PrimePartners launches digital whisky-based security
It is believed to be the first offering of its kind in South-east Asia, and is open to accredited investors
Singapore
INVESTING in whisky may sound esoteric, but a new asset-backed security (ABS) sets out to make this alternative investment more accessible.
PrimePartners has launched a digital ABS linked to exclusive casks of single malt Scotch whisky, selected as "Casks of Distinction" (COD) by Diageo.
COD is a programme where Diageo releases single malt Scotch whiskies which are deemed to be unique and rare. Diageo is the world's largest alcoholic beverage company; its stable of brands includes Johnnie Walker and Guinness.
The digital ABS is promoted by Rare Cask Holdings, a subsidiary of PrimePartners Corporate Finance Holdings, and coordinated by Fundnel. It is believed to be the first offering of its kind in South-east Asia, and is open to accredited investors.
Investors purchase tokens which will be listed on Hg Exchange (HGX), a private member-driven exchange for growth companies and digital assets. HGX's founding members include PhillipCapital, PrimePartners and Fundnel.
A token represents a bottle from the offering comprising five CODs, including Port Ellen 1979 and Caol Ila 1990. Each cask is expected to mature between 2022 and 2025.
Typically, an investor may buy investible whisky from auction sites but there may be uncertainty on the provenance. There are also a number of offshore whisky funds, but since the capital is pooled to purchase assets, investors are unable to cherry pick the vintages they want.
The ABS seeks to mitigate these risks as it is secured against casks that are still stored and aged onsite at Diageo's distilleries and warehouses. HGX is MAS-regulated, and Diageo will bottle and deliver the whisky to Freeport Singapore.
When the casks reach maturity, investors can opt to redeem the value of their tokens in cash or take delivery of bottles. In the meantime, listing and trading on the HGX are expected to provide price transparency and liquidity.
In Knight Frank's Wealth Report 2019, whisky was among the best performing luxury assets, based on 2018 data, topping the Knight Frank Luxury Investment Index that year. The report noted that one bottle set a new world record price of £700,000 (S$1.26 million) in October 2018, and a month later another bottle sold for £1 million. Both were bottles of The Macallan distilled in 1926.
In 2019, however, significant oversupply saw prices soften. The Macallan saw a half-year fall of 2.67 per cent, but prices stabilised in the second half, according to Rare Whisky 101.
Gerald Ong, deputy chairman and executive director of PPCFH, said: "Casks of Distinction represent the crème-de-la-crème and crown jewels of Diageo's portfolio of whisky casks... Among luxury investment items, whisky has come into its own over the last decade due to rapidly growing demand from consumers and investors around the world."
Willie Chang, chief operating officer of HGX, said: "We are delighted to welcome South-east Asia's first digital whisky-based asset-backed security to HGX. Securities backed by luxury assets are a new and fast-growing asset class that democratise investment in what have traditionally been illiquid and highly exclusive items."
