Fintech weekly deals and partnerships round-up

FS: Australia blockchain investor TCM acquires controlling stake in US fund

Australian digital assets investment firm TCM Global Asset Management (formerly Token Capital Management) is making its first international foray. TCM is chaired by former ANZ managing director of global markets, Steve Bellotti, and its chief executive is former JP Morgan managing director of Asia Pacific commodities trading, Jon Deane.

The firm has acquired a controlling stake, alongside high profile blockchain investor Frank Amato, in Cleveland-based Grasshopper Capital. Grasshopper Capital’s first fund, launched in 2017 and closed in 2018, returned 29.28%. The fund was long only and focused on infrastructure opportunities in the blockchain ecosystem.

Grasshopper has now announced it will be launching a new fund, Grasshopper Capital Fund II LP, which it says will leverage the capital markets expertise at TCM as well as the blockchain knowledge of the existing Grasshopper team. The fund will continue to be focused on the adoption and commercialization of blockchain and distributed ledger technologies in financial services.

Grasshopper investment manager Frank Amato was cited in the article as stating: “Blockchain and DLT represent the next evolution of a distributed database. We are seeing widespread adoption from JP Morgan, Facebook, IBM, Starbucks, Fidelity, Nasdaq , ASX etc. Global banks are either developing their own protocol/solution or are part of a larger consortium. Blockchain is really just the backend database that most users won’t ever see. When used efficiently, end users will not even know it is there. Whether it is a private or public blockchain will depend on the use case, however it represents a significant investment opportunity equivalent to the early days of the internet, with potential to disrupt multiple industries.”

John Morris, investment manager at Grasshopper, was cited in the article: “The investment community is grossly under-appreciating the adoption and commercialization of blockchain technology in the financial markets.”

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Telegraph: fintech 20/30 in first token share issue on LSE

The London Stock Exchange has waved through the first issue of shares using blockchain tokens, bringing the technology known as the backbone of cryptocurrencies like bitcoin into a regulated financial market for the first time. Equity in financial technology company 20/30 was sold in tokenized form, digital representations of shares similar to cryptocurrency technology.

These shares then exist on a blockchain, an online ledger that creates a cryptographic record of transactions. Around £3 million ($3.9mn) worth of shares in 20/30 were issued in token form and settled in a test environment on the LSE’s Turquoise equity trading service.

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Northern Trust taps Avvoka tech for smart contract deployment

Northern Trust announced it’s deployed legal clauses as smart contracts directly from a digital legal agreement onto its private equity blockchain. The technology application on a blockchain can be deployed to other platforms, with potential for broad use in generating digital documents and applying conditions beyond legal agreements.

Northern Trust’s application used advanced software developed by legal tech startup Avvoka which enables participants to negotiate, review and digitally sign legal agreements. This new capability was deployed for Emerald Technology Ventures, a venture capital firm with funds administered on Northern Trust’s blockchain in Guernsey.

Pete Cherecwich, president of Corporate and Institutional Services at Northern Trust, said in a statement: “The collaboration and innovation that led to this further breakthrough in blockchain technology is a testament to all parties involved. The ability to leverage digital documents that include smart contract code across multiple platforms is a very significant step toward the future digital environment of securities servicing.”

Northern Trust launched the first commercial blockchain solution for private equity fund administration in 2017 and was awarded four US patents in 2018 for processes critical to the move from manual to digital operations in private equity. Northern Trust also collaborated with major audit firms to enable real-time auditing of private equity lifecycle events on the blockchain.

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Software firm TradeChannel joins UnaVista for SFTR

TradeChannel is pleased to announce that it has joined the UnaVista Partner Programme to support clients in meeting the requirements for the Securities Financing Transactions Regulation (SFTR). UnaVista, part of London Stock Exchange Group, is one the largest regulatory technology platforms globally. TradeChannel, part of global regtech platform Compliance Solutions Strategies (CSS), is a software company that assists the financial community with post-trade regulatory transaction reporting.

Mikkel Mördrup, CEO of TradeChannel said in a statement: “With EMIR and MiFID II we have seen how regulatory changes affects our clients and their data needs…SFTR is a complex regime with many and fragmented data attributes, together with UnaVista we can offer a solution with full transparency and control.”

TradeChannel’s regulatory transaction hub supports reporting under EMIR, MiFID II and SFTR, in a fully automated, integrated, end-to-end solution. The hub extracts, normalizes and formats data from client source systems. By integrating with trading platforms and data vendors, the solution answers the challenge of capturing and consolidating data attributes in a timely and efficient manner. The partnership with UnaVista aims to help clients seeking to fulfil their transaction reporting obligations for EMIR, MiFIR and SFTR.

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VMWare will use Digital Asset’s DAML smart contract language

Digital Asset, the creators of the open source DAML smart contract language, announced that it is working with VMware to integrate DAML with the VMware Blockchain platform. VMware plans to distribute DAML with its blockchain platform directly to its existing customer base and through its partners.

DAML is an open source programming language designed specifically for use in multi-party business processes, often referred to as smart contracts. VMware Blockchain is deployed in enterprises worldwide, offering a distributed blockchain for security and scalability. “DAML has been proven to be one of the few smart contract languages capable of modeling truly complex workflows at scale,” said Michael DiPetrillo, senior director of Blockchain at VMware, in a statement.

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Insurtech Lemonade announces $300 million funding round led by SoftBank

Lemonade, the insurance company powered by artificial intelligence and behavioral economics, announced the signing of a $300 million Series D funding round led by SoftBank Group, with participation from Allianz, General Catalyst, GV (formerly known as Google Ventures), OurCrowd, and Thrive Capital. Lemonade plans to use the funds to accelerate its US and European expansion in 2019, and explore new product lines. The transaction is targeted to close in Q2 2019.

Founded by tech veterans Daniel Schreiber and Shai Wininger, Lemonade is licensed as a full-stack property and casualty insurance carrier. The company began offering homeowners and renters insurance in New York in late 2016, and is now available for most of the US population. Lemonade is currently the #1 rated provider of renters insurance in the country.

In addition to digitizing the entire insurance process, Lemonade reduces costs and bureaucracy through giving. In a reversal of the traditional insurance model, Lemonade takes a fixed percentage as a flat fee, eliminating the conflict between paying claims and making a profit, and donates a portion of unclaimed premium dollars to nonprofits during its annual ‘Giveback.’

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Deutsche to acquire Axioma for $850mn, will create new index and portfolio analytics business

Deutsche Börse and Axioma announced that Axioma has agreed to be acquired by Deutsche Börse for $850 million cash and debt free (around $820 million equity value) and will be combined with Deutsche Börse’s index businesses (STOXX and DAX) valued at €2.6 billion ($2.9bn). Axioma is backed by Goldman Sachs and Salmon River.

The combination will create a fully integrated, leading buy-side intelligence player that will provide unique products and analytics to meet the growing demand for an end-to-end platform. Axioma, a global provider of cloud-based portfolio and risk management software solutions, and Deutsche Börse’s index business together will offer a broad suite of index and analytics products with global coverage.

As part of the transaction, Deutsche Börse has entered into a strategic partnership with General Atlantic, which will invest around $715 million into the new company. The investment will be used to finance the acquisition of Axioma.

Theodor Weimer, CEO of Deutsche Börse, said in a statement, “This transaction is a step change for our pre-trading business and fully in line with our Roadmap 2020 strategy, which besides organic growth builds on programmatic M&A and new technologies.”

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