Exquisitely hand-crafted cold-cast porcelain statues of characters from popular comic book series Marvel and DC Comics made by XM Studios, a Singapore-based design studio, have been some of the most sought-after art collectibles by comic book fans around the world.
XM Studios holds IP licenses to some of the biggest popular culture brands such as Marvel, Star Wars, DC Comics and Sanrio. The collectible statues the studio makes are individually hand-painted and feature intricate details such as fine zips and buckles as well as “switch out” parts to reflect the character’s changing moods. Prices of the premium collectibles range from under S$1,000 (US$745) to as much as S$6,000 (US$4,470), depending on the size and complexity of design.
The company, which started in 2012 as a small family business, has seen strong growth during the Covid-19 pandemic alongside its expanding licensing agreements. It reported a net profit of over S$4.2 million (US$3.1 million) in 2020, with revenues more than doubling in 2020 to S$16.9 million (US$12.6 million) from S$7.9 million (US$5.9 million) in 2019.
Collectors can now also invest in the fast-growing company itself.
On the back of an investment by Heliconia Capital, a wholly-owned subsidiary of Singapore’s state-owned investment firm Temasek Holdings, in XM Studios last week, the company on Sept. 9 announced it raised S$4.5 million (US$3.3 million) in fresh capital through a tokenized listing of exchangeable notes on digital securities investment platform ADDX – formerly known as iSTOX. Heliconia anchored the deal with a S$1 million (US$745,000) investment. ADDX is regulated by the Monetary Authority of Singapore and its investors include the Singapore Exchange and Heliconia Capital.
XM Studios CEO Ben Ang told Forkast.News the company had decided to fundraise on ADDX to reward its community, create liquidity for its investors and increase awareness of XM Studios in the financial community. The fresh capital will be used for XM Studios’ expansion into new product categories and markets as well as to acquire new intellectual property licenses.
“XM Studios has grown from a humble shop in Singapore’s Bras Basah Complex into a global brand. We could not have done this without the consistent support of our fans and collectors over the past decade,” Ang said. “The fundraising on ADDX was designed to allow fractional access at a minimum investment of just S$10,000, because we wanted to provide long-time XM Studios fans with the chance to take part in the growth of the company.”
“The new capital also enables XM Studios to seize opportunities in the next phase of our expansion — in new markets and new segments like premium mass collectibles, allowing fans to buy their favorite collectibles at a more affordable price range,” Ang added. The company is also in the advanced stages of exploring non-fungible tokens (NFTs).
How the tokenized offering works
The offering, which was oversubscribed by over 1.75 times based on the company’s fundraising target, saw the size of the deal increasing from S$3 million to S$4.5 million to accommodate the high demand from investors. The exchangeable notes are redeemable for shares in XM Studios at a significant discount under specific liquidity scenarios. The notes will mature at an interest rate of 6% per annum if they are not redeemed within 18 months.
Tokenizing the offering also allowed the investor base to be broadened by reducing the minimum investment size to S$10,000, down from the S$1 million minimum that is typical for such investments. With primary subscriptions now closed, the XM Studio tokens have been listed on the ADDX secondary exchange, where they can be traded by accredited investors.
“XM Studios is a superhero of a company, a home-grown Singapore start-up with an expanding global footprint. Even as it grows rapidly, the firm has succeeded in turning profitable, making it an attractive investment proposition,” said ADDX chief commercial officer Oi Yee Choo, said in a statement. “Over the past decade, XM Studios has built a loyal, cult-like following among comic fans through its well-made products and high-quality portfolio of licensing agreements.” Licenses that XM Studios acquired this year include Sanrio, Harry Hotter, Looney Tunes and the Great Gatbsy as part of its plans to expand into the premium mass collectibles segment.
Tokenization spearheads new way of investing, fundraising
Tokenized securities — also known as security tokens or digital securities — are issued using blockchain technology. The tokenized nature of digital securities means they can be offered in fractional sizes to a wider range of investors and allow them to diversify their portfolios. Smart contracts on the blockchain facilitate the automatic execution of actions such as dividend and coupon payments, cap table management, as well as trading and settlement, and reduce dependence on intermediaries, thereby lowering costs and improving efficiency.
Speaking at a conference earlier this year, Piyush Gupta, CEO of Singapore-based DBS Bank, said tokenization can fundamentally transform the fabric of the financial system. “Every asset class is going to get tokenized, and that includes whether it’s physical property or paintings or buildings, what have you. The notion of tokenization extends well beyond currency as a medium of exchange,” Gupta said. DBS Bank, which launched its own digital exchange last year has said it intends to scale its exchange business by issuing security tokens.
As digital assets increasingly gain mainstream attention, the tokenization trend looks set to grow.
ADDX’s Choo told Forkast.News that ADDX has received a lot of interest from both startups and established companies. “Tokenization works well if the issuer has a good track record and a compelling story, and if it can persuade investors that the opportunity is a high-quality one,” Choo said. “XM Studios, for example, is a fast-growing company that has turned profitable. It also has a reputable investor — Heliconia Capital — anchoring the deal. These were all factors that strengthened the case made to investors on the ADDX platform, which ultimately led to the deal being oversubscribed by 1.75 times.”
For companies looking to raise funds, the tokenized approach is less expensive and faster, Choo said. The lower minimum fundraising threshold of around US$2 million also makes it a viable option for more companies and fund managers, and a wider range of project types.
The listing of XM Studios’ exchangeable notes marks the first in a new line of equity-linked products by ADDX, expanding the listings on its platform beyond funds and bonds, according to a company statement. ADDX intends to roll out other new product lines this year, including structured products and investments with exposure to cryptocurrencies.
See related article: How blockchain is transforming the investing and securities industry
