A Wall Street Giant Takes a Bold Step Into Blockchain Technology

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The barbarians are at your front gate.

KKR — the storied private equity firm and subject of the famous piece of Wall Street literature Barbarians at the Gate: The Fall of RJR Nabisco — has announced one of its funds will soon be available on a public blockchain.

It’s the latest sign of a new, more welcoming version of Wall Street that wants to be one with the masses, the ones with money anyhow.

Off The Chain

A proper analysis of the merits of blockchain is comfortably outside the purview of today’s newsletter. But Dan Parent, co-head of US private wealth at KKR, told The Wall Street Journal the structure will make it easier for individuals to invest in smaller dollar increments and allow for smooth monitoring of capital flows.

To launch the opportunity, KKR has partnered with Securitize, a company that has spent five years acquiring the necessary regulatory licenses to raise capital on a decentralized blockchain:

  • The duo will offer tokenized stakes in KKR’s Health Care Strategic Growth Fund from the convenience of the Avalanche public blockchain.
  • The investments will be available only to so-called qualified purchasers — individuals with $5 million of investable assets — who will be vetted through Securitize’s digitized onboarding process. Investors will be required to hold the security for a minimum of one year, after which they will be able to sell to other qualified purchases on a secondary market managed by Securitize.

For all the fancy new tech, the motivation for KKR to tap a pool of HNW retail investors is as clear as day. At the end of the second quarter, private-wealth assets totaled $70 billion at KKR out of a total of $491 billion assets under management. Last year KKR said it expects that in the fullness of time, 30% to 50% of annual fundraising will come from wealthy individuals, up from 10% to 20% as of 2021. It’s Wall Street’s version of eating the rich.