Citigroup Inc. is partnering with Switzerland’s stock exchange SIX Group AG as part of a push by the Wall Street lender to make it easier for investors to settle and store their private markets holdings.
The New York-based bank will use a platform operated by SDX, a subsidiary of SIX, to offer shares in late-stage, pre-IPO companies to investors, according to a statement. The offering will be available starting in the third quarter.
“Private markets is a major and growing opportunity,” Marni McManus, Citigroup’s country officer and head of banking for Switzerland, Monaco and Liechtenstein said in the statement. The firm’s partnership with SIX will “simplify and digitize what is essentially a manual and paper-driven industry today.”
Tokenization has become a growing trend on Wall Street and in the world of market infrastructure. Essentially, it’s the process of creating a digital representation of real-world assets on a blockchain.
The shares will be distributed through digital asset group Sygnum Bank AG and Singapore-based financial institution SBI Digital Markets. The two companies will distribute the pre-IPO equities to their institutional and eligible investors in Europe and Asia, respectively.
The announcement comes as many of the world’s biggest banks have boosted their private-market offerings in recent months. Many have forged alliances with private-credit firms while others have been looking to ease access for retail investors into the illiquid asset class.
Morgan Stanley said last week it plans to launch a private equity fund for the widest audience yet, while Goldman Sachs Group Inc. in April announced the launch of a private equity offering that will be open to individuals with as little as $5 million in investments across their portfolios.
With Citigroup’s new partnership, trades that previously took weeks will be executed instantaneously on the new platform, McManus said. The tokenization of assets will also allow accredited investors to hold smaller amounts in those firms than they previously could.
Written by: Levin Stamm @Bloomberg
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