Singaporean CapBridge and investment manager Gordian Capital has formed a partnership to launch a pre-IPO fund – the first sub-trust fund in a series of CapBridge Investment Trust which is said to be a rules-based trust investing in private securities.
The pre-IPO Fund is targeting a US$100 million fresh capital to provide growth-stage startups and pre-IPO companies an opportunity to tap into additional funding as well as to provide accredited and institutional investors a greater access to venture capital-level returns.
CapBridge’s Co-founder and CEO Steven Fang explained, “Venture Capital consistently outperforms other asset classes and has some of the best returns in the investment industry. Traditionally, accredited and institutional investors have had limited access to these venture capital-backed growth companies.”
Established in 2015, CapBridge is an online capital-raising platform that enables institutional and accredited investors to invest in growth-stage enterprises companies via venture capital financing and pre-IPO placement. The firm has also formed partnerships with the SGX and Clearbridge Accelerator.
“While rules-based processes are applied in the trading of publicly-listed investments, this is the first time, as far as we know, that a rules-based structure is being applied to investments in venture-backed securities issued by private companies,” said Dr. Steven Fang.
“Given the efficiency of a rules-based trust structure, we believe that the Pre-IPO Fund has the potential to expedite pre-IPO capital raising, making Singapore an attractive fundraising destination for growth companies,” he further adds.
In a way, CIT enables qualified institutional and accredited investors the access to quality, diversified portfolios in a cost-efficient and effective manner with no management fee to carry. Over the next five years, the platform will target investments in venture-backed enterprises in pre-IPO investments.
The fund following a rules-based structure is typically defined as a fund that aims to generate exposure to a to a specific segment of the equities market but operates without consideration of stock market capitalisation or portfolio weighting. In the case of CIT’s Pre-IPO Fund, it is aimed is to increase exposure to securities issued by growth-stage companies.
“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,” Steven Fang explains.
The Pre-IPO Fund will also invest exclusively in convertible instruments issued by companies curated on the CapBridge platform. This will allow the company to preserve capital and maximise returns, allowing for a measure of downside capital protection and potential capital gains.
Commenting on the deal, Mark Voumard, the Founder and CEO of Gordian Capital Singapore Pte. Ltd said, “We are delighted to be working with CapBridge to help support the venture capital ecosystem in Singapore.”
By Vivian Foo, Unicorn Media