Asian venture capital companies and crypto funds to invest $100m in Assembly blockchain

Some of the largest Asian venture capital companies and crypto hedge funds will invest $100 million to further develop applications on a new blockchain, called Assembly, under the Iota network, co-founder Dominik Schiener told Reuters.

Iota is a distributed ledger network similar to blockchain. Assembly will focus on decentralised finance, non-fungible tokens and cryptocurrency games, Mr Schiener said.

DeFi projects, facilitating crypto-denominated lending outside traditional banking and NFTs, which are digital assets certified to be unique and not interchangeable, are two of the fastest-growing crypto sectors. Many blockchain companies around the world have pivoted to cater to this space to meet increasing demand.

Assembly, a smart contract network similar to the Ethereum blockchain launched by Berlin-based research and engineering group Iota Foundation last month, will serve as the anchor for DeFi, NFT and gaming applications. Smart contracts are self-executing transactions whose results depend on pre-programmed inputs.

Asian investment firms led by LD Capital, Signum Capital, Huobi Ventures, UOB Venture Management, HyperChain Capital and Du Capital have committed $100m to funding developments in the Assembly network, Mr Schiener said. Crypto market-maker GSR will also contribute to the $100m investment, he said.

All the investors confirmed their investment to Reuters.

You can think of Assembly as being a network of networks, where there are many blockchains that are now being secured and connected through the same architecture

Dominik Schiener,
co-founder of the Iota network

These firms also took part in a seed funding around earlier this year that raised $18m for Assembly.

"Assembly is now its own network that's built on top of Iota and enables anybody to create their own blockchain network. And this blockchain network is deemed secure and connected through Iota," Mr Schiener said.

"You can think of Assembly as being a network of networks, where there are many blockchains that are now being secured and connected through the same architecture," he said.

Assembly's beta or test version is already live, Mr Schiener said, to be officially launched next year with its own token. Developers, creators and early contributors to Assembly will be rewarded with close to 70 per cent of the entire token supply.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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