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Tykhe debuts HK’s first security token offering
Real estate-backed offering first under SFC regulations, targets professional investors
The Asset 12 Sep 2023

Tykhe Capital Group has launched Prince Token, the first real estate fund security token offering (STO) in Hong Kong for professional investors and the first STO permitted under the regulations of the Securities and Futures Commission (SFC) of Hong Kong.

This STO is made possible, the company says, because of its virtual asset licences (acting through its subsidiaries), technical strength in Web 3.0, and an execution team with experience across capital markets and operations.

The funds raised from the token offering will be used to acquire a five-unit retail property located in Prince Edward, a core tourism district in Kowloon, Hong Kong.

The tokens are digital securities offered by a closed-ended fund, managed by Pioneer Asset Management, a Tykhe subsidiary under its capital markets and wealth management business.

The minimum subscription amount for the STO is HK$1,000, compared with the average US$1 million (HK$7.8 million) threshold typically required by private real estate funds. By holding the tokens, investors are entitled to the annual distribution of rental income generated from the property and the future appreciation of the property’s value.

Upon completion of the subscription documents, Pioneer will arrange for investors to open a digital wallet account at ON1ON Custody for the allocation and storage of the tokens. The custodian, another subsidiary of Tykhe, is a Hong Kong Trust or Company Service Provider licence holder and an AICPA SOC 2-certified virtual asset custodian. The stored tokens stored are under the protection of virtual asset insurance provided by a Hong Kong insurer.

Compared with traditional funds where shareholdings are detailed by a book entry maintained by fund administrators, the settlement finality of these tokens, the company shares, will be on the public Ethereum blockchain. This technical advantage enables an immediate secondary market via over-the-counter (OTC) trading.

Subject to regulatory approval, Pioneer will also seek to list the tokens on HKbitEX, a subsidiary of Tykhe operating a virtual asset exchange business, which enables greater liquidity via 24/7 automated trading.  

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