Two former bankers based in Asia went live this week with an online portal that connects buyers and sellers – and providers and seekers of financing – for real assets.
The Real Assets Exchange (Rax) aims to facilitate investment in areas including real estate, land, businesses, mines, leases, concessions, intellectual property, equipment, toll-roads and oil rigs.
The founders are Singapore-based Garry Frenklah, formerly of Société Générale Private Banking and RBS, and Martin Bertsch, who has worked for EFG Financial Products, Nomura, Lehman Brothers and JP Morgan and is based in Hong Kong. They are about to start a round of early financing, and discussions are progressing with a possible cornerstone investor.
Asked how the project came about, Rax CEO Frenklah says: “After observing inefficiencies in the real asset selling, broking and intermediation processes, I realised that nothing has changed in centuries in this market."
He cites issues such as “mall operators mostly working locally and limited by the size of their contact book and bandwidth; formation of endless broker chains; leakage of confidential information; and dissemination of false/misleading information in the hope of securing deals”.
In addition, “while most investors have the vast bulk of their wealth in real assets, adds Frenklah, “the wealth management industry is totally financial asset-centric”.
Finally, investments are becoming truly global, he notes: “Whereas in the past investors tended to invest in their own backyards, nowadays they assess each opportunity on its merits irrespective of geography.”
The Rax site has been under testing for a few months and has several approved users already, says Frenklah.
Some 50 assets are on the portal and the number is growing, both online and in dark-pool format, he adds, with fundraising deals having already attracted investors. “We market assets to specific investor types that our users request, such as sovereign wealth funds,” says Frenklah.
It is free both to join and post assets on Rax, with a fee payable when a deal is completed. Know-your-customer checks are performed on users before membership is granted, and some limited due diligence undertaken on the assets before they are posted.
The bulk of Rax’s assets and users will likely initially be from Asia Pacific. There is also a plan to roll out a Chinese-language version – and possibly Russian, Spanish and Japanese if there’s demand.
Institutional partnerships are being formed to help boost Rax’s distribution and reach. The first will be with global trust and fund services company Amicorp, which plans to take an equity stake in Rax. In turn, Rax will be able to use Amicorp’s 40 offices worldwide and 600-plus professional staff for distribution.
Frenklah was most recently a senior director in customer relationship management at Société Générale Private Banking in Singapore. Before that, he worked at RBS, Salomon Brothers, Barclays Capital, HSBC Securities and Sumitomo-Mitsui Banking Corporation Capital Markets across Hong Kong, Tokyo and Singapore.
Bertsch’s roles have included stints at EFG Financial Products, Nomura, Lehman Brothers and JP Morgan. At Nomura and Lehman he held the role of Asia-Pacific ex-Japan head of capital markets structuring products. His most recent activities include founding and running two businesses, financial industry consultancy Kledia and training and e-learning provider MyFinanceTutor.