African capital markets exist in silos, as numerous exchanges throughout the continent are sometimes inaccessible to traders outdoors their house nations. For example, a South African investor who needs to diversify their portfolio outdoors the Johannesburg Inventory Trade might discover investing within the Nigerian Inventory Trade tough.
Not solely does this restrict traders’ entry to high-growth securities, nevertheless it additionally limits entry to capital that has grown in leaps and bounds over the previous couple of years. Per reports, main regional exchanges in Africa have raised over $80 billion in fairness capital markets and $240 billion in debt capital markets.
Whereas native retail apps resembling Bamboo and Chaka supply U.S. and overseas shares to particular person shoppers, they’re as constrained as conventional brokers in the case of serving to shoppers purchase shares and bonds throughout totally different capital markets inside Africa. Nevertheless, there’s a startup taking a peek on the problem and aiming to sort out it with its cross-border, multi-asset order routing and market information portal: Ghanaian fintech SecondSTAX (Secondary Securities Buying and selling and Aggregation eXchange).
The platform, which can permit broker-dealers, asset managers, pension funds, and institutional traders to entry markets outdoors their very own nation, is saying its launch to the general public in the present day. To bolster its efforts, it has additionally raised $1.6 million in pre-seed funding from personal traders and enterprise capital corporations, together with LoftyInc Capital, Orbit54 and STEMeIn.
SecondSTAX co-founder and chief government officer Eugene Tawiah brings immense expertise to run such an bold undertaking. Along with spending greater than a decade at Goldman Sachs, he ran numerous consulting and tech jobs for corporations in monetary companies and capital markets.
In 2018, a landmark occasion tilted his journey into constructing SecondSTAX. That was the 12 months MTN Ghana, an area telecom operator, went public within the West African nation after raising about $237 million. “I used to be having conversations with heads of buying and selling desks and there was a way that in MTN’s IPO, that although one had a bunch of money to speculate, if you weren’t in Accra, there was no strategy to entry or purchase into that IPO,” Tawiah instructed TechCrunch on a name. “And so the idea I had in thoughts was, if I stayed in Lagos, Nairobi, or another place outdoors of Accra, how do I get entry to those choices and have the ability to commerce them?”
Tawiah co-founded the corporate with Duke Lartey. SecondSTAX supplies entry to debt and fairness securities throughout a number of African bonds and inventory exchanges. Equally, the B2B capital markets infrastructure platform says it would help funding corporations outdoors Africa that wish to put money into rising and frontier economies on the continent. Funding corporations onboarded on its platform may maintain belongings in numerous currencies, thereby decreasing single foreign money danger and decreasing the volatility of their returns, whether or not in Africa or elsewhere, the fintech stated.
Breaking down how SecondSTAX works, Tawiah says to think about his firm’s platform as a layer in a sequence of concentric circles. The primary and second circles encompass institutional traders from developed markets and people in Africa, respectively, who’re involved in investing in numerous shares and bonds accessible on African exchanges. SecondSTAX is the third circle and acts as a gateway to the fourth circle, the exchanges.
“You will have exchanges the place the securities are traded in every nation. Nigeria is a silo, similar with Ghana, Kenya and South Africa and many others. SecondSTAX is successfully the aggregation of those exchanges throughout the continent. It’s that one platform that hyperlinks all of them collectively. After which now as an institutional investor like Goldman Sachs in New York, Financial institution of America within the U.Okay., or a boutique agency out in Singapore, they’ve entry to this platform to the touch every of those exchanges.”
In line with the chief government, as soon as the fintech’s infrastructure is up and operating, it would take into account extending its capabilities to help B2C funding administration apps. Retail traders inside and out of doors Africa will then have the ability to entry and commerce cross-border shares and bonds through white-labeled apps launched by brick-and-mortar brokers and powered by SecondSTAX or third-party wealth tech apps resembling Bamboo, HashApp, Robinhood and Hisa.
“We aren’t distinguishing between brokers; they are often brick and mortar or startups. Our potential shopper base is way broader than one sort of establishment; as long as the dealer has a digital play, they will use our infrastructure to entry African exchanges.”
The fintech, launched in 2020, is eyeing capital markets in Ghana, Kenya, Nigeria, South Africa, Morocco and Egypt. Nevertheless, at launch, it would launch within the first two, enabling routing of market orders for all shares throughout Ghanaian and Kenyan exchanges and permitting cross-border transactions inside each capital markets by means of its sponsoring dealer partnerships.
Tawiah says the funding will see SecondSTAX launch in extra nations by the top of the 12 months and carry out the actions that include that, particularly concerning regulatory and licensing points. There are additionally plans to extend its employees dimension and strengthen its tech by creating extra options that its purchasers demand. “We count on that within the subsequent 18 to 24 months, the income coming from these purchasers begins to develop into incrementally impactful by way of having the ability to shift us from startup mode to an precise operating idea producing significant income,” added the chief government.
Leave a Reply