Leaders List Interview: 60 seconds with Oi Yee Choo, Chief Commercial Officer, ADDX
Citywealth caught up with Oi Yee Choo, Chief Commercial Officer of ADDX, to find out how ADDX are using technology to open up access to alternative investments in a way that historically was not possible.
Tell Citywealth’s readers about your role.
I am Chief Commercial Officer at ADDX, where we are focused on using technology to help more individual and corporate investors take part in the private markets.
My role involves connecting high-quality investment opportunities with accredited individual, corporate and institutional investors. We believe a calibrated increase in their holdings of alternative assets could benefit their portfolios. This is the reason sovereign wealth funds and pension funds have added to their share of alternatives in recent years. As we lower the minimum size of investment to enable more investors to participate, we also have to educate them about products they may be seeing for the first time – for example, hedge funds, VC funds, private debt and pre-IPO unicorn shares.
I also work with issuers to structure opportunities for our investors. Issuers appreciate the new-found access to a bigger pool of capital, which is giving rise to new types of deals. For example, we recently launched a S$150-million short-term commercial paper programme on behalf of CGS-CIMB, a top Asian brokerage. It was a win-win: CGS-CIMB borrowed at a lower cost, and investors were offered higher rates as an alternative to bank fixed deposits, for example.
How are you disrupting the wealth management industry?
ADDX is a private market exchange that deals in digital securities. These are traditional securities that have been issued on a blockchain network. The efficiencies from tokenisation and smart contracts allows us to automate processes throughout the life cycle of a security – such as dividend or coupon payments, cap table management or secondary trading on an exchange.
What this means for end investors is, the minimum investment size for private market assets can now be lowered to around $20,000, which totally changes the game from their viewpoint. In the case of VC funds – we recently listed two – this is a 250-times reduction vis-à-vis the traditional minimum size of $5 million. Even for wholesale bonds, private equity or hedge funds, the reduction is still very meaningful, because these products traditionally start at anything between $250,000 and $1 million.
We are opening up access to alternative investments in a way that historically was not possible, but can now be done thanks to technology.
What’s next for ADDX in 2021 and beyond?
In 2021, ADDX will make further progress on two fronts – customers and products.
Today, we serve accredited investors from 27 countries in Asia Pacific, Europe and the Americas (excluding the US). We eventually would like to serve retail investors as well, because they too could benefit from exposure to the private markets. We are currently working on how we can make that happen from a regulatory standpoint.
Further upstream, we are also talking with private banks, brokerages and external asset managers about how our alternative asset platform could benefit their clients. We have in fact onboarded a few of them. If you are a private bank, you currently would have a fairly limited selection of alternative investments for clients with a net worth of $2 million to $10 million – because of the high minimums in the traditional market. Could working with a digital securities platform be the answer to that conundrum – and lead to higher satisfaction among the private bank’s clients?
In terms of products, investors on our platform now have access to funds, bonds and equity. We are exploring two more areas: structured products and products with exposure to cryptocurrencies. Perceptions on bitcoin and crypto have shifted markedly in the past year. Financial institutions in the wealth space now face rising mainstream demand for cryptocurrencies. We receive many questions on crypto assets from our clients. ADDX does not have a license to help customers trade bitcoin directly, but we could potentially offer crypto funds, for example.
What should UHNWs consider before investing in the alternative asset space?
Whether you are an HNW or UHNW investor, getting into alternative assets does place higher knowledge demands on you.
So even though alternative assets are now open to you in sizes that make sense for your portfolio, our advice to clients is always to take the time to become well-informed about alternative assets. In short, you have to understand what you’re buying. What is a hedge fund or a VC fund? What is a private equity bond? What does it mean to take up equity in a pre-IPO company that has not become profitable yet and therefore cannot be analysed based on its PE ratio?
A deeper appreciation of the relationship between risk, reward and diversification is also always useful. Private market assets tend to have a higher risk-reward profile. You would benefit from some exposure to it, but the majority of your portfolio might well continue to be in the public markets. The question then is how much alternatives you should take on, given your goals, horizon and risk appetite? Whether you are working with a financial adviser or investing on your own, you should think through these issues and understand what the implications are for your portfolio.
Which moment of your personal journey are you most proud of?
I am truly passionate about the capital markets. Before ADDX, I’d spent more than 20 years of my career at investment banks, working on deals. It was tremendously enjoyable. I witnessed some very important changes in the markets that have generated wealth for a broader segment of investors. Electronic trading and public REITs are two examples. Both changes have taken place within my lifetime, and these revolutions have had a large wealth creation impact on investors at an institutional as well as individual level.
When I decided to leave investment banking behind to join ADDX, a financial technology start-up, it was a weighty moment for me. Personal sacrifices aside, the move was one I strongly believed in. Because like electronic trading and public REITs, the advent of tokenised alternative assets promises to be another transformative wave that brings greater wealth creation to the man on the street. There have been many proud moments at ADDX for me – becoming fully regulated by the Monetary Authority of Singapore, raising $50 million in our Series A round, and onboarding world-class issuers like Mapletree and Azalea. It has been quite a ride, but the best days are ahead.
Favourite way to relax at the end of the day?
I am not always 100% sure if my family enjoys having the meals as much as I enjoy preparing them – but I really like to cook. Grilling, baking, roasting – that’s my way of unwinding, either at the end of the day or on the weekends. I am currently obsessed with making different types of home-made pasta and the sauces to go with the pasta.
If you weren’t in the wealth management industry, what else might you be doing?
I feel strongly about the power of education and I volunteer with a couple of education-related causes. If I wasn’t in finance, I might be teaching or perhaps working in an EdTech start-up.
Find out more by visiting Oi Yee Choo’s Leaders List profile.