futures of Alternatives 2027 report, forecasts that globally, total alternative assets under management will reach US$18.3 trillion by 2027, up from US$9.3 trillion as at the end of 2021.
In Singapore, private market investing has been restricted to more sophisticated investors for a variety of reasons. There is increased risk and complexity when it comes to investment opportunities which are typically illiquid assets with longer investment horizons and strategies that may be difficult for less experienced investors to understand and evaluate. There is a relative lack of access to information on investment opportunities and the significant minimum investment size requirements which may be prohibitive for retail investors who have limited financial resources.
However, individuals who qualify as Accredited Investors according to the criteria set out by the Monetary Authority of Singapore (“MAS”) are able to access the benefits of private market investing. These investors are generally assessed to be high-net-worth (“HNW”) individuals who are deemed to possess the knowledge and or experience to understand and the resources to bear the risks associated with alternative asset investments.
Benefits of being an Accredited Investor
Opting-in as an Accredited Investor comes with certain advantages and opportunities in the world of investing. These include:
• Access to exclusive investment opportunities from the private markets: Accredited Investors have access to a wider range of investment opportunities, including private equity, private credit, real estate, sustainability and collectibles. These investments often have the potential for higher returns but are generally considered riskier and require a higher level of investment expertise.
• Ability to diversify investment portfolios beyond the traditional asset classes of equities and bonds: SDAX curates digital asset investment opportunities which are structured as securities or fund units and are based on real assets with intrinsic value, such as real estate, in the future, fine art and funds. Accredited Investors can access these investment opportunities that act as a hedge against market volatility and potentially benefit from better risk-adjusted returns.
• Potential for higher returns: Many investment opportunities available to Accredited Investors have potential for higher returns compared to traditional investment options. This would include the opportunity to invest in institutional-grade investments, through direct access to the private exchange and its deal listings, as well as other forms of digital securities, which were previously only available to family offices or ultra-high-net-worth individuals at a minimum of US$5 million. With the benefit of tokenisation, qualifying AIs have access to these investments.
• Participate in early-stage investments: Accredited Investors have the opportunity to access investment deals with secondary liquidity and trading options through an exchange, offering two sources of liquidity which is not restricted to redemption by asset or fund managers.
Qualifying as an Accredited Investor
In line with MAS’s Securities and Futures (Classes of Investors) Regulations 2018, an individual Accredited Investor has to meet at least one of the following criteria:
a. Minimum income of S$300,000 in the last 12 months (or its equivalent in a foreign currency);
b. Have at least S$2 million of net personal assets, of which the net value of your primary place of residence can only contribute up to S$1 million; or
c. At least S$1 million value of Net Financial Assets (or its equivalent in a foreign currency).
A corporate Accredited Investor has to meet at least one of the following criteria:
a. All equity owners must individually meet the Accredited Investor requirements set forth by MAS; or
b. The company’s most recent audited balance sheet should exhibit net assets exceeding S$10 million (or the equivalent amount in a foreign currency).
Access to SDAX’s Exclusive Deals and Global Private Exchange as an Accredited Investor
SDAX Exchange connects markets through partnerships with digital assets players around the world, delivering a seamless and efficient cross-border digital assets ecosystem for wealth creation.
Accredited Investors will have access to exclusive investment opportunities via SDAX’s financial services and multi-asset investment platforms.
They will also benefit from attending closed-door events and webinars and gain from insights shared by market players to broaden their knowledge of the intricacies involved in investing in alternative assets.
Accredited Investors will also enjoy greater transparency of investment information, fees and valuations, and be assured that all curated investment opportunities presented would have passed SDAX’s rigorous due diligence process.