Why Nomura’s Swiss subsidiary and Britain’s Brevan Howard started “Libre” – Huge funds flowing into alternative assets | CoinDesk JAPAN

Blockchain-based financial transactions around the worldtokenizationtechnology andsmart contractNomura Holdings’ Swiss subsidiary has taken the initiative a step further as there is a growing push to create the next generation of cheap, automated digital financial systems.

Laser Digital, headquartered in Zurich, Switzerland, which operates businesses related to crypto assets and digital assets, announced in January that it will collaborate with a company called “WebN Group” toalternative assetsannounced the launch of “Libre,” a Web3 infrastructure for institutional investors that will dramatically improve the efficiency of distribution and transactions.

Libre is designed to use tokenization and smart contracts to automatically manage the distribution and trading lifecycle of alternative investments while complying with regulations. It is possible to safely streamline the operations performed by asset management companies and wealth advisors who provide asset management advice to companies and wealthy individuals.

WebN is an organization that provides financial technology with a decentralized approach based on blockchain, and is backed by Alan Howard, who is also known as a billionaire and hedge fund manager. Howard co-founded British hedge fund management company Brevan Howard in 2002.

Under the plan, Brevan Howard and American alternative investment management firm Hamilton Lane will be the first to use Libre. In addition, Libre has adopted Polygon, a blockchain called “Layer 2” that aims to extend the Ethereum blockchain.

In 2021, Brevan Howard opened a digital asset division, Brevan Howard Digital, to provide institutional investors with investment opportunities that incorporate blockchain-based crypto assets and other digital assets. ing.

smart contractWhat is: Automation of contract performance management in which certain processes are automatically executed when specific conditions are met for a contract or transaction. By writing the conditions for effective transactions and contracts recorded on the blockchain as a program, such as their effectiveness, and automating performance management, various operations can be seamlessly connected. (Source: Hitachi, Ltd.)

alternative assetsWhat: A relatively new investment target or investment method other than traditional assets such as listed stocks and bonds. Alternative is the English word “alternative” and means “alternative”. Investment targets include trading in commodities such as agricultural products and minerals, real estate, and financial derivatives such as private stocks, futures, options, and swaps.In addition, unlike traditional bank loans that lend to banks and companies, investment funds other than banks lend directly to companies.private creditare also included in alternative assets. (Source: SMBC Nikko Securities)

Libre to establish headquarters in Abu Dhabi: Sala CEO

(Abu Dhabi Global Market: Shutterstock)

At first glance, Libre looks similar to Libra, a digital currency project that was briefly developed by Meta (formerly Facebook) several years ago, but of course the two are unrelated. is.

Libre has been under development since around February 2023, with Nomura’s Laser Digital and WebN as joint business partners. The company’s founding CEO is Avtar Sahra, who entered the financial world after earning a doctorate in physics and particle theory.

“wealth managementLibre’s purpose is to become the preeminent B-to-B protocol that connects asset management companies and sales companies. We want to encourage the transfer of existing capital markets to on-chain (on the blockchain),” Sala said in an interview with CoinDesk Japan.

“This is also my challenge, which I have been planning since around 2014.”

wealth managementWhat: A service that appropriately manages assets held by individuals. It is a financial service that has been provided in Europe and the United States for wealthy people, and in recent years it has been provided mainly to wealthy people and business owners in Japan as well. (Source: Mitsubishi UFJ Bank)

As for why Libre first focused on the alternative asset market, Mr. Sala explains, “Due to changes in the macroeconomic environment in recent years, growth opportunities in the alternative market are increasing.”

“Adding alternative assets is essential for institutional investors to optimize their asset portfolios.”

According to Mr. Sala, Libre will establish its headquarters in the international financial center “Abu Dhabi Global Market (ADGM)” in Abu Dhabi, the capital of the United Arab Emirates (UAE), and he will also proceed with development based in Abu Dhabi. go.

Alternative market expected to see huge inflow of funds

(Shutterstock)

Consistent with Sala’s view is a report compiled in December by JPMorgan Chase, the largest U.S. bank, and Bain & Co, a major consulting firm. A 2022 survey by Bain found that not only institutional investors but also many ultra-high-net-worth individual investors are seeking investment opportunities in alternative assets.

In addition, a joint report by JPMorgan and Bain states that if the alternative asset industry advances blockchain-based tokenization, it will create new revenue opportunities worth $400 billion (approximately 58 trillion yen). states that it is possible.

The background to this is that alternative asset management operations, which have traditionally targeted institutional investors, are now largely done manually to meet the needs of specific institutional investors, and multiple operations within the industry have become fragmented. There are things that have been done.

If the number of cases in which alternative asset management services are provided to individual investors with a certain amount of assets increases, the need for cross-industry automation will further increase.

Of the approximately $290 trillion in total global wealth, $150 trillion is held by individuals, and only 5% of personal wealth is currently invested in alternatives.

U.S. companies that manage alternative assets, such as Blackstone, Carlyle, and Apollo, are seriously considering offering services that focus on high-net-worth individual investors (like JP Morgan). Bain’s report).

Related article:The ultra-rich are looking foralternativeAssets”, economic effect of over 50 trillion yen due to tokenization

Mr. Ikeda’s perspective as head of Nomura’s digital division

(Mr. Hajime Ikeda, who leads Nomura Holdings’ digital company/Photographer: Keisuke Tada)

Laser Digital, on the other hand, is a subsidiary launched by Nomura in 2022, and its three pillars of business are digital asset management services and trading for institutional investors, and startup investment. The company has been preparing for the global expansion of Laser Digital by opening a Japanese subsidiary last year.

Related article:Nomura is accelerating the “construction site” of digital assets

Nomura has created an internal organization called the “Digital Company” and has been leading the development of business infrastructure related to crypto assets and digital assets. In addition to the development of Komainu, a service for institutional investors that stores and manages digital assets, the opening of Laser Digital is also a project undertaken by Digital Company.

Hajime Ikeda, who oversees the Digital Company, revealed in an interview with CoinDesk Japan last December that he plans to increase Laser Digital’s headcount to around 100 people worldwide by 2024. . Nomura plans to create a new investor experience with digital financial products by utilizing technologies such as blockchain to cover areas that cannot be covered by traditional financial services.

Mr. Ikeda said, “Blockchain, AI, and alternatives. We are focusing on these three things in the digital asset business of the near future.”

｜Interview/Text: Shigeru Sato
｜Editing: CoinDesk JAPAN Editorial Department
｜Image: Libre CEO Avtar Sahra (Courtesy of Mr. Sahra)