In brief
- Fund manager Valentus looks to raise over $50 million in its own digital currency for a credit fund.
- Both retail and institutional participants can participate in the token sale.
- A Valentus executive said retail investors are a "strong force to reckon with," explaining its decision.
Valentus Capital Management, a US-based investment fund, is looking to raise over $50 million using its own, upcoming digital currency as part of a larger $250 million credit fund, according to a press release. It will be open to both retail and institutional participants alike.
The firm will partner with technology provider and fund manager Realio for the launch of Valentus Digital—a digital currency platform built for the fundraiser—and its corresponding “VAL1” token to raise the amount, with the minimum participation amount set at $10,000. It will be built on Algorand, a blockchain and smart contract issuance platform.
“Realio provided us a seamless, efficient, end-to-end solution to create, manage and take to market a digital token," Taufiq told Decrypt, adding, "We look forward to digitizing more future offerings with Realio as our key service provider.”
Behzad Taufiq, Valentus’ chief investment officer, said the firm aims to raise the amount later this year as part of its first fund, the Credit Opportunities Fund I. Valentus has been in business since March this year and will additionally register as a private equity firm with the US Securities and Exchange Commission.
The $250 million credit fund will invest in assets such as mortgage securities, including real estate, and “distressed” debt, a type of asset or company experiencing financial problems but having otherwise strong fundamentals (creating an opportunity for buyers).
Taufiq claimed the development would mark the first time a private equity credit fund has used digital currencies to raise investor capital.
The VAL tokens will give the holder a right to a “digitized claim” to all limited partnership interests and activities of a Valentus fund, the release said. The public sale will likely take place in 2020 or in early 2021, depending on the restrictions around the ongoing coronavirus pandemic.
The concept of asset tokenization has gained in recent years in the cryptocurrency space. Such tokens digitally represent an underlying asset and can be traded on the open market, potentially providing increased liquidity for market participants and an increased base of investors for issuers.
But while such tokens have so far seen little adoption, the increased shift to digital currencies by global governments may change that muted narrative.