Fourth Generation (4G) Capital Group, a micro-finance and training company, is set to issue tokenised bonds using digital currencies.
Hennessy-Barrett, the founder and CEO of 4G capital said the initial issuance has a target of $10 million and a targeted coupon of 10 percent to prove the idea. 4G will issue the tokenised bonds to the current institutional and qualified investors in April. The investors have the option to pay in either ether or bitcoin.
4G cryptocurrency tokens will be issued on a platform run by Finhaven, which will then forward US dollars to the Kenyan micro-finance. Returns will be paid on a monthly basis in crypto or USD while investors will receive the same protection as with any other bond Finhaven is a technology company from Canada.
Hennessy-Barrett says the plan to issue a tokenised bond was propelled by the high cost of capital in Kenya. Banks are less inclined to lend to high-risk borrowers due to the interest rate cap law. Furthermore, bonds are also expensive.
“There is a big gap in the market for small African businesses to raise working capital. What cryptocurrencies are doing is acting as a bridge to new sources of funding, to elsewhere in the world where there is more capital,” Hennessy-Barret said, adding that 4G Capitalʼs bond was “the most logical use of cryptocurrencies”.
Hennessy-Barrett hopes his bond will affect the debate. Part of his motivation for the bond was to “demonstrate best practice so the benefits of this technology can be understood and shared.”
We are very sensitive to regulators moving at the speed they are comfortable at,” he added.