YAD Capital plans to ease its way into tokenized assets with a two-phase approach to bring a special purpose vehicle onto a distributed ledger after having initial discussions with blockchain startup Fusion Foundation at the beginning of the year.
In its first blockchain pilot, the alternative asset manager plans to move a hard-money lending deal onto Fusion Foundation’s DLT platform to help the SME lenders track their cash advances and drawdown activity.
“The second thing that we are going to do is enhance their merchant lending anywhere between $5 and $20 million and wrapping those up into digital securities as well,” said John Liu, chief product officer at Fusion Foundation.
By bringing the portfolio onto the blockchain, it delivers real-time transparency for investors and merchants while providing a digital identity to some merchants for the first time.
“It eliminates the need for costly and time-consuming fundraising roadshows while enabling YAD to deliver truly borderless investing in opportunities to which investors might not otherwise have access,” added Dejun Qian, founder and CEO of Fusion Foundation, in a prepared statement.
The asset manager also plans to create investment analytics, which are based on merchant metadata like credit quality, sectors, and cash-flow profile, according to the firm.
YAD Capital recently closed a $5 million closed-end fund with a $250,000 minimum buy-in that replicates the firm’s previous funds and looks to issue the securities in the coming weeks. When it does, the asset manager will offer placements in its typical fashion as well as via tokenized offerings.
The firm expects that its established client base of family offices, small institutions, and high net worth individuals, will select to do business as usual.
“I think the demand for the tokenized security will come from people who already have one foot into the crypto environment,” said David Perez, a co-founder of YAD Capital.