Apex Group announced on Wednesday that it has become the first fund administrator to utilise blockchain technology as a book of record. This innovation has led to the introduction of a new, digital share class and a Distributed Ledger Technology (DLT) registry for the Hamilton Lane Global Private Assets (GPA) fund.
The 3.7 billion euro fund, which was initially launched in 2019, is an evergreen fund designed to offer investors diversified exposure to private equity and private credit. The fund aims to generate capital appreciation over the medium to long term by investing in private assets worldwide, while addressing some of the challenges associated with traditional private market funds by offering limited liquidity to investors on a monthly basis.
As the fund administrator, Apex Group developed the blockchain application in collaboration with asset manager Hamilton Lane, based in Conshohocken, Pennsylvania, and Sygnum Bank, a Swiss digital asset bank based in Zurich. Together, they have established a DLT registry for the fund. DLT, the technology underlying blockchains, allows users to track any changes and identify who made them, reduces the need for data auditing, ensures data reliability, and restricts access to authorised individuals only.
First milestone for Apex Luxembourg
“This is a first milestone in the DLT space for the Apex Luxembourg Transfer Agency and we look forward to further opportunities to expand our offering and support our clients in their distribution ambitions,” said Bernard Biren, Head of Transfer Agency Operations at Apex Group Luxembourg, in a statement.
Victor Jung, head of digital assets at Hamilton Lane, said the technology can serve as a catalyst for broader adoption within the banking and wealth management industry. “We strongly believe that tokenisation has the potential to transform the way investors gain access to the historically strong returns and performance opportunities within the private markets, and are delighted to announce this digital-native, institutional-grade offering with Sygnum and Apex.”
Benefits increasingly recognised
In recent years, asset managers and service providers have increasingly come to recognise that the integration of blockchain technology into the investment fund sector could represent a transformative shift towards greater efficiency, transparency, and accessibility.
Blockchain, the foundational technology behind cryptocurrencies, offers a secure and immutable ledger that facilitates the real-time tracking of transactions and ownership. For investment funds, this means an unprecedented opportunity to streamline operations, from the issuance of shares to the management of investor records and compliance processes. By tokenising fund shares, blockchain enables fractional ownership, expands the potential investor base to include a wider array of participants, and offers enhanced liquidity options.
“This is a significant breakthrough in making private markets more broadly accessible and investible via DLT solutions,” said Sygnum head of tokenisation Fatmire Bekiri, adding that the partnership heralds “positive, blockchain-powered change for the industry.”
The inherent transparency of blockchain reduces the need for intermediaries, lowers transaction costs, and minimises the potential for fraud, all while providing a clearer audit trail. At Luxembourg conferences, experts have expressed their belief that this technological leap is not just about improving operational efficiencies, but that it’s also about redefining the landscape of investment funds, making them more accessible, more secure, and more adaptable to the needs of today’s investors.
Pioneering approach
Apex stated that its pioneering strategy aims to broaden investor access and enhance the efficiency of fund distribution and administration. “Apex Group has become the first transfer agent and fund service provider to administer regulated securities using blockchain as the book of record,” it said. “This innovative approach enables global private market funds to access a broader and significantly larger pool of qualified investors.”
The DLT registry allows for the integration and automation of many traditionally separate fund administration functions. The tokenisation of the fund creates a digital share class, with the DLT registry managing its distribution and administration.
Subject to oversight by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, Apex will oversee investor onboarding (AML/KYC), subscription, administration, and transfer agency services for the fund’s digital share classes. The firm indicated that it plans to increasingly adopt this operational model for all its asset management clients, thereby enabling them to sell more of their products.
“Our objective is to enable distributors and wealth managers to have greater access to our clients’ alternative strategies,” said Bruce Jackson, CFA, chief of digital asset funds and business at Apex. “We will continue to refine our Framework Operating Model for the distribution of alternative asset funds, using blockchain as the platform for subscription, onboarding, operation, administration, and transfer agency.”
With over 13,000 employees globally, Apex provides services into 50 jurisdictions delivering an expansive range of services to asset managers, financial institutions, private clients, and family offices. The group has continually improved and evolved its capabilities to offer a single-source solution through establishing the broadest range of services in the industry; including fundraising solutions, fund administration, digital onboarding and bank accounts, depositary, custody, super ManCo, corporate services and a pioneering ESG Ratings and Advisory solution.
Further reading on Investment Officer Luxembourg:
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- Blockchain startup to help SMEs access ESG capital