SecondSTAX - Afrikan Heroes

SecondSTAX Facilitating Intra-Continental African Capital Markets Transactions

January 16, 2023

SecondSTAX founders Eugene Tawiah and Duke Lartey

Ghanaian capital market startup SecondSTAX has built a tech-driven smart order management and execution routing system for investment firms, aiming to facilitate intra-continental African capital markets transactions.

Launched in Ghana and Kenya in November 2022, the startup plans to move into other markets across Africa in the coming months. It was basically founded to build solutions to enhance intra-Africa capital and investment flows, with an initial B2B focus – for, for example example, broker dealers, asset managers, and institutional investors, according to the founders Eugene Tawiah and Duke Lartey.

“Starting with Ghana and Kenya, we are consolidating all debt and equity capital markets throughout Africa, making it easier to access opportunities in relevant markets. Our portal facilitates transactions by securely and efficiently routing orders onto existing mature capital markets infrastructure in complete compliance with local regulations,” Tawiah said.

“As a result, investment firms are empowered to do more for their clients and have the opportunity to earn more for themselves. Investors are also able to invest in their native currencies, making a wider range of assets and opportunities available to more Africans and creating an efficient route to increased wealth on the continent.”

Though founded in 2020, the SecondSTAX journey actually started from a conversation with investment professionals in Accra during the summer of 2018.

“We were inspired to create SecondSTAX after noticing the gaps in Africa’s capital markets that led to many missed opportunities,” said Tawiah.

“For example, during MTN Ghana’s IPO in 2018, unless you were in Accra, there was no way to access or buy into that IPO. Despite various institutional investors having funds to invest, limited access to markets outside the countries they are based means they are unable to take advantage of available opportunities. And so the concept we had in mind was, if I stayed in Lagos, Nairobi, or some other place outside of Accra, how do I get access to these offerings and be able to invest in them? That was how SecondSTAX started.”

This is a very relevant solution. Despite having some of the best-performing stocks and bonds globally, Africa’s exchanges are largely inaccessible to investors outside the jurisdictions where they have been listed. Over the last decade, African capital markets have raised more than US$246 billion in debt capital markets. More than US$87 billion has been raised in equity capital markets, and equity indices have peaked at over 50 per cent growth across the major regional exchanges.

“However, the siloed nature of these exchanges as well as insufficient data on the risk profiles of assets has led to limited access to capital for markets and limited access to high-growth assets for investors,” said Tawiah.

SecondSTAX has raised US$1.6 million in pre-seed funding from private investors and venture capital firms, including LoftyInc Capital, Orbit54 and STEMeIn.

“We also recently announced two new partnerships with the Nairobi Securities Exchange (NSE) and the Ghana Stock Exchange (GSE) that will make it easier for institutional investors across Africa to directly invest into these exchanges, via brokerage partners Kestrel Capital Limited in Kenya and Databank Brokerage Limited in Ghana,” Tawiah said.

“Following the announcement, the client pipeline now includes 10 additional top tier investment firms across Ghana and Kenya. This includes a large fund manager and a large pension fund.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Ghana’s SecondSTAX Raises $1.6M To Enable Investors Access Foreign Capital Markets

September 22, 2022

SecondSTAX, a platform that connects institutional investors like pension funds and broker-dealers with international markets, has raised $1.6 million in pre-seed funding from private investors and VC firms like LoftyInc Capital, Orbit54, and STEMeIn.

According to co-founder and CEO Eugene Tawiah, this money will be used to expand SecondSTAX’s reach internationally by the end of the year. It also intends to grow its team and bolster its technology by creating more functions requested by customers.

Eugene Tawiah, co-founder and CEO of SecondSTAX

“We expect that in the next 18 to 24 months, the revenue coming from these clients starts to become incrementally impactful in terms of being able to shift us from startup mode to an actual running concept generating meaningful revenue,” said the chief executive.

Why The Investors Invested

Investors appear to be interested in this round because of the founders’ extensive backgrounds in similar fields. Eugene Tawiah, co-founder and CEO of SecondSTAX, has the extensive background necessary to steer the company’s lofty goals. More than a decade at Goldman Sachs wasn’t all he spent in the financial services and capital markets industry; he also worked in consulting and technology.

A Look At What The Startup Does

SecondSTAX, created by Eugene Tawiah and Duke Lartey in 2020, allows investors to trade debt and equities assets on a number of different African bond and stock markets. The B2B capital markets infrastructure platform claims to do the same thing, helping investment firms from outside Africa access the continent’s rising and frontier economies. The fintech claims that investment businesses using its platform may hedge against the risk of losing money on foreign currency fluctuations by holding assets in many currencies.

Tawiah suggests that, in order to understand how SecondSTAX operates, you must visualise the platform that his firm provides as a layer in a sequence of concentric rings. Institutional investors from developed markets and those from Africa, respectively, who are interested in investing in a variety of stocks and bonds that are accessible on African exchanges make up the first and second circles, respectively. SecondSTAX is the third circle, and it serves as a passageway to the exchanges, which are located in the fourth circle.

“You have exchanges where the securities are traded in each country. Nigeria is a silo, same with Ghana, Kenya and South Africa etc. SecondSTAX is effectively the aggregation of these exchanges across the continent. It’s that one platform that links all of them together. And then now as an institutional investor like Goldman Sachs in New York, Bank of America in the U.K., or a boutique firm out in Singapore, they have access to this platform to touch each of these exchanges,” he said.

The CEO has stated that once the fintech has its infrastructure in place, it would think about expanding its capabilities to enable B2C investment management applications. Then, using white-labeled applications published by traditional brokers and powered by SecondSTAX or third-party wealth tech apps like Bamboo, HashApp, Robinhood, and Hisa, retail investors inside and outside of Africa will have access to and be able to trade cross-border stocks and bonds.

“We are not distinguishing between brokers; they can be brick and mortar or startups. Our potential client base is much broader than one type of institution; so long as the broker has a digital play, they can use our infrastructure to access African exchanges.”

The company is looking at the financial markets of Egypt, Morocco, South Africa, Morocco, and Kenya in Africa. When it does start, however, it will do so in the first two, allowing for cross-border transactions inside both capital markets via its sponsored broker agreements and facilitating the routing of market orders for all equities across the Ghanaian and Kenyan exchanges.

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexpert