CapBridge unveils world's first rules-based trust

CapBridge unveils world's first rules-based trust
CapBridge's Dr Fang (above) says the CIT gives investors access to an asset class that is usually closed to them.
PHOTO: The Straits Times

Two new funds worth more than US$140 million have been launched by Singaporean-founded investment vehicles to support growth companies and startups globally, The Business Times has learnt.

The first is a US$100 million pre-IPO (initial public offering) fund set up by CapBridge in collaboration with Gordian Capital. This sub-trust fund under the CapBridge Investment Trust (CIT), said to be the first-of-its-kind, is a rules-based trust that invests in private securities.

CapBridge chief executive officer (CEO) Steven Fang told BT: "The rules-based nature of CIT 'automates' the selection criteria and removes the need for active discretionary management, which reduces the fund's expense load."

Launched on Thursday, CIT will develop a series of sub-trust funds, with the pre-IPO one being its first. This maiden fund will, over the next five years, invest in venture-backed securities issued by private emerging growth companies curated on CapBridge's platform, and offer a mandated, efficient pathway to a Singapore Exchange (SGX) listing.

CapBridge, a capital-raising online platform, enables institutional and accredited investors to invest in growth companies via venture capital financing and pre-IPO placement.

Founded in 2015, it counts SGX and Clearbridge Accelerator as its partners.

Dr Fang said: "Given the efficiency of a rules-based trust structure, the pre-IPO fund has the potential to expedite pre-IPO capital raising, making Singapore an attractive fund-raising destination for growth companies."

Asked what niche the fund occupies, he said it gives investors access to an asset class to which they traditionally have limited access - venture-backed securities issued by private companies, in this case.

"Venture capital has historically been one of the highest-returning asset classes, consistently outperforming equities globally," said Dr Fang.

CapBridge deputy chief Scott Duncan added: "An innovative and exciting product like CIT and its pre-IPO fund will give investors the opportunity and ability to complement and enhance their investment portfolios with an allocation into venture capital. This is an asset class that has been widely sidestepped due to the lack of transparency and availability."

When asked whether CIT will compete with venture capital funds, Dr Fang said that the trust works as a co-investment fund that will make investments alongside top-tier venture capital firms, and is thus complementary to the venture capital ecosystem.

The serial entrepreneur added that CapBridge has the requisite market connections and experience to launch a product like CIT. He noted that Mr Duncan used to be a private banker, and that CapBridge managing director Nick Caldwell has more than 25 years' experience in venture capital, private equity, corporate finance and M&A (mergers and acquisitions).

CapBridge has just started its fund-raising efforts for CIT, having lodged the trust with the Monetary Authority of Singapore only late last month.

The other new fund set up by Zhuo Tianxiang of Fika Ventures is a US$41 million seed-stage fund for US-based tech startups in enterprise software, fintech, marketplaces and digital health.

Mr Zhuo, aged just 33, is said to be the youngest Singaporean venture capital fund manager and among the first Singaporeans to have launched a venture fund in the US.

Asked why he chose to base the fund in Los Angeles (LA), he said: "We believe a large proportion of tech innovations will still come from the US. Venture capital is also an underserved asset class in LA, with less than US$1 billion in assets under management, so the talent-to-capital ratio there is very skewed."

He added: "We are primarily focused on seed-stage companies because we want to be the first institutional check-in, where we will lead funding rounds and back founders - often before others recognise and understand their vision and potential."

Notably, his new fund is backed by prominent Singapore conglomerates and entrepreneurs, including Singapore Press Holdings (SPH), PhillipCapital, a listed property developer, CTW chief executive Loi Pok Yen, as well as US-based Cross Creek Advisors and Knollwood Investment Advisory.

The former entrepreneur said: "I'm excited that I can play a small role in helping Singapore companies access some of the best technologies in the US, and bring back that DNA and innovation mentality to help them become global tech leaders."

Chua Boon Ping, head of the SPH Media Fund, noted that LA is home to a dynamic media-tech ecosystem. "SPH Media Fund's investments in LA include Jukin Media and Victorious. Both are Tianxiang's investments from his previous fund. By partnering him in his new fund, we hope to tap his network for new deal flow and co-investment opportunities."

Meanwhile, venture capital activity continues apace as EDBI, the dedicated corporate investment arm of the Singapore Economic Development Board, announced its participation in the US$60-million Series D funding round in Lytro, a US-based light-field camera company; and homegrown healthtech startup mClinica said it has raised US$6.3 million in Series A funding to expand its operations globally.

This article was first published on Feb 16, 2017.
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