Tokenization set to widen private equity’s investor base: but at a price

By Justin Pugsley, Group Editor - Financial Services at FT Longitude

There has been quite a buzz recently about tokenisation among private equity (PE) firms in the hope that it could open up a whole new investor base made up of mass affluent investors. PE is still mostly the preserve of institutional investors and very high net worth individuals. This is not surprising given the minimum ticket size to participate can be as high as $10mn for certain funds. There are some PE firms and their funds listed on public stock exchanges, which are accessible to retail investors with stockbroker accounts. However, they are a mere tip of the iceberg. Therefore, the mass affluent are a large untapped investor base for PE. Various estimates suggest that this segment of the retail investor market - that is individuals with $100,000-$1mn in investable assets - is worth anywhere between $10tn-$25tn. 

Paving the way

The low cost, efficiency and automation aspects of tokenisation and blockchains make them very attractive technologies to reach smaller investors. Tokenisatio…