ABO (Alpha Blue Ocean), based in UAE and Bahamas, has launched a new fund called ABO Digital to support digital assets projects in the region and provide alternative financing solutions. During Gulf Business’ exclusive interview with Amine Nedjai, CEO at ABO, here is what he had to say about the future of the organisation.
Approximately, how much are you going to allocate for this new fund?
We are a private investment firm and so we don’t disclose any financial details. ABO is also very much an event driven entity, which gives us the agility and flexibility to easily shift our focus from equity to crypto as the markets change.
Blockchain funding requirements is expected to increase in 2023, and in the event of bear market circumstances, ABO Digital will have a significant role to play as a supportive investor.
We will bring innovative and flexible financing to help projects meet their capital requirements, delivered in different forms of structured products for the crypto world. This will be complemented by our experience with more than US$2 billion in executed financing commitments over nearly six years in traditional public equity markets.
Beyond financial support, our aim is to open our network for crypto projects to connect them with market makers, OTC desks and exchanges to help increase the liquidity of their tokens as well as assist in the technical aspects of their objectives as we look to create synergies between our portfolio companies.
What kind of projects are you interested in the most?
Blockchain is an area with substantial potential. It’s in the process of moving away from the comfort zone its established for itself, to provide solutions for all industries, which naturally will open up new opportunities for many different entities.
There is considerably more adoption of Web3 technologies among traditional companies too. Among the many possibilities this will create, it could contribute towards the end of the crypto winter, initialising a new rise for the sector.
Non-fungible tokens are also on an upwards trajectory. They will continue to gain more ground in the months and years to come, making them a definite area of interest.
On top of this there’s the gaming sector to consider. This industry by itself will drive mass crypto adoption, especially as players become more invested in hyper-realistic, super immersive games.
Decentralised finance, or DeFi, is a strong area of interest. We can quickly find a comparison between DeFi projects and equivalent offerings in traditional markets. DeFi has the opportunity and flexibility to introduce numerous product offerings without the need for intermediaries. It also has the added boon of being open for anyone to participate in.
Among other areas, on a technology front we see an interesting new world opening up thanks to zero knowledge – also known as ZK – technology. This is an exciting development that has the potential to open many new avenues, especially with protocols such as Mina and Aleo.
There is a lot of exciting movement in the digital world, with countless projects that deserve attention. It’s worth noting at this point that more than a third of traditional hedge funds now invest in digital assets, which is testament to how much lucrative potential the sector has.
ABO Digital claims that that few major players have been dominating the investment space over the last few years. What differentiates ABO Digital from others?
What sets ABO Digital apart is the fact that we propose an alternative form of financing crypto projects, in which we use their tokens. This is different to traditional Simple Agreement for Future Tokens investments. We provide total flexibility, and allow for projects to control their dilution via different structures. These include, for example, convertible bonds. Companies have the ability to intelligently utilise these facilities around large spikes in volume, or around press releases. This is similar to how companies such as Tesla have used at-the-market facilities to quickly tap into market liquidity.
What opportunities/challenges do traditional funds see in the current market?
The biggest challenge we see at the moment relates to the current economic cycle we are in, and how crypto is still correlated with traditional markets. At present, funds will be very prudent in their decisions, and will be extremely selective with their portfolio allocation. This will mean that the competition for capital amongst projects will be even fiercer – which in itself provides both a challenge and an opportunity, for all parties.
What is the added value of bringing the corporate fund mentality into the crypto space?
ABO Digital leans on our experience with more than $2bn in executed financing commitments. This alone is a substantial value-add. Beyond this, by bringing the corporate fund mentality into the crypto space we are introducing the ability to provide new solutions, while opening up a network of potential to crypto projects – something that we consider to be vital at this time. Projects that work closely with us gain access to our network of institutional investors and traditional investors, all of whom are interested in gaining exposure to digital assets. It’s a win-win situation all around.
With more credible fund turning their eyes to the cryptocurrency space, will this speed up the normalisation process of cryptocurrency?
Yes, we certainly think this will be the case. As more credible funds move into the cryptocurrency space, they will bring with them more than just institutional capital – they’ll introduce institutional human capital and processes. This will help the sector to evolve and mature. With the increasing participation of more institutions, we’ll see growth in sector regulations, and, most likely, a decrease in sector volatility in general. All of this, in turn, will broaden the appeal and adoption of crypto in the eyes of the traditional financial community.
While everyone is talking about a potential recession, what’s the best investing strategy to have during such circumstances and your outlook for cryptocurrencies and digital assets for the year ahead?
In any environment, whether there’s a recession looming or not, we believe in investing in projects that bridge the gap between the traditional financial world and cryptocurrency world – especially when those projects have real world applications. Quite possibly the most difficult thing for many investors in the crypto and digital space, especially during times of uncertainty, is the extreme volatility. This is especially the case with small, lesser-known projects.
The future price action of many cryptocurrencies is largely uncertain, however, continued growth, coupled with developments such as institutional adoption of the industry as a whole, gives us the confidence to say that the long-term outlook for the sector is very positive.
We have had conversations with numerous DeFi companies, all which which have revealed an incredible amount of innovation happening in the space. In our opinion this is what we would consider to be a ‘blue ocean’ of possibility, which will become a high tailwind over the next few years. There’s a lot happening, a lot of potential, and we recommend that people watch this space for great things to come.
What are ABO Digital’s plans for the year?
Given that ABO Digital is a relatively new venture, our focus in the coming years will be on partnering with leading players in the industry. This will complement our existing capital markets and structured financing expertise. Some examples of our current collaborations include an exclusive partnership with Delchain, a financial services provider to the crypto industry. Delchain will provide all trading execution and custody services for ABO Digital.
We will continue to seek partnerships in this space. Our solutions are highly complementary to many players’ activities. We have already seen traction from several of the crypto projects that are interested in using our solutions to bolster their offerings. This is, of course, an exciting time for us, and we look forward to building a bright, strong future for ABO Digital.
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Islamic Coin, a UAE-based Shariah-compliant crypto, has secured up to $200 million from Alpha Blue Ocean’s ABO Digital, bringing the company's total funding to $400 million and ensuring a long and stable runway.
ABO Digital to bring alternative financing structures to region’s crypto market
We leverage capital markets and use the infrastructure from Alpha Blue Ocean to provide institutional-level financing solutions to the digital asset developers fund their capital needs.