A private equity development project listed on Fraxtor’s digital platform was fully subscribed within 90 minutes, proof that digital fundraising for property projects is gaining a foothold during this Covid era.
Against the backdrop of economic uncertainty as many countries see resurgent coronavirus infection waves, Fraxtor Private Limited (“Fraxtor”),’s latest project was oversubscribed within 90 minutes after its listing on the platform on 31st May 2021. The funds raised are intended for a property development located in Goldhill Estate in Singapore.
“Fraxtor’s digital platform, powered by blockchain technology and brick-and-mortar real estate expertise, provides Accredited Investors (AI) assurance with quality real estate investments,” says Oliver Siah, Co-founder and CEO of Fraxtor.
Accredited Investors subscribed to Frax online from the comfort and safety of their own homes. Frax comprises digitised tokens representing shares that investors own by investing. Since end 2020, Fraxtor, described as an online real estate co-investment platform, has successfully raised more than S$17 million.
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As comparison, traditional fundraising for private equity projects typically spans between one and three months, depending on the project.
Commenting on the overwhelming response, Siah shares, “A myriad of factors affect fundraising; it can be project specific like its complexity or risk-return profile, the profile of fund managers, macroeconomic factors or even socio-environmental factors. In this instance, the online platform provided a safe and convenient avenue for investors, who are mostly at home, to invest in private-equity real estate projects.”
As Singapore transitions to a digital economy, Fraxtor is amongst a handful of local companies pushing the envelope to change the way people invest. When the company launched its first project in early 2019, the response was lukewarm. An online platform was unconventional then.
Fast forward to 2021, as the world reels from pandemic lockdowns, an online platform bridging fundraisers and investors has gained wider acceptance.
Asian Property Review finds out from Oliver Siah, Co-founder and CEO of Fraxtor more details of this relatively new way of investing during pandemic times: What are the ingredients needed to successfully raise funds through a digital platform for a real estate development?
We have seen that the success of each fundraiser depends very much on the deal. Despite investing through a digital platform, investors still assess each deal based on its merits. The good thing about investing on a digital platform is really the convenience and ease with which investors can subscribe to each investment. This allows us to reach out to a wider investor base easily and efficiently. How safe are the funds? Any guarantees for investors?
Just like any other private equity deal, an investor’s capital is always at risk. There are no guarantees for the investors and this is always made clear to them upfront. That being said, the expected returns for most of our opportunistic funds get at least 15% IRR per annum. Our best product so far is on track to achieve approximately 40% IRR per annum. This is the Mandai Food Factory, to be completed in 2023. How do you pick the right development to attract maximum investments?
Our team go through a very thorough due diligence process to find the gems in the private equity real estate space. We assess each deal based on its merits and feasibility as well as the track record of the developer or fund manager. What other developments do you have in the pipeline to be put into your fundraising platform?
We are always on the lookout for projects in Singapore and abroad. Interested investors can sign up for an account on our platform (www.fraxtor.com) and be alerted when the next deal pops up. Based on feedback from our user base, they prefer deals from more mature and stable economies such as Australia, UK, Japan and the USA. What is the average time-frame for returns to investors?
The time frame pretty much depends on the size of the project. Typically, the time frame is around 2 to 2.5 years for smaller projects and 4 to 5 years for larger projects. The demographics of your investors?
Age between 27 to 70++, from Singapore and Australia, most of whom are professionals (lawyers, doctors, bankers) as well as retirees. Do you have plans to extend your digital fund-raising platform to other countries?
Yes, at the moment, we have plans to expand into Australia and Hong Kong.