New Digital Model Offers Issuers Flexible Capital While Providing Investors with Direct, Transparent Access to Company Equity

Citi announces the launch of Digital Depositary Receipts on private shares, introducing a direct and transparent model that broadens access to private markets for both global issuers and investors. The launch marks the first time a global financial services company is both issuing and acting as a custodian for tokenized depositary receipts representing private companies.

As IPO timelines stretch, private companies are seeking alternate routes to access liquidity instead of navigating fragmented secondary markets. These markets often require navigating structures that can, in some cases, be difficult to understand, involve multiple intermediaries and less transparent fees. Citi’s new solution addresses this gap by delivering an efficient, cost-effective and digitally native solution for a historically illiquid segment of capital markets.

Building on its industry-leading Depositary Receipts and Custody businesses, Citi’s model uses tokenized depositary receipts to provide a flexible, institutional-grade alternative capable of meeting the scale needed for private markets.  While other structures like third-party Special Purpose Vehicles (SPVs) serve a valuable market function, Citi’s model can reduce the potential for complexity and hidden costs given Citi acts as a single, trusted issuer and custodian.

Digital Depositary Receipts applies Citi Issuer Services’ depositary receipt product to private market shares, using blockchain infrastructure operated by SIX — one of the world’s first fully regulated digital central securities depositories — to tokenize those shares. As part of its collaboration with SIX, Citi serves as a custodian on the platform, responsible for the settlement and safekeeping of the tokenized depositary receipts.

This new solution went live with an inaugural transaction between Kaleido, an institutional tokenization and digital asset platform and a Citi portfolio company, and investors within its Wealth business, with support from Citi’s Secondary Private Markets business.  This successful launch represents a coordinated One Citi effort, bringing together its Issuer Services, Custody, Wealth, Markets, and Ventures teams to enhance the client experience and establish a scalable model for future issuances.

Source: Citi