TheChek News Flow

Digital tokens authenticated on blockchain ledgers offer the potential to make buying and selling assets much easier

To some investors, the term “tokenisation” may conjure up images of colourful monkeys. But the same technology that created Bored Ape Yacht Club Non-Fungible Tokens — unique digital cartoon artworks, authenticated on a blockchain ledger — also promises to shake the tree of global finance.

What crypto mania and the digital art craze have both highlighted is that blockchains and other distributed ledger technologies can tokenise almost any asset — real or imaginary. 

The finance industry may stand to be one of the biggest beneficiaries of this stage of the digital revolution. So far, adoption has been slow. However, clear benefits are beginning to overcome the establishment’s inertia. For example, the largest ever digital bond issuance, worth about $750mn, was carried out by the Hong Kong government in February. Notably, the bonds were issued directly on to HSBC’s private blockchain, Orion, providing the benefits of digital tokenisation — such as cheaper, quicker trading — from the outset.

Of these benefits, the largest, and most immediately obvious, is short settlement time. For the recent Hong Kong bond issue, this fell to just one day (referred to as T+1), compared with the traditional five days for a conventional Hong Kong bond issuance.

“What we can see with digital bonds is shorter and more efficient settlements that will free up capital and can eventually alter the underlying structure of markets,” says John O’Neill, HSBC’s Global Head of Digital Assets Strategy. 

O’Neill thinks tokenised bonds have moved from trial phase to implementation and are on a par with conventional bond markets, in terms of liquidity and demand.

Shorter settlement time, and the lower costs associated with that, are not the only benefit of a tokenised issue, though. For the Hong Kong bond, coupon payments and secondary-market trading settlement will take place on the more efficient private blockchain.

Traditional securities, such as bonds and equities, are just the tip of the iceberg when it comes to the potential use of digital token technology by big finance.  

“Digital art and NFTs showed us how tokenisation can be used for fractionalisation, which can in principle be applied to any fungible or non-fungible asset, from gold to real estate” says Michael Silberberg, head of investor relations at hedge fund AltTab Capital. Fractionalisation enables a single asset to be divided up into a large number of smaller parts, with ownership of each part certified by a digital token.

However, breaking assets down into smaller chunks is just the first step to unlocking tokenisation’s potential. A token that contains details of ownership corresponding with a blockchain — and backed with the proper legal protection — then becomes a bearer instrument for whoever owns the private key that controls that token.

“Tokenisation extends the entire universe of collateralisable assets,” says Ralf Kubli of the Casper Association, a decentralised blockchain project. It means that lenders become able to accept all kinds of tangible and intangible assets in return for financing — and they can do so with greater certainty that the collateral exists and that their claim on it is legitimate. 

Everything from manufacturing machinery to pharmaceutical recipes or software could be collateralised efficiently, and without the costs of escrow or other security guarantees. To fully unlock the technology, though, Kubli thinks the smart contracts need to become much more sophisticated.

Information on the liability side of the equation needs to be embedded with tokens; namely getting the cash flows that the collateral generates into a machine-readable and executable format. Blockchain technology then comes into its own with the ability to observe and verify this information which creditors can act upon, if needed. 

In essence, that would produce close to real-time balance sheet information. When combined with the ability to fractionalise assets, it could have huge implications for financial services. Securitisations would move beyond today’s black box instruments, that are priced on snapshots of data from six months ago, into instruments that are easier and faster to monitor, trade and price.

That extends the list of potential benefits well beyond more efficient and cheaper settlement times. Standardisation could mean that legal and other advisory fees all fall, because all that information is contained within the token itself. Secondary trading liquidity should also then increase, and market data would be made more readily available, and timely. 

But that end goal may be further away than many hope. “Technology does not change human behaviour overnight, and tokenisation cannot guarantee liquidity or create markets out of thin air,” says Tim Bevan, founder and CEO of ETF provider ETC Group. 

The full potential of tokenisation to reinvent financial services may therefore be the factor that stops the establishment from embracing it fully.

Private equity firm Carlyle Group has begun the sale process of Japanese cosmetics supplier Tokiwa Corp in a deal that could value the company at $800 million, three sources with knowledge of the matter said.

Non-binding bids for the company are expected by mid-March, said the sources, who declined to be named as the information is confidential.

Potential buyers include private equity firms and several companies in the cosmetics industry, said one of them.

The 75-year-old Japanese company has about $50 million in expected earnings before interest, taxes, depreciation, and amortisation (EBITDA), the sources said.

Tokiwa is aiming to fetch a high-teen multiple over the core earnings in a sale, potentially valuing the company at $800 million or more, they said.

Carlyle and Tokiwa declined to comment.

Jefferies and SMBC Nikko Securities are advising Carlyle on the sale, sources have said. SMBC Nikko declined to comment, while Jefferies did not immediately comment.

Carlyle invested an undisclosed amount in Tokiwa in 2019 via its third Japan-focused buyout fund to help the company expand overseas, it said at the time.

Tokiwa, known as a major supplier of eyeliners and brow defining pencils to global cosmetics brands, is engaged in the research, development and manufacturing of cosmetic products and employs more than 800 people around the world.

Carlyle was one of the first global private equity firms to open an office in Tokyo two decades ago and has invested more than 450 billion yen ($3 billion) in more than 30 Japanese companies.

Pierre-Emmanuel Angeloglou becomes managing director of LVMH Fashion Group and will oversee Fendi, Kenzo, Marc Jacobs, Pucci, Stella McCartney, Patou and Off-White.

PARIS – Making his first major hire as chairman and CEO of fast-growing LVMH Fashion Group, Michael Burke has brought over Louis Vuitton executive Pierre-Emmanuel Angeloglou to become his deputy, WWD has learned.

Executive vice president, strategic missions, at Vuitton since 2022 and a key builder of its menswear business, Angeloglou officially starts March 11 as managing director of LVMH Fashion Group, reporting directly to Burke.

Angeloglou is to take over the direct responsibility for Fendi, Kenzo, Marc Jacobs, Pucci, Stella McCartney, Patou and Off-White, while the Fashion Group’s largest and fastest-growing properties, Celine and Loewe, fall directly under Burke.

The executive was spotted not far from Burke’s elbow at several shows during Paris Fashion Week, which wrapped on Tuesday.

“I am delighted to team up again with Pierre-Emmanuel,” Burke said in a statement shared exclusively with WWD, calling Angeloglou a “key player” in Vuitton’s success story.

“His capacity to articulate a compelling vision, coupled with the empowerment vested in his teams, will enable the Fashion Group Division to fully embrace the objective of heightening the magic of these extraordinary maisons, with their amazing capacity for innovation and their unique history and savoir-faire,” Burke commented.

A seasoned L’Oréal executive, Angeloglou was global brand president of L’Oréal Paris, the world’s largest beauty label, when he joined Vuitton in 2019, initially as strategic missions director for fashion and leather goods.

He was handed responsibility for its men’s division in 2020, then exploding under creative director Virgil Abloh. Under Burke’s guidance, Angeloglou built the men’s business up to 5 billion euros, market sources estimate.

Angeloglou took on increasing responsibilities at Vuitton as an executive vice president, also adding women’s accessories, digital innovation, visual merchandising and communication to his remit.

Prior to steering L’Oréal Paris, Angeloglou for three years held the position of general manager of L’Oréal’s Consumer Products Division in North Asia and for four years oversaw that division in Brazil, according to his LinkedIn profile.

Angeloglou was also general manager of Lascad in Paris and global vice president of L’Oréal Paris skin care. He joined L’Oréal in 1996, starting as a product manager in Italy and then France. He holds degrees from HEC Paris and CEMS.

In a major changing of the guard at LVMH Moët Hennessy Louis Vuitton involving two of the industry’s most accomplished and admired executives, Burke succeeded Sidney Toledano at the head of LVMH Fashion Group last month.

Toledano become an adviser to LVMH chairman and chief executive officer Bernard Arnault, a responsibility he took up alongside roles at the Paris fashion school IFM, French fashion’s governing body, and family commitments.

Last year, Michael Burke bowed out of Vuitton after a stellar 10-year tenure as its chairman and CEO, during which revenues tripled to exceed 21 billion euros, with profitability leaping fourfold, according to market sources.

Former South Carolina governor expected to urge Trump to try to earn the support of those who backed her

Nikki Haley plans to suspend her Republican presidential primary bid in a speech Wednesday morning, people familiar with her plans told The Wall Street Journal.

The former South Carolina governor and United Nations ambassador is expected to make an appearance to deliver brief remarks in the Charleston area around 10 a.m. ET. Her decision arrived the day after Super Tuesday, when she won only Vermont among 15 states that held GOP contests.

Haley won’t announce an endorsement Wednesday, the people said. She will encourage Donald Trump, who is close to having the delegates needed to win the GOP nomination, to earn the support of Republican and independent voters who backed her.

She is expected to emphasize that she will continue to advocate for the conservative domestic and foreign policies she supports and caution against some of the dangers, such as isolationism and a lack of fiscal discipline, that she sees coming from Washington.

Haley was the first major candidate to challenge Trump for the nomination and the last to stand down, showing determination even as she came under significant attack by the former president and his supporters.

Her campaign on Monday referenced Margaret Thatcher, the former British prime minister known as the “Iron Lady” who is a role model for Haley, as it tried to motivate its Super Tuesday voters.

As she exits the race, it is hard to know whether Haley is part of the party’s future or a last gasp of more traditional Republicanism that favors a hawkish foreign policy, fiscal discipline and limited government.

The 52-year-old could still have a future in presidential politics, but her sharp criticism of Trump in the final two months of her campaign will likely make that challenging while he still has a hold on the party.

Polls show Haley had strength among suburban women and independents, both key demographics in winning general elections. That is a key reason she often led Trump significantly in hypothetical matchups against President Biden.

Her campaign used such polling to argue she was the safer bet for the party than Trump to take on Biden in November. As her campaign drew to a close, Haley repeatedly argued that the former president wouldn’t win the general election.

In a statement late Tuesday, Haley’s campaign noted her wins while scoffing at Trump’s characterization of the party as united. “Today, in state after state, there remains a large block of Republican primary voters who are expressing deep concerns about Donald Trump,” spokeswoman Olivia Perez-Cubas said. “That is not the unity our party needs for success.”

Haley pledged earlier in the campaign to endorse the party’s eventual nominee but has since refused to reaffirm that commitment when asked about Trump. “What I will tell you is that I have serious concerns about Donald Trump. I have more serious concerns about Joe Biden,” she said in a Journal interview in late February.

She pointed to the 91 criminal charges Trump faces for matters including his handling of classified documents and efforts to overturn the 2020 presidential election.

“This may be his survival mode to pay his legal fees and get out of some sort of legal peril, but this is like suicide for our country,” she said in the February interview. “We’ve got to realize that if we don’t have someone who can win a general election, all we are doing is caving to the socialist left.”