Interview with Oi Yee Choo, Chief Commercial Officer of ADDX
The 2021 Investment Series
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Interview with Oi Yee Choo, Chief Commercial Officer of ADDX
The 2021 Investment Series: Oi Yee Choo, Chief Commercial Officer of ADDX
We speak to Oi Yee Choo, Chief Commercial Officer of ADDX, who shares her valuable insights on private markets in The 2021 Investment Series.
ADDX is a capital markets platform for capital-raising and investment. ADDX allows institutional and accredited investors globally to invest in private market securities including hedge funds, wholesale bonds and private equity at a smaller ticket size (eg. $20,000 instead of $1 million). ADDX also manages activities spanning the life cycle of the securities, including coupon payments, ownership tracking and secondary trading. Its secondary exchange matches and settles trades instantly using blockchain technology.
ADDX helps issuers – such as companies and funds – to raise capital by issuing equity or debt via digital securities, providing access to a bigger pool of capital or investors. For issuers, digital securities mean lower fees, a lower minimum fundraising threshold and faster speed to issuance.
In early 2021, ADDX raised $50 million and is backed by Singapore Exchange (SGX), Singapore’s Sovereign Wealth Fund Temasek’s subsidiary Heliconia Capital, Japan government-backed investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan. ADDX is regulated by the Monetary Authority of Singapore (MAS) as a platform for the issuance, custody and secondary trading of digital securities.
Highlights from Interview
- On Hedge Funds: “Too risky if the minimum investment ticket (is) $1 million”
- “Tokenisation enables fractional ownership – reducing minimum size of $1 million to $20,000”
- With S$2 to S$10 million in assets: “This investor is not likely to be well-served by a traditional financial institution”
- On Private Market: “In general, private market investments have a low correlation to the public markets … can carry a higher risk, while offering a higher reward”
- “Our secondary exchange matches and settles trades instantly”
- On deals done online / Zoom: “When building new relationships, physical meetings are still very important”
- Investment banks and financial institutions: “Can work with ADDX to list an issuance on behalf of their clients”
- “Digital securities are the biggest transformation in the capital markets since the advent of electronic trading”
- For issuers: “Have the space to make longer-term decisions on growth, without coming under pressure to declare a profit every quarter”
- As an investment banker – “(deals) were not available to individuals … because the market infrastructure did not allow it”
- Why investment banking to fintech: “Once-in-a-lifetime opportunity to transform the capital markets”
- Likely first travel destination: “Hong Kong – Every time I visit Hong Kong, I can feel the buzz and the energy in the city.”
” An investor with SGD 2 to 10 million in assets is not likely to be well-served by a traditional financial institution “
Introduction:
Who are you and what do you do?
Oi Yee: I am the Chief Commercial Officer of ADDX. I am responsible for all commercial and business activities, including deals, growing relationships with issuers, institutional investors and private investors (UHNWs, HNWs).
- Chief Commercial Officer at ADDX
- 20 Years of capital raising and M&A advisory experience
- Former Head of Investment Banking, UBS Singapore
- Former Head of Investment Banking Singapore, Morgan Stanley
- Previously Led Asia Real Estate Investment Banking Franchise, Nomura Singapore
- Former SVP of Strategy & Development, Parking Holdings
- Authority member for the Civil Aviation Authority of Singapore
Oi Yee has more than 20 years of capital raising and M&A advisory experience. Prior to ADDX, Oi Yee Choo was the Head of Investment Banking of UBS Singapore. Before joining UBS, she held leadership roles including the Head of Investment Banking Singapore at Morgan Stanley and led the Southeast Asia Real Estate Investment Banking franchise at Nomura Singapore. She started her career at Citigroup, covering Singapore corporate and real estate clients. (M&A ~ Merger & Acquisitions)
Between 2006 to 2008, Oi Yee was the SVP of Strategy & Development at the largest healthcare group in Asia, Parkway Holdings and created the Parkway Life REIT. She is also currently an Authority member for the Civil Aviation Authority of Singapore.
On Private Market Investments
1. Why are private market investments generating so much interest among high-net-worth individuals? Can they generate good returns? How about the risks?
Oi Yee: In general, private market investments have a low correlation to the public markets. Investors can therefore add them to their portfolios to achieve greater diversification and potentially build a portfolio that provides higher and more steady long-term returns.
- Low correlation to the public markets
- Greater diversification
- Build portfolio that provides higher and more steady long-term returns
Private market investments can carry a higher risk, while offering a higher reward. One example is Quantedge, which has been rated in recent years by Bloomberg and EurekaHedge as a top global hedge fund. Quantedge had achieved net returns of 19% per annum over a 13-year period when it was listed on ADDX in 2020.
The fractional ownership made possible by digital securities helps investors manage the higher risk-reward profile of private market investments. A hedge fund like Quantedge may well be too risky for the portfolios of many individual accredited investors if the minimum investment ticket was USD 1 million.
But at a minimum of USD 20,000 to 50,000 on ADDX, the risk becomes manageable, and we are giving investors of adding value to their portfolios.
” A hedge fund may well be too risky if the MINIMUM investment ticket (is) USD 1 million “
2. What is ADDX?
Oi Yee: ADDX (formerly known as iSTOX) is a digital securities platform on a mission to democratise the private capital markets.
By tokenising private market securities on the blockchain, including hedge funds, wholesale bonds and private equity, we make it much more efficient to manage the securities, automating manual processes such as dividend and coupon payments, ownership tracking and secondary trading. This brings significant benefits to both investors and issuers.
Benefits:
- Efficient management of securities due to automated processes
- Manage dividend & coupon payments
- Allow ownership tracking
- Enable secondary trading
- Enable fractional ownership
For accredited investors, tokenisation enables fractional ownership. For example, ADDX can reduce the minimum investment size of a hedge fund from USD 1 million to USD 20,000, putting these investments within the reach of many for the first time.
ADDX is fully regulated by the Monetary Authority of Singapore as a platform for the issuance, custody and secondary trading of digital securities. We are backed by Singapore Exchange (SGX), Temasek subsidiary Heliconia Capital and Japan government-backed investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan.
” reducing minimum investment size of $1 million to $20,000 “
3. Who are the investors using ADDX?
Oi Yee: Individual accredited investors on ADDX today come from 27 countries, spanning Asia, Europe, the Americas (excluding the United States), Australia and New Zealand.
We have a fully digital KYC process for investors who are able to meet the Singapore definition of an accredited investor:
- Individual with SGD 1 million (foreign currency equivalent) in net financial assets, or
- Individual with SGD 2 million (foreign currency equivalent) in net assets, or
- Individual with SGD 300,000 (foreign currency equivalent ) in annual salary.
Consider the example of someone with SGD 2 to 10 million in assets. This investor is not likely to be well-served by a traditional financial institution. Beside facing higher fees, he or she will not be shown many private market products because the USD 1 million minimum investment in, say, a hedge fund would take up too large a share of their portfolio. But by reducing the minimum investment to USD 20,000, we are enabling access for this group.
In addition to individuals, we have launched institutional accounts for brokers, family offices and external asset managers that would like to trade securities on their own or on behalf of individual investors.
” an investor with SGD 2 to 10 million in assets is not likely to be well-served by a traditional financial institution “
4. If the minimum investment size is reduced to $20,000, would this not discourage larger investors who have tens or hundreds of millions, and prefer ticket size of $1 million or $10 million?
Oi Yee: ADDX does serve large investors who want to participate in the millions or tens of millions as well. Within our current client base, we do have a number of investors in this category. Our platform breaks down the minimum investment size because we want to expand access to private market investments, but we do not have a maximum investment size.
ADDX Secondary Exchange:
- Matches and settles trades instantly (powered by blockchain technology)
- Traditional OTC trades that can take days if not weeks to clear
One key advantage of the ADDX platform for both bigger investors and other investors is our secondary exchange, which matches and settles trades instantly because it is powered by blockchain technology. This stands in contrast to traditional OTC trades that can take days if not weeks to clear. (OTC ~ Over-the-Counter)
” our secondary exchange matches and settles trades instantly “
5. Do you find that deals are being done online and via Zoom? Or are people waiting until they can travel again?
Oi Yee: As a platform, ADDX has adapted to the pandemic measures by conducting all our investment roadshows online.
Investors can still interact with the issuer over Zoom and they can ask the issuer questions they have about the investment. This has worked particularly well for global investors. As the users of our platform come from cities in 27 different countries, they might connect to the roadshow from London or Hong Kong or Sydney, for example.
- (Zoom) worked particularly well for global investors
- Users of our platform come from cities in 27 different countries
- Connect to the roadshow from London or Hong Kong or Sydney
We do meet with issuers face-to-face because these meetings can be done in smaller groups. Some issuers moved their fundraising projects from 2020 to 2021 – possibly because they wanted to observe the medium-term economic and financial impact of the pandemic before committing to deals, so we are starting to see a flurry of activity this year.
But a resumption of travel will be helpful, because given the quarantine measures, we can only meet issuers physically in Singapore at the moment. Zoom calls can be very productive, but they work best when there is already a prior relationship of trust. When building new relationships, physical meetings are still very important.
” When building new relationships, physical meetings are still very important “
6. As a company, how do you get listed on ADDX?
Can you raise debt or equity easily? What is the criteria? What about investment banks that have companies or deals? Can they list on behalf of their clients?
Oi Yee: Yes, ADDX is building a strong list of issuers and investors. We help companies and funds raise capital in a variety of ways, including debt and equity. Raising funds via digital securities brings many benefits, including access to a bigger pool of capital or investors, lower fees, a lower minimum fundraising threshold and faster speed to issuance, which in a fast-changing landscape can be important for reducing uncertainty.
To safeguard the interest of investors, we apply rigorous standards when performing due diligence on proposed issuances, taking into consideration factors such as the track record, creditworthiness and reputation of the issuer, where and how they are regulated, who the other investors are and whether the company is likely to meet our disclosure requirements. Each listing also needs to be approved by a listing committee comprising experienced figures from the financial industry.
Investment banks and other financial institutions (FI) can work with ADDX to list an issuance on behalf of their clients. The deals listed on ADDX so far have come in different forms, including deals where ADDX has worked directly with the issuer and others where we have worked with a partner or adviser to the issuer.
” Investment banks and other FInancial institutions can work with ADDX to list an issuance on behalf of their clients “
On future of Capital Markets
ADDX recently raised $50 million in your Series A round. Given the strong backers and strong team, ADDX seems to be on a path to accelerate change in the private market.
7. How do you see capital markets or investments evolving because of ADDX? Is there something you like to see changing faster in capital markets or private markets?
Oi Yee: Tokenisation and digital securities have the potential to change the private capital markets in very profound ways. At ADDX, we see this as the biggest transformation since the advent of electronic trading for the public markets.
Why are digital securities such a game changer? Because if private market securities can be tokenised and traded freely on an exchange, the sharp line between the private and public markets starts to blur, and products across a wide spectrum become available.
This is great for investors, because it opens up access to instruments previously only available to institutions. It is a fairer playing field.
For issuers, it is also a very fundamental shift, because it will allow companies to stay private for longer. They will have the space to make longer-term decisions on growth, without coming under pressure to declare a profit every quarter.
” digital securities are the biggest transformation in the capital markets since the advent of electronic trading “
On Career
Oi Yee has more than 20 years of capital raising and M&A advisory experience including senior investment banking roles at UBS, Morgan Stanley, Nomura.
She had started her career at Citigroup, was also the SVP of Strategy & Development at the largest healthcare group in Asia, Parkway Holdings and created the Parkway Life REIT. Oi Yee is currently an Authority member for the Civil Aviation Authority of Singapore.
8. You’ve had a very successful career, Oi Yee. Why did you choose to switch from investment banking to a fintech company?
Oi Yee: As an investment banker, I was seeing the growth of deals in the private markets – issuances by established companies involving high-quality assets that offered good returns to investors. But these deals were not available to individuals – not even if you are a sophisticated investor – because the market infrastructure did not allow it.
The fundamental shape of the capital markets had not changed for decades. But the technology now exists to allow a shift. Large financial institutions have to consider their legacy systems, and they tend to be more cautious in adopting the latest technology, but fintechs like ADDX are entering the space and getting that first-mover advantage. That is why when the ADDX opportunity came up, I decided to take it.
It is a once-in-a-lifetime opportunity to transform the capital markets and bring significant benefits to millions of investors.
” once-in-a-lifetime opportunity to transform the capital markets “
What is your first likely destination once travel opens up again?
Oi Yee: Hong Kong. Every time I visit Hong Kong, I can feel the buzz and the energy in the city. The clients I meet would be throwing creative ideas around the room. The entrepreneurial spirit and can-do attitude are unlike what you’ll see in other Asian cities.
Thank you Oi Yee for sharing your valuable insights on private markets and ADDX in The 2021 Investment Series.
Oi Yee Choo, Chief Commercial Officer of ADDX
Oi Yee Choo is the Chief Commercial Officer of ADDX, with more than 20 years of capital raising and M&A advisory experience.
Prior to ADDX, Oi Yee Choo was the Head of Investment Banking of UBS Singapore. Before joining UBS, she held leadership roles including the Head of Investment Banking Singapore at Morgan Stanley and led the Southeast Asia Real Estate Investment Banking franchise at Nomura Singapore. She started her career at Citigroup, covering Singapore corporate and real estate clients.
Between 2006 to 2008, Oi Yee was the SVP of Strategy & Development at the largest healthcare group in Asia, Parkway Holdings and created the Parkway Life REIT. She is also currently an Authority member for the Civil Aviation Authority of Singapore.
About ADDX
ADDX is a future-ready capital markets platform set to usher in a new era for capital fundraising and investment. Through digital securities, ADDX offers a more innovative, flexible, inclusive, and efficient system for an emerging generation of investors and issuers. As part of its mission, ADDX seeks to enable all users to transact exactly the way they want to and extends capital market access to a wider segment of the community. ADDX is owned and operated by ICHX, which has been approved by MAS as a recognised market operator (RMO) and has a capital markets services (CMS) license to deal in securities and collective investment schemes, and to provide custodial services.
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