In the last few years Software as a Service (SaaS) businesses have had the option of skipping venture capital and instead borrowing against recurring revenues. Now Swiss digital asset bank Sygnum is helping one of the European SaaS lenders, float, to tokenize part of its portfolio using Sygnum’s Desygnate tokenization offering.
The UK hedge fund Fasanara Capital (AUM $4 billion) is the senior lender. In other words, the tokens are the junior, higher risk, higher return tranche. The token has an 18 month maturity, pays 14% per annum and uses Switzerland’s DLT laws.
So what are the benefits of tokenization in this case? Usually an investment like this would be relatively illiquid, but Sygnum provides a secondary market, SygnEx. The biggest advantage is likely the smaller ticket size, which broadens the investor base, although Sygnum doesn’t target average retail investors. Both the fractionalization and secondary market enhance liquidity.
“Tokenised debt markets are on the cusp of going mainstream and we expect this asset class to reach USD 3.5 trillion by 2030,” said Francesco Filia, CEO and Co-Founder of Fasanara Capital, “This partnership is a breakthrough for tokenisation and we are dedicated to bringing even more debt on-chain. We are proud to support bringing Float’s high-performing debt portfolio into Sygnum’s market-leading environment.”
The token will be issued on the Polygon blockchain.
There’s been much debate about which sectors are ripe for tokenization. There seems to be some consensus that the less efficient and less liquid asset classes make sense. That’s because of the potential for efficiencies, leading to a smaller token size and hence greater liquidity. Private credit and private equity fit neatly into this definition. On the flipside, public equity markets are already pretty liquid and hence not the best option. Last year BCG forecast there will be $16.1 trillion in tokenized assets by 2030.
