Investments are still pouring into African startups even in the face of the coronavirus pandemic and continuing financial crashes across several stock exchanges around the world. South Africa’s A2X Markets, a stock exchange startup that offers stock trading services at a reduced cost to South Africans has announced it has received an undisclosed amount from Absa, a Johannesburg-based bank. The investment came as a part of the stock exchange’s efforts initiated in late last year to raise capital.
“Absa’s investment in A2X is a vote of confidence for what we are building in South Africa. Effective competition in an industry drives market efficiency and this benefits all users, including individual investors and pensioners. By offering lower costs, we are able to create a better market to grow the overall industry,” Kevin Brady, CEO at A2X, added
Here Is All You Need To Know
- Although the amount involved in this funding round is undisclosed, A2X disclosed that Absa, through the investment, has become the first major South African bank to invest in the stock exchange which was founded in 2014 and began trading in 2017.
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“We want to have 20 percent [of total activity in South Africa’s equities market] in the next five years. We anticipate that to be our end game. We want to leverage the platform into other asset classes. We think there are real opportunities there. We are looking at other opportunities such as primary listings. But for now, we are only focusing on building scale in our equities business,” CEO Brady said in an interview with M&A Africa.
Why The Investors Invested
“The team at Absa CIB are always looking for innovative ways to save money for our clients and support the industry in which we operate,” Quintus Kilbourn, Absa’s head of equities said, mentioning the investment. “As a broker, we believe in an efficient and progressive marketplace and our investment in A2X shows our support for this.”
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A Look At A2X, The Startup That Is Disrupting Traditional Stock Exchanges
- Launched its services in October 2017, A2X regulated under the Financial Sector Conduct Authority and the Prudential Authority (SARB) in terms of the South African Financial Markets Act.
- To date, the exchange lists many top South African companies, including eight Top40 constituents, three Absa precious metal ETFs and two Investec ETNs.
- The companies listed on the exchange vary from the sectors including mining, media, banking, retail, FMCG, financial services, insurance, healthcare, and telecommunications, A2X detailed.
- The exchange has eight approved brokers for facilitating services to the traders.
- A2X’s model is to get any company that is listed on the Johannesburg Stock Exchange to have a secondary listing on it.
“And all we are doing is giving shareholders more choice to transact. It’s a complimentary listing, and for companies, A2X offers an opportunity to expand the choice of venue that their shares are available for trade,” CEO Kevin Brady said in an interview.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
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