With depositary assets growing from USD17 billion in 2018 to USD100 billion in 2024, SEI writes that it has experienced significant demand for this service and already provides depositary services to more than 430 funds from other fund centers.

SEI writes that it is the largest fund administrator for private market funds in Luxembourg that are managed by a US firm and the largest private credit fund administrator by assets globally.

Over the last two decades, private markets have consistently outperformed corresponding public markets indexes. However, as the demand for these investments continues to grow, asset managers are managing a complex ecosystem of providers to support their operational footprint. The launch of these services in Luxembourg will complement SEI’s offering that includes fund administration, registrar and transfer agent, and regulatory reporting services—providing asset managers with a single point of contact for their technology and operations requirements.

Bryan Astheimer, Head of SEI’s Investment Managers business, EMEA, says: “The demand for alternatives and European private markets continues to grow, and investment managers of all sizes are looking to expand their investor base and introduce new sources of capital, and this launch further underscores our growth and commitment in Luxembourg. Our strategic focus on scaling our global operational footprint supports our clients to efficiently launch funds—while meeting compliance requirements in different domiciles.

“The addition of our depositary services not only enhances our comprehensive offering across Europe, but it also positions us well to capitalise on these trends and opportunities to drive growth for our clients and SEI.”

SEI has delivered depositary services in Ireland for 25 years, and the company is the largest non-bank depositary in Ireland by assets under management (AUM) and the second biggest depositary in Ireland for servicing non-Irish funds by AUM.

Depositary services in Luxembourg will further support funds that primarily invest in private assets, the firm says, adding that alternative investment fund managers can access the company’s depositary services as part of a suite of fund administration services or on a standalone basis. Services include:

·       Cash flow monitoring

·       Oversight

·       Ownership verification

·       Safekeeping of assets

SEI can also provide depositary services to non-European Union managers looking to market non-EU funds to European Union investors under the Depo Lite Regime.

The firm writes that shares in the fund will be issued using Franklin’s proprietary blockchain-enabled transfer agency platform, giving investors the benefit of the transparency, security, accuracy and immediacy made possible by blockchain technology.

The fund, which is scheduled for launch over the next few months, will be the first tokenised UCITS fund on a public blockchain using in house capabilities and technologies in Luxembourg, and is expected to be distributed widely throughout Europe pending regulatory approval, the firm writes. Further details will be available to investors in due course. 

Franklin Templeton’s Sandy Kaul, Head of Digital Assets and Industry Advisory Services, says: “We want to be known as a leader in developing innovative solutions that align with the needs of our clients’ in terms of business growth, operational efficiency, and scalable best practices.  Disruptive technology and innovation in financial services is reshaping the industry and changing the fundamental rules for how to attract, secure, and serve clients.  We believe that in the future, there may be opportunities to create other tokenised financial products, including interoperability with other digital assets and blockchain native facilities.  We are committed to continuing to explore these opportunities as part of our broader digital assets strategy.”

The expansion of this new capability signals Franklin Templeton’s confidence and belief in Web3 and digital technologies which have the potential to reshape the asset management industry by creating new opportunities to more closely link traditional asset management products and services to transactional payments.  Over the last four years, the firm has developed the resources, reach and expertise to support innovative solutions from beginning to end, including regulatory, custody, digital wallet creation, and the legal and risk management structures required for long-term success.

In April 2021, Franklin Templeton launched the Franklin OnChain U.S. Government Money Fund2, the first US-registered mutual fund to use a public blockchain to process transactions and record share ownership.

Roger Bayston, EVP, Head of Digital Assets, Franklin Templeton, says: “We have been active participants and builders in the digital asset ecosystem since 2018 and have seen the transformative power of blockchain technology firsthand.  As technological innovation continues at pace, we continue to work closely with regulators around the world to introduce innovative solutions to the marketplace. Leveraging our in-depth knowledge of blockchain ecosystems and proprietary technologies, we are well positioned to introduce products that serve to further the understanding and accessibility of digital assets within the broader community.”

The firm writes that blockchain is a decentralised digital ledger that records and verifies transactions in a secure, transparent, and immutable way. It enables peer-to-peer transactions without the need for intermediaries, ensuring that all data is permanently recorded and visible to everyone.  While traditional databases can be vulnerable to security breaches, blockchain provides improved security and a reduction in administrative burden.

The benefits of asset tokenisation include increased liquidity, accessibility, composability and transparency, the firm says. By applying the benefits of blockchain technology to a traditional product, investors will benefit from efficient transfer and cost-effective administration.

Matt Harrison, Head of Americas (ex-US), Europe & UK at Franklin Templeton, says: “This new fund will mark a pivotal step in our global commitment to leverage blockchain technology for clients beyond the US.  We continuously focus on innovation and long-term value creation for our clients, and we want to equip them with tools, services and knowledge to make informed decisions.  With our proprietary solutions, we offer enhanced security, transparency, and efficiency, further solidifying our leadership in the rapidly evolving digital asset space.”