Inspired by the United Nations Sustainable Development Goals, Fasset hopes to expedite the construction of sustainable infrastructure while providing safe, secure, and yielding investments to a broader investor base. This is in response to increasingly pronounced climate degradation and a clear lack of capital entering the sustainable infrastructure sector — estimated by the World Economic Forum to be moving towards a US$15 trillion deficit by 2040.
Hard asset tokens
“With climate change expected to cost the world economy US$7.9 trillion by 2050, impacting lives and communities, the need for sustainable infrastructure has never been more urgent. In addition, the COVID-19 pandemic has placed the global economy at a standstill with massive job losses and markets tumbling around the world. The most direct and effective way to accelerate the production of large-scale sustainable infrastructure projects — and, in turn, create sustainable jobs for the global economy — is through hard asset tokenization and the democratizing access to these investments. We believe that there is, today, an unprecedented opportunity to equalize the global economy while creating sustainable jobs and fighting climate change — and the time to seize it is now,” said Mohammad Raafi Hossain, Fasset Founder and CEO and former Technology Advisor to the United Arab Emirates Prime Minister’s Office, in a press statement.
Founded in early 2019, Fasset has already amassed more than US$4.7 million raised from strategic backers in the UAE, Saudi Arabia, Bahrain, Kuwait, and Singapore. The company aims to bridge the physical, financial, and digital worlds to create and offer a new asset class to all types of investors — hard asset tokens. These are digital representations of infrastructure assets, such as solar farms or fiber optic networks.
The platform uses blockchain technology to fractionalize these large, previously illiquid assets, representing these “pieces” digitally — similar to traditional stocks in a company representing fractional ownership. As a result, these previously unavailable and unlisted assets become highly liquid, more accessible, and easily tradable — allowing retail and institutional investors seeking to diversify their digital portfolios to invest in a low-risk, highly-resilient, yielding, and liquid asset class.
Mismatch in capital
The need for sustainable infrastructure funding is global. While emerging markets are looking to keep pace with urbanization, developed markets must upgrade deteriorating infrastructure. Meanwhile, as of the end of 2019, US$11 trillion in negative yielding bonds are being held. This gross mismatch in capital creates a unique opportunity for the private sector in its desperate search for high quality assets. However, private sector investors face a cumbersome and inefficient process in financing infrastructure, with issues such as:
- Low Levels of Liquidity. Though private infrastructure funds exist, investors have limited exit options and are unable to construct portfolios with optionality.
- Large Ticket Sizes. Only the largest investors can access infrastructure investment opportunities due to the magnitude of the investment.
- Lack Of Optionality. The nature of illiquidity inhibits optimal portfolio construction, limiting asset diversification opportunities;
- High Costs and Fees. Layers of intermediation and a lack of direct investment opportunities lead to higher costs and fees for investors.
To address these issues, which have ultimately limited capital inflows to sustainable infrastructure projects on a global level, Fasset introduces the first of its two flagship products — the Fasset Enterprise Platform. This is aimed at providing tokenization services to any hard asset owners looking to tokenize their assets for fundraising purposes.
By moving the entire sustainable infrastructure financing process to the blockchain, Fasset enables a wider investor audience to get exposure to assets that were previously illiquid, inaccessible, and had high barriers to entry. At the same time, asset owners can bypass costly middlemen to directly list their assets on an exchange, gain faster access to liquidity, and court a wider base of like-minded investors. Fasset will also be launching a regulated exchange for hard assets in the near future.
“It’s a well-known fact that infrastructure projects provide dividends for an economy long after the project is finished. In fact, for each US$1 billion of construction work, there are 6,000 man-years of employment. In today’s economic situation and with record job shortages worldwide, this is very powerful. Fasset wants to create an ecosystem for the efficient financing of sustainable infrastructure by providing tokenization services to any infrastructure asset owners looking to digitize and fractionalize equity of their assets. Fasset is just one small effort among a larger and more coordinated global effort needed, but we hope to work towards meeting one of the most urgent needs of our time,” Hossain said.
Climate change and COVID-19
“With the growing threat of climate change and the unpredictable impact of COVID-19, our global economy is becoming increasingly fragile, threatening livelihoods and impacting the most vulnerable communities across the world. It is up to the next generation of business leaders and innovators, such as Fasset, to create greater equitability amongst markets and economies. By merging traditional assets that are the backbones of any healthy economy with emerging financial technology, Fasset is laying strong foundations for sustainable investments, paving the way for a more ethical and sustainable future for generations to come,” said Jean-Louis Ekra, Board Member for the African Economic Research Consortium and African power generation developer Globeleq.
Ekra, who is the former African Export-Import Bank president and chairman, is a Fasset advisor.
Cryptoassets and DeFi
“Cryptoassets and decentralized finance (DeFi) have shown great potential and have secured their place in the global fintech evolution. DeFi solutions are evolving at a lightning pace and the innovations being built at Fasset will help develop structural fundamentals and financial stability into a space that is traditionally very volatile. As a Global Digital Finance (GDF) member, Fasset is aligned to GDF’s mission to further the advancement of the next generation of financial technologies and we’re excited to welcome Mohammad and his team in the community as they realize the future of sustainable investing,” said GDF Co-Chair Lawrence Wintermeyer.
GDF is a digital asset members organization with industry-leading patron and advisory council members such as Coinbase, DLA Piper, Huobi, R3, and Hogan Lovells.
According to a McKinsey report, a total of US$2-2.5 trillion is invested into sustainable infrastructure annually. By taking into account Fasset’s initial geographic focus on emerging markets and in energy and power based assets, the immediately addressable market totals US$135 billion. While there are many players looking to tokenize hard assets, Fasset will be the only full-service platform offering tokenization of hard assets with a fully-functioning exchange.