Ravi Chandran
Fraxtor embarks on first development project with its community of Accredited Investors and seasoned property developer partners
• First freehold landed development project in Singapore funded by community of co-investors on Fraxtor’s online platform
• Project is first in Singapore that gives investors opportunities to co-invest in niche opportunities here and globally, with seasoned industry players Daniel Teo & Associates (DTA) and its business partners
• Fraxtor’s unique combination of digital platform backed by blockchain technology and brick-and-mortar expertise to provide Accredited Investors1 access to a full gamut of real estate investments
Fraxtor Capital Private Limited (“Fraxtor”), a real estate co-investment online platform, has successfully closed the equity fund raising from its community of Accredited Investors (AIs) to co-invest in a freehold landed development project in Singapore.
Construction for the project – with a two-year investment holding period – is expected to commence in November 2019 and co-investors will receive their potential returns when the properties are fully developed and sold, with projected completion in 2021.
Fraxtor is a start-up backed by veteran real estate developer Daniel Teo to make real estate investments more financially accessible to individuals. Property investments are typically big-ticket items but Fraxtor’s “byte-sized” approach means that individual AIs can be onboarded through Fraxtor’s blockchain-enabled platform and invest small amounts in property deals together with other co-investors in the Fraxtor community. Over time, Fraxtor aims to build an ecosystem of co-investors to pursue global real estate investment opportunities together with seasoned real estate players.
Fraxtor will manage the entire process from fund raising to sale of the completed properties on behalf of the co-investors who had subscribed for “fractional units” (frax) in the project. In addition, the management team believes the project had appealed to those who have always invested in real estate and would like to be involved in developing a new property from the ground up.
As an exempted fund manager under the Securities and Futures Act, Fraxtor is restricted to offering non-capital market products to AIs only. This means that its offerings are not meant for retail investors who may not understand the risks involved in such investments. In line with regulatory guidelines, AIs will need to pass initial Know-Your-Client (KYC) and Anti-Money Laundering (AML) checks before they get access to project details on the Fraxtor platform.
Democratising Real Estate Investment
“Fraxtor was founded on the premise that Asian investors adore real estate and are adaptive to digital innovation. With the secure digital platform to buy fractional units of real estate with a mouse click, investors can gain access to a selection of niche and global real estate investment opportunities which are otherwise out of reach, and enjoy hassle-free real estate ownership as investments are fully managed from inception to disposal,” said Daniel Teo, Director of Tong Eng Group, Hong How Group, and Daniel Teo & Associates (DTA).
As Fraxtor offers byte-sized investment opportunities to AIs, the minimum investment amount required varies from project to project, but will likely be in the range of S$10,000 to S$50,000.
“Typically, investment in real estate requires a large capital outlay. This is rather prohibitive and makes diversifying your portfolio difficult. Investors often do not have access to such opportunities because of the deal size or they lack the expertise in structuring deals in foreign markets. We understand these challenges, hence Fraxtor was conceptualised for investors to invest alongside seasoned investors such as Daniel Teo & Associates. Our strengths lie in our vast experience in global real estate investment, management and development, which has led us to develop an end-to-end digitised real estate investment platform,” said Oliver Siah, Fraxtor’s Chief Executive Officer and Co-Founder.
Mr Siah said that this is the first of “a couple of projects” in the pipeline that Fraxtor has lined up, including one located in Europe that Fraxtor plans to launch soon.
“Democratising real estate investment is the enabling of easy access to bite-sized, hassle-free investment opportunities through the convenience provided by the Fraxtor platform. More importantly, we are also building an ecosystem of like-minded real estate enthusiasts who can bring their own deals on to the platform,” said Rachel Teo, Fraxtor’s Co-Founder and Director of DTA.
To date, a targeted list of invited high-net-worth individuals with net financial assets exceeding S$1 million, amongst other criteria, have gone through the KYC and AML checks and accredited into Fraxtor’s community of co-investors during the soft-launch phase. Fraxtor is now embarking on the second phase of its launch by inviting members of the wider investment community in Singapore to be accredited as co-investors.
Experienced Deal Sourcing Expertise
Backed by DTA and its partners, which include real estate consultancies and network of professionals with direct access to quality global assets, Fraxtor’s investment team sources for high quality assets globally, and proposes shortlisted assets to the Investment Committee for approval before the investment opportunity is pursued. For every deal, there will be a pre-determined investment mandate stated at the onset and fixed holding period of 3-7 years depending on the project-specific strategy.
Fraxtor has been actively looking for global real estate deals in more mature markets such as the United Kingdom, Germany, Japan and Australia. This means that co-investors will soon be able to gain access to a wider range of investment opportunities which are otherwise out of reach. Co-investors are also welcome to bring on deals on the platform to garner investment interest.
In addition, Directors and Shareholders of Fraxtor will co-invest in every deal, so that their interests are aligned with onboarded co-investors.
Real Estate Investment Platform Backed by Blockchain
Incorporated in January 2017, Fraxtor stands for “Fractional Investors” and was co-founded by Oliver Siah, who has more than 10 years in real estate investment and management as a private investor and through his family office, and Rachel Teo, with over 24 years in real estate development, investment and management through her family office and real estate development company, DTA.
Operating like a private equity real estate fund, Fraxtor focuses on niche investment opportunities which AIs typically do not have access to, either due to the sheer investment size or sourcing expertise. By leveraging the deep experience of Fraxtor’s Investment Committee, as well as DTA’s domain knowledge and strong network in the real estate industry, Fraxtor sources for deals in Singapore and around the world which are then presented on its platform to its community of co-investors for subscription.
The relationship between Fraxtor and its investors will be two-way as the intention is to build an eco-system of like-minded co-investors of properties globally. Besides enjoying the convenience of co-investing on a digital platform with one central body handling all the due diligence work and presentation of deal information, co-investors can also bring potential opportunities to Fraxtor for evaluation, before the deals are presented to the community for co-investment.
In addition, Fraxtor’s platform aims to digitise the investment experience of its co-investors, and enables them to create their own portfolios based on geography, asset type and risk profile. As the platform is backed by blockchain, it provides Fraxtor with full traceability of co-investors and the transactions they have made. The platform has also been coded in such a way that tampering of past transactions is not allowed.
