Cape-based property investment specialist Flyt Property Investment has launched Africa’s first property-backed security token.
The Flyt token (FLYT), which resides on the Ethereum blockchain, allows investors to subscribe for, redeem and transfer shares in the Flyt Hospitality Fund, a South African Section 12J fund investing in hospitality property and apart-hotels. One Flyt token is equivalent to one share (which is currently valued at R100) in the Flyt Hospitality Fund.
The breakthrough in fund technology has been developed in conjunction with Swiss-based financial technology supplier Bakari. “South Africa has a developed, forward-looking financial sector and it is not surprising to see it on a shortlist of countries embracing next-generation financial technology. We are proud to be working with the Flyt Hospitality Fund, which is leading in innovation by using technology to offer responsible investments directly to individuals,” says Ciaran MacDevette, Co-Founder of Bakari.
This is the first example of a blockchain-based token servicing a fund operating within a regulated, legal and compliant environment in Africa. Investors who are familiar with Ethereum blockchain can manage their Flyt token via their digital wallet. FLYT is an ERC-20 compatible token on the Ethereum blockchain which can be self-custodied in existing Ethereum wallets.
Zane De Decker, MD of Flyt Property Investment says that the move to digital asset brings an exciting option for investors. “Our aim is to be ahead of the curve and with that in mind, we are thrilled to present our investors with varied options of entry. An investment into the Flyt Section 12J hospitality fund is available via old-school investment into the fund and now, for those who support the blockchain technology, via the Flyt token,” he explains. The token allows for easy, liquid infrastructure where investors can manage their asset through a trusted blockchain.
The Flyt Hospitality Fund is a property-backed section 12J fund, investing in strategically located hospitality properties with a focus on sectional-title serviced apartments and student accommodation. A minimum investment of R50 000 is required, via the token or share option, with a cut off imposed by SARS of R2.5million.
Section 12J of the Income Tax Act was introduced in 2009 by the South African Government to encourage South African taxpayers to invest in local companies and receive a 100% tax deduction of the value of their investment. To date, South Africans have invested over R6 billion into the 12J sector.