Private-equity giant, KKR, has said that a portion of its $4 billion Health Care Strategic Growth Fund II will be tokenized on the Avalanche blockchain. This will allow investors to access the asset class using a part of the required wealth.
KKR to use Avalanche to tokenize Health Care Strategic Growth Fund II
The effort made by the KKR is the latest move taken by the firm to adopt blockchain technology. The move aligns with the efforts made by other traditional companies globally to adopt blockchain technology.
The first sector of financial companies using blockchain technology went towards permissioned versions such as Corda, Fabric, and Hyperledger. Therefore, the latest move is being seen as a way of opening up traditional companies to more blockchain technologies, such as public blockchains on which anyone can create projects.
KKR manages $491 billion worth of assets, among the few US private-equity companies deploying part of its funds to tokenization on a public blockchain network. KKR is not the only firm exploring this option. According to Forbes, iCapital is also looking at similar opportunities through its 18 members, including BlackRock and BNY Mellon.
KKR has, for a long time, sought exposure to tokenization. The company explored tokenization in 2018. It pointed to the opportunities in fractionalizing investments through tokens on the blockchain, lowering the amount needed to invest and growing the potential sector of financiers.
To support the HCSG, KKR has partnered with Securitize, a San-Francisco-based company to secure $85 million in funding from Morgan Stanley and other firms to issue securities on multiple blockchains. The co-founder and co-CEO of KKR at the time, Henry Davis, currently the co-executive chairman, made a personal investment into ParaFi, a crypto investment, and technology company.
In September 2021, KKR made a formal investment into ParaFi, after which the firm unveiled a working group to explore the application of blockchain applications. By the end of that year, KKR further stressed its commitment to the sector after making its initial fund investment in a cryptocurrency firm. At the time, KKR led a $350 million investment in Anchorage Digital to run as a banking institution.
In 2022, KKR has also made active crypto-related initiatives. These include joining a consortium including leading financial companies such as Apollo Global Management, Blackstone, Carlyle Group, Institutional Capital Network, Morgan Stanley, UBS, State Street, and WestCap to explore blockchain and other distributed ledger technologies.
Tokenization is a big move for KKR
In the past months, KKR’s efforts in web 3.0 & crypto have been limited to investments and team building. However, tokenizing a part of the HCSG II Fund is quite a change.
The firm has not revealed the exact amount of the investment portion that will be tokenized. However, the firm has said that the value will be worth millions of dollars, a small fraction of the $4 billion fund going to healthcare companies. However, the companies commitment to the effort shows they are confident investors are not buying securities.
Since July, the US Securities and Exchange Commission (SEC) has detected ten cryptocurrencies classified as securities. Earlier this month, the regulator announced plans to review filings on crypto assets. However, KKR has assured investors that it was not worried about the crackdown as it follows the regulatory framework.
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