Exploring Assetization and the private markets opportunity at GenTwo’s inaugural Swiss-Latam event

It was a full house on February 8 at Zurich’s Widder Hotel for the inaugural GenTwo Swiss-Latam Evening.  

As GenTwo’s Pablo Jodar explained in his introduction, the gathering – which was co-hosted by LH Strategic and Previse Capital Partners – had two main purposes. One was to give the large but dispersed Swiss-Latam community a rare chance to get together. The other was to explore the increasingly interesting opportunities in private markets today. 

A good time for private markets 

The heart of the evening was a panel discussion on private markets moderated by Brian Johnson, CEO of Previse Capital. The panel featured three leading names from the LatAm private banking community: Juan de Dios Sanchez-Roselly, CFA, Global CIO at Santander Private Banking; Esteban Polidura, CFA, Head of Investment Strategy in the Americas at Julius Baer; and Fabio Farillo de Souza Abdo, CFP, Head of Private Banking Zurich at Itaú Private Bank Zurich. 

Insights from the wide-ranging discussion included: 

• Bad times can be good for private markets. While many investors (rightly) worry about geopolitical and economic risk today, such times tend to be advantageous for private market investments. As one panellist pointed out, during the current period of turmoil from Brexit to the war in Gaza, private markets have performed quite well.  
   
• The illiquidity of private markets is an advantage, especially in times of stress. Many private market investments can be illiquid for years and so require a long-term commitment. This can be an advantage, particularly in times of market turmoil when investors tend to panic and sell at the wrong moment. One panellist referred to this phenomenon of forcing investors to stay committed for a full cycle as "behavioral alpha".   
   
• Private markets are still not sufficiently represented in many portfolios. Despite their advantages, many investors are underweight private markets. This is particularly the case in Europe, one panellist said. The situation is different in Latam, where investors tend to be knowledgeable about private markets and allocations of 10% to as much as 30% are not uncommon. That said, there is a bias in Latin America towards local opportunities. And while investors are increasing their allocations to this asset class, panellists felt there was still a lot to do to educate these investors. A good example is Brazil, where 10 years ago investments in private markets were low but where allocations are now increasing.  
   
• We are witnessing a democratization of private markets. One of the most important developments, panellists said, is the ongoing democratization of private market opportunities. Until recently, most private market investments came with minimum tickets in the five to ten million dollar range. Now, thanks in part to companies like GenTwo, ticket sizes can be much smaller. This will open up private markets to a much wider range of investors. 

A practitioner's tale  
 

Attendees were also treated to a practitioner's view of the private debt markets with a presentation by Toreigh Stuart, Managing Director of Coral Cove Private Credit Fund by Garrington.  

With many banks in the US – in particular smaller, regional banks – tightening their lending, Stuart said there are more and more opportunities in the private debt markets. Because there is also more risk, he emphasized that the quality of the manager was an important factor for success. As he put it: “If you invest with a good private debt manager, you can get some of the best risk-adjusted returns today from the simple, time-honored strategy of lending money to people.”  

As an example, Stuart discussed the strategy and risk management, as well as the performance, of his fund. He also explained how GenTwo allowed Coral Cove to create a bankable product around the fund that is easily accessible to qualified investors of all types. 

How Assetization is helping to democratize private markets 

GenTwo was able to help Coral Cove through its platform, which is designed to make it easy to turn any asset or investment idea into a bankable security. This is an approach the company refers to as Assetization, and during the event Steven Loepfe, GenTwo’s Head of Growth, provided a deep dive into the concept.  

As Loepfe explained, Assetization is a combination of the words “asset” and “democratization”, Assetization is a term used by GenTwo to describe its innovative approach to securitization, as well as the subject of a new book written by GenTwo’s co-founders. 

Loepfe, who read excerpts from the book, explained that Assetization is about providing a standard wrapper around assets so that they can be made bankable and hence investible. It is comparable to the containerization of shipping that started in the 1950s and sparked the current phase of globalization. And likely to be as powerful. “What containerization did for global trade,” Loepfe explained, “Assetization is set to do for global investing.”   

For more see: 

• Assetization – The book 
• Coral Cover Private Credit Fund 
• Financing a Real Estate Project 
• To SpaceX and Beyond! CIC Bank and the Opening of Private Markets 

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