Conservatively, This One’s a Multibagger: Oxbridge Re to Ride $10T Blackrock RWA Tokenization Boom

When Larry Fink published his 2023 annual Chairman’s letter to Blackrock investors, he dropped a couple of innocent-looking hints about an RWA tokenization boom that was about to happen. A boom that’s about to drive certain industry players like Oxbridge Re (NASDAQ: OXBR) subsidiary SurancePlus to stratospheric, multibagger heights.

At the time, all he spoke about were some “very interesting developments… in the digital asset space” that were happening beyond “the media’s obsession with Bitcoin.”

Fink then went on to say, “For the asset management industry, we believe the operational potential of some of the underlying technologies in the digital assets space could have exciting applications. In particular, the tokenization of asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”

To many observers at the time, this might have looked like little more than Fink paying lip service to the tail end of the last crypto bubble. After all, Fink dedicated barely more than a hundred words to the topic, all of which were buried deep in the middle of a novella-length letter.

But the substance behind these scant words — the wheels which were presumably already in motion behind the scenes at Blackrock — is perhaps the biggest thing to hit capital markets since… well… forever.

Today, we now know Fink was talking about the tokenization of Real World Assets, or RWA Tokenization for short. In March of this year, confirmation of this came when Blackrock partnered up with Securitize to begin the process of tokenizing $10 trillion worth of Real World Assets on the blockchain.

Of course, for Blackrock, this is little more than business as usual. Whether via the ETFs it has championed for years or this new wave of RWA tokenization, Blackrock has long been at the forefront of “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”

But for other smaller players with their fingers in the right pieces of the capital markets pie, the Blackrock announcement is a bombshell of an announcement — a bombshell that could catapult them to the sorts of unfathomable, multibagger heights most investors only dream of.

This applies to none more so than SurancePlus, an Oxbridge Re (NASDAQ: OXBR) subsidiary — an early mover on the RWA tokenization boom.

The Real RWA Tokenization Opportunity

While much of Blackrock’s interest in RWA tokenization might be about “driving efficiencies in capital markets,” there’s a lot more to the RWA tokenization story than this. The real opportunities arise when we take a look at what, exactly, these efficiencies unlock.

To steal a popular buzzword that gets thrown around a lot every time technology gets involved, the efficiencies of RWA tokenization promise to bring about a massive “democratization” of capital markets. Or, to put that in more concrete terms, RWA tokenization will unlock opportunities for smaller investors to access asset classes that were once the private domain of large institutions and a select few UHNWIs.

One company at the forefront of this is the Oxbridge Re (NASDAQ: OXBR) subsidiary SurancePlus, which launched its first round of tokenized securities in 2023, right around the same time Fink was first hinting at Blackrock’s interest in RWA tokenization.

What makes SurancePlus stand out, however, has little to do with beating Blackrock to the punch by a year. After all, by 2023, tokenization was already a well-established technology by this stage — ever since the NFT mania we witnessed during the latter half of the Covid era, people had been exploring the potential of using the same technology for RWA tokenization.

Instead, what makes SurancePlus stand out is that it was one of the first to truly deliver on the promised land of “democratization” that blockchain pundits had been bandying around for years. Specifically, it took reinsurance securities — a truly inaccessible asset class — tokenized them on the blockchain, and sold off $5 million worth of them to relatively ordinary investors.

For the uninitiated, reinsurance securities are part of a broader class referred to as Insurance-Linked Securities (ILS). This includes things like the ominously named “Catastrophe Bonds” (cat bonds) or, in the case of SurancePlus, pools of reinsurance contracts — insurance for insurance companies.

Previously, the only way to gain access to an ILS was through secondary markets only accessible to asset managers, hedge funds, and other super-sized investors. But with RWA tokenization, all the previous roadblocks like low liquidity and the overhead of fractionalizing multi-million dollar assets can be broken down.

And this is precisely what Oxbridge Re set out to do when it set up SurancePlus.

SurancePlus Set for Exponential Growth in Blackrock’s $10 Trillion RWA Tokenization Wake

When SurancePlus first offered up tokenized reinsurance securities to investors in 2023, it started off with a modest offering of just $5 million. At the time, this was entirely reasonable.

For starters, tokenization was still heavily associated with NFTs — worthless internet assets — and had been further impacted by the breakdown in trust in the broader crypto ecosystem. This was, after all, just months after the FTX collapse.

Adding to the headwinds SurancePlus would face with its offering was the simple fact that it was selling one of the more obscure asset classes around. While the whole world is familiar with insurance, surprisingly few of us have ever heard about “reinsurance” — the insurance that insurance companies buy.

Still, despite the headwinds it was facing, SurancePlus was successful with its first offering. So successful, in fact, that it not only managed to deliver a first-year return of 49% on its reinsurance securities, but also doubled its offering size for 2024 to $10 million.

Of course, this all happened while RWA tokenization was flying well under the radar. Oxbridge Re’s Form 8-K submission to the SEC for its most recent issuance of SurancePlus tokens was lodged on March 18 of this year. At the time, RWA tokenization was still more a thing for the “true believers” than for mainstream investors, and so, despite strong demand for its first round, SurancePlus kept its second issuance to a modest $10 million.

A few days later, on March 21, the Blackrock bombshell hit. RWA tokenization was now playing in the major leagues in the biggest way possible, with the BlackRock brand name giving RWA tokenization to sort of institutional credibility the crypto bros of yesteryear could only dream of.

Of course, as with many things, the takeoff won’t be immediate. For now, Blackrock has only launched a single token — The BlackRock USD Institutional Digital Liquidity Fund Token (BUIDL). But there is a lot more to follow, with each one bringing momentum and legitimacy to the broader RWA tokenization space.

What sets up Oxbridge Re’s subsidiary SurancePlus to benefit so much from this, however, has little to do with cornering trillions of dollars of the capital markets like BlackRock has. Instead, the real growth for Oxbridge Re (NASDAQ: OXBR) investors will come from two fronts.

Naturally, the first is the exponential growth in investor interest we’re about to see in RWA tokenization. Anyone in the RWA tokenization space is set to ride this wave. But beneath the surface, there’s another component of the Oxbridge Re (NASDAQ: OXBR) story that’s truly setting it up as a multibagger for the ages.

Oxbridge Re: Conservatively a 4-Bagger, Realistically a 10-bagger

Although it took Blackrock to bring the RWA tokenization story into the broader public’s consciousness, clued-in VCs have been following the story for a couple of years now.

In startup land, this has led to some heady valuations for some very early-stage companies. For example, Re.xyz, another RWA tokenization mover in the reinsurance space, raised $14 million at a post-money valuation of $100 million. And that was just a seed round, well before it had established any sort of real traction or properly proved its product.

SurancePlus, on the other hand, has a fully proven product with exponentially growing demand from investors. However, it has yet to attract this sort of valuation for one simple reason — it’s a relatively well-hidden subsidiary of Oxbridge Re (NASDAQ: OXBR), a more traditional reinsurance company.

The full story here was something we looked at in more detail not long ago when we pointed out that Oxbridge Re (NASDAQ: OXBR) has failed to communicate the SurancePlus RWA tokenization opportunity to investors. But, to cut a long story short, investors have been valuing Oxbridge Re based on its more traditional reinsurance business, ignoring the RWA tokenization opportunity it’s chasing with SurancePlus.

Of course, every story deserves a happy ending, and, in the wake of BlackRock’s RWA tokenization bombshell, Oxbridge Re (NASDAQ: OXBR) has come to its senses and decided to bring SurancePlus the attention it deserves, announcing a probable spin-out or other similar transaction in the near future.

Naturally, the impact any such move will have on its current valuation will be huge as a whole new class of growth-focussed investors develop interest in Oxbridge Re, which is currently trading with a market cap of about $14-$15 million, about 6-7x shy of what Re.xyz raised its seed round at.

Conservatively, this means that even if regular Nasdaq investors don’t value risk as highly as VCs, SurancePlus should still drive Oxbridge Re (NASDAQ: OXBR) well and truly into multibagger territory. Even if we assume the average Nasdaq investor only wants to pay half as much as a VC is willing to pay, that still puts SurancePlus at a $50-60 million valuation going by similar VC deals in the space.

That alone already puts Oxbridge Re (NASDAQ: OXBR) into the 4-bagger range. But, in all likelihood, what we’re realistically looking at will be much higher.

This is simply because the VC deals we’ve seen to date all took place before BlackRock got serious about RWA tokenization. But with the added momentum and legitimacy BlackRock just bought to the space, the opportunity just got real, and valuations will follow.

For this reason, it’s not entirely unrealistic to expect SurancePlus to drive current Oxbridge Re (NASDAQ: OXBR) investors well into the double-digit-bagger space, contingent on one condition. That condition is that Oxbridge Re finally brings the attention to SurancePlus that it deserves — but that now seems to be happening.

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(Featured image by Burak The Weekender via Pexels)

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