There are silos in African capital markets, as the various exchanges within the continent are often unavailable to investors outside their home countries. For example, South African investors who want to diversify their portfolio outside the Johannesburg Stock Exchange may find it difficult to invest in the Nigerian Stock Exchange.
This not only limits investors’ access to high-growth securities, but also access to capital that has grown by leaps and bounds over the past few years.Every ReportMajor regional exchanges in Africa have raised more than $80 billion in equity capital markets and $240 billion in debt capital markets.
While local retail apps such as Bamboo and Chaka offer U.S. and foreign stocks to individual consumers, they are as limited as traditional brokers when it comes to helping consumers buy stocks and bonds in Africa’s different capital markets.However, there is one startup that is peering into this challenge and aims to tackle it with its cross-border, multi-asset order routing and market data portal: Ghana Fintech Second Stax (Secondary Securities Exchange and Aggregate Exchange).
The platform, which will allow broker-dealers, asset managers, pension funds and institutional investors to access markets outside their home countries, was announced today for the general public. To support its efforts, it also raised $1.6 million in pre-seed funding from private investors and venture capital firms, including LoftyInc Capital and STEMeIn.
Co-founder and CEO of SecondSTAX Eugene Tavia Brings a wealth of experience to running such an ambitious project. In addition to more than a decade at Goldman Sachs, he has held various consulting and technology roles at firms in financial services and capital markets.
In 2018, a landmark event tilted his journey to the creation of SecondSTAX.That year, local telecom operator MTN Ghana went public in the West African country After raising approximately $237 million“I was in conversations with the head of trading, and during MTN’s IPO, there was a feeling that even if one had a ton of cash to invest, if you weren’t in Accra, you couldn’t go into or buy that IPO,” Tawiah said in a statement. told TechCrunch on the phone. “So the concept that comes to my mind is, if I stay somewhere other than Lagos, Nairobi or Accra, how do I get these products and be able to trade them?”
Tawiah with Duke of Ratti. SecondSTAX provides access to debt and equity securities across multiple African bond and stock exchanges. Likewise, the B2B capital markets infrastructure platform said it would help investment firms outside Africa looking to invest in the continent’s emerging and frontier economies. Investment firms on its platform can also hold assets in a variety of currencies, reducing single-currency risk and reducing the volatility of their returns, whether in Africa or elsewhere, the fintech company said.
In breaking down how SecondSTAX works, Tawiah said to think of his company’s platform as one layer in a series of concentric circles. The first and second circles consisted of institutional investors from developed markets and Africa, respectively, who were interested in investing in various stocks and bonds on African exchanges. SecondSTAX is the third circle and acts as a gateway to the fourth circle (exchange).
“You have exchanges where securities are traded in every country. Nigeria is an island, as are countries like Ghana, Kenya and South Africa. SecondSTAX is really an aggregation of these exchanges across the continent. It’s a way to link all of these in A platform together. Now, as institutional investors like Goldman Sachs in New York, Bank of America in the U.K. or boutique firms in Singapore, they can access this platform to gain exposure to each of these exchanges.”
SecondSTAX Team
According to the CEO, once the fintech’s infrastructure is up and running, it will consider expanding its capabilities to support B2C investment management applications. Retail investors inside and outside of Africa will then be able to access the platform via a physical broker and launched by SecondSTAX or third-party wealth technology applications such as Bamboo, HashApp, Robin Hood and Hisa.
“We don’t differentiate between brokers; they can be brick-and-mortar or startups. Our potential client base is much broader than one institution; as long as brokers have a digital game, they can use our infrastructure to access African exchanges.”
Launched in 2020, the fintech looks at capital markets in Ghana, Kenya, Nigeria, South Africa, Morocco and Egypt. At launch, however, it will launch on the first two, enabling market order routing for all stocks on the Ghana and Kenya exchanges and allowing cross-border trading within both capital markets through its sponsoring broker partnership.
Tawiah said the funding will allow SecondSTAX to launch in other countries by the end of the year, with the ensuing activities, particularly around regulatory and licensing issues. There are also plans to increase the size of its workforce and strengthen its technology by developing more features that customers demand. “We expect that over the next 18 to 24 months, the revenue from these customers will start to become increasingly impactful, capable of moving us from a startup model to an actual operational concept that generates meaningful revenue,” the CEO added. road.
