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KKR Partners with Avalanche and Securitize to Tokenize Fund

Posted September 14, 2022 2:10 pm
4 min
By Jethro Sandico

Digital asset securities firm Securitize announced on September 13, 2022, the launch of a fund tokenizing the interest in global investment company KKR’s Health Care Strategic Growth Fund II (HCSG II) on the Avalanche blockchain. 

The institution is making a portion of one of its private-equity funds available on prominent blockchain Avalanche. Securitize Capital, the digital asset management arm of Securitize, is in charge of managing the fund.

“Tokenization has the potential to address many of the biggest challenges for individual investors seeking to participate in private market investing by enabling technological and product innovations that were not possible before,” Securitize CEO Carlos Domingo stated. 

The collaboration marks the first time that a portfolio like HCSG was offered in a digital format in the U.S. Essentially, the project will provides individual investors access to additional private investment vehicles. The opportunity is a significant addition in a market that is traditionally limited to institutional investors and high-net-worth individuals. Additionally, this is a big win for Avalanche for partnering with one of the largest investment funds in the world.

“This new fund is an important step toward democratizing access to private equity investments by delivering more efficient access to institutional quality products,” Domingo added.

According to Ava Labs president John Wu, the partnership with KKR and Securitize “will surely spur more blockchain activity among leading investment firms,” since they are now “equipped with both the technology and knowledge they need to form an impactful strategy.”

“Financial markets demand innovation, and over the last two years we’ve seen dramatic leaps forward in the evolution of real world assets moving on-chain and delivering on the promise of breakthrough technology for institutions,” Wu said. 

About HCSG II

Health Care Strategic Growth II, or HCSG II,  is the successor to KKR’s HCSG I fund. The first iteration of the firm’s health care growth equity vehicle held its final closing in November 2017. During that time, the project had $1.45 billion in capital commitments.

On January 10, 2022, KKR announced the final closing of the $4 billion HCSG II fund. The fund focused on biopharmaceutical, health care services, medical devices, and life science tools, among others.

About Securitize

Securitize is a digital asset securities firm focused on providing shareholders access to alternative investments. Currently, Securitize has a community of over 1.2 million investors, and a network of 3,000 businesses. 

The company created a digital platform for issuing, managing and trading digital asset securities (in compliance with U.S. regulations). Leveraging blockchain technology, Securitize is also the first platform that manages and tokenizes institutional-grade investment products.

“Securitize is now a leading tokenization and distribution platform for investors and global asset managers,” said Securitize Capital Head Wilfred Daye. “The tokenized fund we have developed is a significant breakthrough in unlocking investor access to private equity investments.”

About KKR

In 1976, Jerome Kohlberg Jr., and cousins Henry Kravis and George R. Roberts, founded KKR & Co. Inc., (a.k.a. Kohlberg Kravis Roberts & Co). Today, KKR is one of the leading investment firms in the world. 

As of December 2021, KKR has $471 billion in assets under management (AUM). The company handles various asset classes including credit, private equity, real estate, energy, infrastructure, and hedge funds (through its strategic partners).

Additionally, KKR’s insurance subsidiary Global Atlantic Financial Group offers retirement, life, and reinsurance products.

About Avalanche

Developed by Ava Labs, Avalanche is an open source, Proof-of-Stake (PoS) blockchain. 

The ecosystem is one of the fastest smart contracts platforms in the industry. It has the capability to process 4,500 transactions per second, while Ethereum can only handle 14 per second.

Developers built more than 500 Decentralized Finance (DeFi) applications on the network for the past year. However, gaming and NFTs have been gaining traction in the platform in 2022 as well. 

In March, Ava Labs pledged $290 million in $AVAX tokens to attract game developers, DeFi builders, and NFT projects. The funding was also instrumental in introducing subnets, the scaling solution of choice for games in the ecosystem. 

The introduction of subnets is one of the factors that sparked gaming’s growth on Avalanche this year. A few popular games on the blockchain include Crabada, Pizza Game, Snail Trail Game, Gunfire AVAX, and Imperium Empires

Meanwhile, rising digital asset platforms such as Joepegs and NFTrade are also gradually making their presence felt in the NFT market. 

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