I have recently posted about tokenification  work being done by  Smart and Mobius, Octopus to put investment administration on the blockchain.

Now let’s look at a prospect that opens an investment of nautical infrastructure to institutional investors

It strikes me that basic needs of pensions are currently missing. Valuation of private assets is poor, we require estimates based on Internal Rates of Returns offered usually by funds. We have little liquidity, with no secondary market to give us an immediate price and if taken – money. We cannot see how our investments are getting on.

Read the brochure and you can see that that not only is shipping a valuable area of investment (think Merchant of Venice for risks and rewards) but that by tokenising the assets you are buying into (ships) , you have an immutable record of what has happened and what is earned – via the blockchain.

Investors will buy a Ship Co-Owner investment contract (SCO).

I hope you can understand from this that an SCO is no more than a way for investors to know what is happening with its investment (think Merchant of Venice when the merchants waited till the boat entered the Venetian lagoon (or didn’t).

Transparency – what the investor will pay – how documented

What this means for the wider private markets

This may sound extravagant a claim but read the FCA on tokenisation and read about the Smart/Mobius/Octopus/Ctrl-Act “TRAC” venture to see how it becomes something as close to home as a UK DC workplace pension.

The Pitch from this firm – “Arrow” – to investors considering

This is high over my head but I can remember the Merchant of Venice!

In Venice, a merchant named Antonio worries that his ships are overdue. All the problems of the play spring from his lack of information and poor decisions he takes that lead him to despair.

I have been through the brochure above in full , seen the risks that buying into “maritime assets” and realise that this cannot be an investment for a retail investment on his or her own. But it is not an investment that pensioners cannot benefit from , if due diligence can be done on the ships invested in and their management.

Antonio and the CIO of a pension fund are in the same position, managing portfolios for gain and with risk and growth balanced in decision making.

What seems evident is that tokenisation is the key to this

What is Tokenisation?

To go to McKinsey for an explanation, I get this

Tokenization is the process of creating a digital representation of a real thing. Tokenization can also be used to protect sensitive data or to efficiently process large amounts of data.

These are two challenges faced by investment managers…so why now? McKinsey goes on

After a couple false starts, tokenized financial assets are moving from pilot to at-scale development. McKinsey analysis indicates that tokenized market capitalization could reach around $2 trillion by 2030 (excluding cryptocurrencies like Bitcoin and stablecoins like Tether).

Specifically, we expect that organizations working with certain asset classes will be the quickest adopters; these include cash and deposits, bonds and exchange-traded notes, mutual funds and exchange-traded funds, as well as loans and securitization. Larry Fink, the chairman and CEO of BlackRock, said in January 2024:

“We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond … will be on one general ledger.”