Archive for the 'Technology' Category

Airtel Africa confirms June $750m listing in London

Airtel Tanzania HQ (photo by Prof.Chen Hualin – Own work, CC BY-SA 3.0, creative commons by Wikipedia

Airtel Africa has confirmed that it is going ahead in June 2019 with its $750 million listing on the main market of the London Stock Exchange, as flagged up in January in our article. Owned by India’s Bharti Airtel, it is Africa’s second biggest mobile operator with operations in 14 countries and has 99m subscribers and 14.2m mobile money customers.

It said this week that it is aiming for a premium listing on the main market of the LSE, meaning it will float at least 25% of hits shares. It could offer up to 15% more shares through an overallotment option, according to a report in Financial Times which reports that the group says the exact number of shares to be sold and the indicative price range of the offer will be determined “in due course”.

Airtel will use the proceeds to cut the ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortization) to 2.5x, according to City AM. It also plans to expand data and mobile money services across Africa.

It is also considering a listing on the Nigerian Stock Exchange, according to reports.

Advisers and joint bookrunners appointed are JP Morgan, BofA Merrill Lynch, Citigroup, Absa, Barclays, BNP Paribas, Goldman Sachs, HSBC and the Standard Bank of Africa but the sole as its advisers. JP Morgan will be sole sponsor; BofA Merrill Lynch, Citigroup and JPMorgan will also act as joint global co-ordinators.

The amount to be raised in the listing is down from the figure of $1bn given by Reuters on 28 May quoting Airtel, and the $1.25bn figure in January and February.

For the year to 31 March it posted revenue of more than $3bn and operating profit of $734m. For more background on the shareholders and earlier capital raises, read our earlier report.

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MTN Nigeria shares soaring after $5bn listing

Telecommunications firm MTN Nigeria has had strong days of trading since it joined the Nigerian Stock Exchange in a listing by introduction on 16 May. As it moves closer to what the company may feel is “fair value”, chances of a future initial public offering (IPO) increase.

The $5.1bn listing of 20.4 billion (20,354,513,050) ordinary shares of MTN Nigeria Communications Plc (MTNN) at N90 per share on the Premium Board makes it the second biggest stock on the NSE after Dangote Cement plc and ahead of Nestle Nigeria plc, according to Bloomberg. It is the Nigerian unit of MTN Group Ltd, Africa’s biggest mobile-phone company.

Journalist Shola Lawal writing in Mail and Guardian newspaper described the scene: “At exactly 2.30pm, when the stock market closed on Thursday, MTN Nigeria’s chairperson Pascal Dozie and Ferdi Moolman, MTN Nigeria’s CEO, excitedly clanged metal sticks on a gong on the crowded trade floor at the Nigerian Stock Exchange (NSE) building. The room, filled with brokers in their maroon jackets, erupted in celebration.”

The shares were priced at N90 and have since climbed some 10% a day to reach N119.75 by close of business on 20 May. The main shareholders are only letting a few shares go until the share gets a higher price, according to an interesting interview by Kayode Omosebi, Team Lead, Financial Advisory at ARM Securities on CNBC. He estimates the stock will keep moving until it gets past N130 when more stock could become available, but his firm estimates “fair value” at N149.

Omesebi adds that interest has been wide including retail investors, and could spark a revival of interest in other equities. It will also widen liquidity across telecom stocks in Africa as investors will have a wider range of shares in South Africa, Kenya, Ghana and other markets.

The NSE listing is part of a settlement with the Federal Government of Nigeria after a $5.2bn fine was imposed for failing to meet at 2016 deadline to register SIM cards. In September 2018 there was a $2bn bill for back taxes, and the Central Bank of Nigeria said it has illegally repatriated $8.1bn between 2007 and 2015.

The initial plan was for a share offer or IPO, and MTN Chairman Dozie was not giving any timetable for when that will come: “We were to have an IPO but due to unforeseen circumstances we couldn’t. Half bread is better than none.”

Oscar Onyema, Chief Executive Officer of NSE, said in a press release: “Having MTN Nigeria listed in our market is a testament of the exchange’s commitment to building a dynamic and inclusive market and creating channels for sustainable investment. This listing will promote liquidity for MTN Nigeria, enhance its value and increase transparency, as our platform remains one of the best avenues for raising capital and enabling sustainable growth for national development”.

Analysts also hope that the listing will encourage international oil companies and two other key telecoms firms, Airtel and Globacom.

Mail and Guardian quotes Ugo Obi-Chukwu, founder of leading financial literacy website, Nairametrics: “The last time we had any major listings was in the early 2000s and it was the Government that stimulated those listings… This will open the floodgates for more listings and possibly renew an interest in the stock market.”

The premium board is “a listing segment for the elite group of issuers that meet The Exchange’s most stringent corporate governance and listing standards. This Board features Dangote Cement Plc, FBN Holdings Plc, Zenith International Bank Plc, Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc,” according to the NSE.

Work starts on African exchanges linkage project

Africa’s stock exchanges, regulators, central banks, stockbrokers and clearing systems are working together on the African Exchanges Linkage Project (AELP), set to create trading and information links between the 7 leading securities exchanges.

Participating exchanges at the first capital markets stakeholders’ roundtable were the West African regional exchange Bourse Regionale Valeures Mobilieres (BRVM), Casablanca Stock Exchange, The Egyptian Exchange, Johannesburg Stock Exchange, Nairobi Securities Exchange, The Nigerian Stock Exchange and the Stock Exchange of Mauritius.

The linkage project is a joint initiative by African Development Bank and African Securities Exchanges Association. It aims to facilitate cross-border trading and settlement of securities, unlock pan-African investment flows, promote innovations and diverse investments, and address lack of depth and liquidity in Africa’s financial markets. For more background, see our recent article.

The project is backed by $980,000 grant through the African Development Bank Korea-Africa Economic Cooperation Trust Fund (KOAFEC).

Karim Hajji, ASEA President and chief executive of the Casablanca Stock Exchange, said according to the press release: “Regional integration is a high-priority continental agenda. By organically linking 7 exchanges in Africa which collectively have a market capitalization of over US$1.4 trillion, the AELP will stimulate intra-African flows and provide opportunities for investors and trading participants in over fourteen African countries.

“With the expected outcome of boosting liquidity in African capital markets, the AELP will unlock the powerful potential of African markets to access and redistribute domestic capital for economic development.”

Pierre Guislain, African Development Bank’s Vice-President, Private Sector, Infrastructure and Industrialization, said: “The partnership between us and ASEA complements the Bank’s interventions towards deep and resilient capital markets in Africa. The African Exchanges Linkage Project will contribute to a wider financing pool for African corporates and SMEs and help close Africa’s infrastructure deficit, estimated at US$67–107 billion annually. Indeed, the continent needs deep, liquid and linked capital markets that will enable accelerated mobilization of domestic resources and incentivize private financing of infrastructure”.

Participating partners at the workshop on 24 April at African Development Bank’s headquarters included:
• Regulators Le Conseil Régional de l’Epargne Publique et des Marchés Financiers, Autorité Marocaine du Marché des Capitaux, Securities and Exchanges Commission of Nigeria, and the Capital Markets Authority of Kenya.
• Central bank – Banque Centrale des Etats de l’Afrique de l’Ouest,
• Stockbrokers and exchanges associations – Association Professionnelle des Sociétés de Bourse, Association of Stockbroking Houses of Nigeria, Kenya Association of Stockbrokers and Investment Bankers
• Clearing systems – Association Professionnelle des Banques Teneurs de Compte Conservateurs, Maroclear, Central Securities Clearing System – Nigeria, Central Depository and Settlement Corporation Ltd. – Kenya
• Investment banking – Afrinvest West Africa.

Pierre Guislain of African Development Bank and Karim Hajji of African Securities Exchanges Association and Casablanca Stock Exchange

Africa’s jumbo stock exchanges to link in 2019?

An ambitious project to link Africa’s 7 biggest securities exchanges is moving to implementation with a call this month for a project manager for the coming year. The African Exchanges Linkage Project (AELP) aims to transform the number of trades on exchanges and investment flows across Africa by creating a platform so an investor in once country can buy or sell shares listed on an exchange in another country.

It’s a leading initiative of the African Securities Exchanges Association (ASEA) and the African Development Bank, and will feature a central linked trading platform linked to the different exchange trading systems. The roll-out was boosted last November 2018 by a grant of $980,000 through the African Development Bank Korea-Africa Economic Cooperation Trust Fund (KOAFEC).

At November 2018, the participating exchanges were listed as Johannesburg, Nigeria, Nairobi, Casablanca, Bourse Régionale des Valeurs Mobilières SA (BRVM) and the Stock Exchange of Mauritius, this year the Egyptian Exchange has been added. The initial 7 exchanges represent at least 85% of the market value of listed securities (market capitalization) across Africa. More exchanges are to join after the pilot phase.

The central platform will enable free flow of trading information between the linked exchanges, and stockbrokers will be able to access the trading platform and place orders on the member exchanges through “sponsored access”, working through a locally registered stockbroker. It will use order-routing technology to channel orders through brokers into exchange trading systems.

Oscar Onyema and Karim Hajji, previous and present Presidents of African Securities Exchanges Association

Karim Hajji, CEO of the Casablanca Stock Exchange and President of ASEA, says: “We look forward to working with AfDB more closely and fostering a more connected African capital market,” according to a Nigerian online report.

Oscar Onyema, CEO of the Nigerian Stock Exchange and former president of ASEA, told stockbrokers at a workshop last November: “The AELP will start off with the 6 markets participating in the pilot with the goal of onboarding other markets in Africa who meet the minimum requirements. The countries participating in the AELP pilot phase are strategically spread across the continent as this will become instrumental in the scaling up of the project.

“The model for the linkage will be ‘sponsored access’, meaning that the cross-border trades will be required to pass through the risk-management system of the sponsoring broker before flowing to the exchange. We believe that this model will minimize the disruption to the local market and provide confidence for all stakeholders.

“Thus we anticipate that the initiative will be welcome by all stakeholders and will support ASEA’s goal of boosting intra-Africa capital-market trading activity. ”

According to a document from ASEA: “The AELP is aimed at addressing the lack of liquidity and promoting information-sharing in the African capital markets. It is envisaged that the linkage project would allow cross-border visibility and open up markets for investors to trade in any of the linked markets.”

Anticipated benefits include: more liquidity, measured by the number of deals and the value traded; better market openness; increased participation by foreign investors; more participation by African investment institutions such as the fast-growing pension funds across the continent; African businesses and other issuers being able to raise capital and floating shares across the continent; creating a bigger financial market; convergence towards international standards; and building capacity and sharing information.

In preparation for the project stockbrokers were asked to talk to clients to gauge potential interest in buying and selling securities on different exchanges, and to give their inputs into the design and rollout.

Ethiopia aims for stock exchange by 2020

Ethiopia has set itself a tight timetable for economic reform, including privatization of telecoms by the end of 2019 and a domestic stock exchange by 2020. A World Bank team was due to arrive in Addis Ababa in December to provide technical help to develop the capital market.

Last week Financial Times repeated the timetable in an interview with Prime Minister Abiy Ahmed, given to FT Editor Lionel Barber and Africa Editor David Pilling, billed his first one-on-one international media interview. Prime Minister Abiy told them: “My economic model is capitalism… If you give me $100bn now, I can’t use it. There is not only money, there is talent and experience. That’s why we need the private sector.”

The Reporter newspaper in December highlighted a “one-page template issued by the Office of the Prime Minister”, which “cited poor financial infrastructure, limited financing and poor financial inclusiveness as the major impediments in the finance sector. The government plans to develop a road-map for introducing a trade financing instruments including capital market. Increasing loans to the private sector by 20 percent annually and ensure its fair disbursement and expanding credit registry to micro finance institutions are the key areas that will be addressed in 2019, according to the document.”

Reporter Kaleyesus Bekele highlighted debates at the third East Africa Finance Summit on 18-19 December, organized by I Capital Institute. Zemedeneh Negatu, Global Chairman of Fairfax Africa Fund, told the summit: “We are going to have a stock market this time. We have been on this path for 18 years. But now it is no more an academic discussion. We do need a capital market. We are part of the global economy,”

He said Ethiopia is by far the largest economy in the world today that does not have a stock market. “We are going to join the global capital market club. We have a bigger GDP than Kenya, there are only two sub-Saharan African countries which have bigger GDP than us — Nigeria and South Africa. I think it is time. We have companies ready to be listed in the stock exchange.”

He says that top priority is to set up a regulatory institution and create a government regulatory framework, and the private sector can incorporate the stock exchange. “We need to have stock brokerage firms and investment banks. Stock traders have to be trained and the local accounting and auditing firms have to build their capacity.. The financial media has to be established or the existing ones should extend their financial news coverage. Financial media is also the key component.”

Zemedeneh says that 50 to 70 local companies can be listed in the stock exchange. “All the banks and insurance companies, which are well regulated, can offer an IPO (initial public offering) the day the Addis Ababa stock market is ready for launch,” Zemedeneh said.

“The bottom line we are ready and it is timely,” he added.

Business community leader and insurance veteran Eyessuswork Zafu said that technical studies for the establishment of the Addis Ababa Stock Exchange were done by Ernst and Young 20 years ago: “Miracle is happening in this country. I can see the twinkling light at the end of the tunnel. Two years ago we were not able to discuss such matters openly.” He called for urgent action to start preparations.

Ethiopia has a commodity exchange and regulator, new regulator needed for capital market

Financial analyst Abdelmenan Mohammed was reported as saying 2 years is a tight timetable to build financial and technological infrastructure, including improvements in auditing.  Although the Government enacted a proclamation that compels local businesses to adopt International Financial Reporting Standard (IFRS) and has established an Accounting and Auditing Board, Abedelmanan says progress is slow: “Not many companies are adopting IFRS and the board is not yet strong enough to oversee that. How can we have a stock exchange where there is no reliable accounting information?” However, Zemedeneh, former Managing Partner of EY Ethiopia, said that the banks and insurance companies have adopted IFRS and other companies and government entities are moving towards it. “That is a start.”

Establishing the stock exchange will require rapid boosts in capacity and understanding. According to Zemedeneh: “We need to set up the regulatory body and formulate the regulation. All the other things have not yet started except the adoption of the IFRS.” He warns there is a lotof work to be done to prepare. “I hope they would be able to roll out these things quickly. Two years is a very short period of time. It could be at the end of 2020 or slide to 2021. All the infrastructure need to be prepared.” 

Privatizations including 49% in Ethio Telecom

Other steps highlighted by the FT in a follow up news story include completing “a multibillion-dollar privatisation of its telecoms sector by the end of this year, followed by a sell-off of stakes in state energy, shipping and sugar companies”. It says the stock exchange is “part of a gradual but decisive shift towards economic liberalisation… alongside other ambitious and transformative programmes.”

“The Government is planning to sell off a 49% stake in Ethio Telecom, according to people familiar with its plans. Ethio Telecom is the biggest telecoms company in Africa in terms of customers in a single country, with more than 60m subscribers.

“But its opaque debt structure and low earnings per customer mean it might fetch less than the government expects, say bankers.

“Mr Abiy said that earning cash from a state monopoly was less important than launching services such as electronic money, e-commerce and virtual government, in which African peers such as Kenya are more advanced.

“To promote competition, Ethiopia is also likely to auction off spectrum to two additional telecoms companies, with Vodacom, Orange, MTN and others expected to bid, according to bankers.

“Miguel Azevedo, head of investment banking for Africa at Citibank, said: ‘When I speak with international investors about opportunities in Africa, the first name that pops up is Ethiopia.’

“The prime minister said he would proceed cautiously on privatisation in order to avoid any hint of corruption. ‘We do telecom, we learn something, we evaluate seriously, we continue,’ he said.”

Full interview

Read the full interview with Abiy Ahmed here: Commentary by FT: “Mr Abiy’s emergence has unleashed opportunity and danger in equal measure. Some fear that rapid liberalisation could spin out of control, leading to anarchy or violent ethnic separatism.”

Ethiopian Prime Minister Abiy Ahmed

Describing himself as “capitalist”, he nevertheless cites Meles as saying it is the government’s job to correct market failures. “The economy will grow naturally, but you have to lead it in a guided manner.”

Still, unlike Meles, Mr Abiy is less wedded to the idea that the state must control the economy’s commanding heights. He is moving swiftly towards privatisation of the telecoms sector in an exercise that should raise billions of dollars, as well as modernising a network that has fallen badly behind African peers.

Here too there are risks. “I need to realise the privatisation with zero corruption,” he says, adding that people who have stashed money abroad want to launder it back into the country.

Successful privatisation of telecoms could potentially lead to a similar exercise in energy and shipping, as well as sugar refineries and, most controversially, the successful national airline that has turned Addis Ababa into a continental hub. Mr Abiy says that, for the moment at least, he draws the line at banking.

“The biggest challenge for Abiy is not politics. It is jobs, jobs, jobs,” says Zemedeneh. With 800,000 students in university or college and 2.5m Ethiopians being born each year, lack of opportunity could quickly catalyse unrest, he adds.

The stock exchange will be a critical component of building domestic savings and capacity in Ethiopia’s private sector so that Ethiopians can take charge of their future, see previous opinion article on this blog. The World Bank has pledged $1.2bn to supporting financial sector growth in Ethiopia.

International – new IPSX exchange opens property as global asset class

A new asset class has opened for investors as the International Property Securities Exchange in London prepares for its first initial public offer (IPO) in coming weeks. The IPSX Group is also planning exchanges in Germany, North America and Asia.

The first IPO is still planned for the end of Q1, depending on market conditions, after UK regulator Financial Conduct Authority (FCA) on 9 January issued a Recognition Order in relation to wholly-owned subsidiary IPSX UK Limited to operate a Recognised Investment Exchange (RIE) in the UK.

This is the highest level of authorization and means IPSX joins London Stock Exchange Group, Euronext, Intercontinental Exchange, CME Group, CBOE Global Markets and Hong Kong Exchanges and Clearing in operating an RIE.

City of London (with my former flat almost in view across river!), photo: Sky News

The new exchange will enable investors to invest in part of a building, and will free up groups with large headquarters or other assets to realize some of that equity. According to Anthony Hilton writing in Evening Standard: “It would allow people who own property, and particularly those who saw it as ancillary to their main business, to extract some of its value by floating its shares on the exchange”.

A company owning a single building would be able to float on the market, giving investors direct sight of the underlying assets. Building owners would no longer need to sell 100% of a building, they could sell a proportion, say 25%, and then buy it back later. The bourse also has eligibility requirements on portfolio commonality to allow “multiple asset issuers” onto the regulated market.

Hilton writes: “A company like pharmaceuticals giant GlaxoSmithKline, which has huge property assets to the west of London, could get some of the value by listing its shares and using the cash to help with its drug development.

“Similarly, the Football Association might float Wembley rather than try to sell it, as it apparently wants to, and use the proceeds for grass-roots football.”

According to a press release, IPSX Group Limited is a market infrastructure and data products business established in 2014 and dedicated to real assets – initially real estate. A strong group of investors include British Land, M7 Real Estate, Henley Investments, Daily Mail & General Trust and top business figures are on the board.

Another press release says: “Issuers on IPSX will be companies owning single real estate assets. For the first time, investors will have a choice as to where they invest and have direct sight of the specific underlying property asset that their investment relates to, with clarity over the revenues and costs associated with it, typically also benefiting from the tax efficiency conferred by REIT status.”

IPSX founder Anthony Gahan says: “From now on every type of investor can access the returns from institutional investment grade real estate by buying and selling shares in issues through IPSX. Imagine the man in the street buying shares in the company owning the building he works in, or even the Premiership football stadium where he watches his favourite team play.”

Gahan is quoted in CityAM newspaper: “We see it as the democratisation of the property market.”

Currently investment into large real estate deals is dominated by big funds and institutions, with smaller institutions and family offices going after the medium and small deals. Individuals can buy shares through property companies and real-estate investment trusts (REITs), which decide the mix of assets and when to buy or sell.

According to Hilton, the liquidity offered by the exchange may also encourage open-ended property funds. Previously investors into funds would have to wait to get their money out and the fund might have to take months selling properties in an illiquid market to get cash out at reduced values. That happened after the 2016 UK Brexit referendum to leave Europe, when there were a queue of redemptions and property companies dropped in price.

According to Hilton, the liquidity and clearer regulation of an exchange will change this: “Institutional investors focus on equities, bonds and real estate. But real estate has always been different because investors are in the hands of chartered surveyors who were the ones who ruled on value.

“In good times that could be more than expected; in bad times it could be worse because liquidity often dwindles just when it is needed. So property assets always have that degree of uncertainty. That too should change. Shares in the IPSX will enhance liquidity, and property in time could emerge as an equal, rather than a nice-to-have, asset.”

There is a pipeline worth billions, as owners of City of London and West End blocks could list on IPSX. Commercial real estate as a global asset class is estimated to be worth $30 trillion.

Tax authority HMRC is likely to recognize the exchange as admission/trading venue for REIT tax status.

The IPSX network infrastructure is being developed by Cisilion and IPSX is outsourcing operation of the trading platform to Cinnober and has its data repository and workflow management platform at Goldensource.

According to the press releases: “Importantly, for all, IPSX connects sellers with a new, deep, international investor universe at a time when some real estate assets are so valuable that few institutions are able to buy alone and private sale processes result in only one bidder submitting an offer to buy the asset… IPSX proposes to add further exchange-based products to its offering including a professional market for closely held REITs together with new real estate indices and data products.”

“Anthony Gahan added: ‘This is game-changing news for asset owners and global investors, many of whom have helped to actively shape the IPSX proposition.’”

IPO report – Airtel Africa looking for $1.25bn in 2019

++ STORY UPDATED AFTER ARTICLE IN SUNDAY TELEGRAPH IN UK ON 3 FEB 2019 ++

Airtel Africa, a UK-based company, is on track for an initial public share offer (IPO) on an international stock exchange in 2019 expected to raise $1.25 billion. Last November 2018 the board announced it had appointed 8 global banks JP Morgan, Citigroup, BofA Merrill Lynch, Absa Group Limited, Barclays Bank PLC, BNP Paribas, Goldman Sachs International and Standard Bank Group for the IPO. It aims to value the African business at some $8bn.

The company has denied a report on Bloomberg that the IPO could be delayed from March 2019 for 6 months due to emerging markets turmoil.
By that date parent Bharti Airtel had raised $1.25 bn in pre-IPO placements to 6 global investors, according to a regulatory filing on the Bombay Stock Exchange (reported in Economic Times of India).

On 3 Feb, an article in the Sunday Telegraph newspaper suggested the IPO would come to the London Stock Exchange later in the year, after delaying the float because of volatility. At $8bn it would be the LSE’s biggest listing since 2017. It adds that Airtel Africa in January secured a further $200m investment from Qatar’s sovereign wealth fund to reduce cash borrowings ahead of the listing.

According to journalist Christopher Williams: “Airtel Africa has turned around in ¬recent years, after making heavy losses in competition with financially stronger players in Africa, including Vodafone-controlled Vodacom. In its most recent quarter profits doubled as mobile data consumption increased across its territories, building on its first full year of profit.”

For various reports, the IPO is expected to raise another $1.25bn. After the IPO Bharti Airtel will only hold some 65%, down from around 92%-93% at present. The pre-IPO investors include Warburg Pincus, Temasek, Singtel and Softbank Group International, according to the report. The money will be used to cut back debt and free up cash to combat rival Reliance Jio Infocomm in India.

Airtel Africa is the holding company for Bharti Airtel’s operations in 14 countries, including Kenya, Tanzania, Nigeria and Ghana. It is Africa’s second largest telco with over 94 million customers, and ranked in the top 2 carriers in most of the countries where it operates, offering 2G, 3G and 4G services, plus mobile commerce through Airtel Money.

In December, the tax authority in Niger had ordered the closure of Airtel Niger which has 4.4m customers, over a tax dispute. French-owned Orange said it had also been threatened with closure in Niger over a tax demand, according to this report.

Airtel also announced a new board from the parent company and the investors: Sunil Bharti Mittal, Raghunath Mandava, Akhil Gupta, Vishal Mahadevia, Alok Sama, Arthur Lang, Shravin Bharti Mittal and Richard Gubbins. In a press release it said the board: “brings extensive experience across industry verticals including – telecom & ICT, financial markets as well as in technology, software development and consultancy”.

African revenues rose nearly 13% for the quarter to September, and net income compared to a loss a year earlier.

Regulated blockchain and commodity exchanges coming to Mauritius

GMEX Group is leading in plans to launch a revolutionary blockchain exchange platform in Mauritius with MINDEX Holdings Limited (MINDEX) linked to Mauritius International Derivatives and Commodities Exchange and Hybrid Stock Exchange Corporation Limited (HYBSE).

The new bourse will be called HYBSE International Marketplace. The partners are:
• MINDEX: a complete exchange, post trade and physical infrastructure, facilitating a variety of asset classes to be traded in Mauritius, supported by GMEX
• GMEX: a world leader in digital business and technology solutions for exchange and post-trade operators. GMEX serves as core of a network of stock exchanges and other trading and post-trade centres around the world.
• HYBSE: a global online marketplace based on blockchain technology that is part of the DIM-Ecosystem.

Daniel Liu of HYBSE and Hirander Misra of GMEX Group

According to the press release:
“The HYBSE International Marketplace will integrate blockchain solutions and technology with traditional financial industries providing a complete and governed ecosystem that digitalizes assets onto the Blockchain. This partnership will for the first time, enable institutional investors access to cryptocurrency ETF’s and other crypto-instruments.
“The following asset classes will be facilitated for trade in a digital tokenized format:
• Cryptonized shares
• Cryptonized currencies
• Commodities
• Indices
• Forex
• ETCs (Exchange-traded commodities)
• ETFs (Exchange-traded funds)
• CETFs (Crypto exchange-traded funds)

“SMEs (small and medium enterprises) will be able to use the HYBSE International Marketplace to seek capital by launching an Initial Blockshare Offering (IBO); a time-limited offer to purchase cryptonized-equities and other cryptonized-instruments, such as blockshares, from businesses registered on the HYBSE International Marketplace at special discounted rates.”

The decision to set up in Mauritius follows news that the regulator FSC will create new licensable activities for the Custodian of Digital Assets and Digital Asset Marketplace – see consultation paper issued in November 2018 – and provide a regulated environment for the exchange and safe custody of digital assets. The regulator in Mauritius has also issued guidelines on investment in cryptocurrency as a digital asset.

Hirander Misra, CEO of GMEX Group, commented: “He added, “We welcome the new regulatory framework for digital assets in Mauritius and we are thrilled to be at the forefront of market development as one of the first ventures to set up under the new regime. We are firmly convinced that there is a massive opportunity for Mauritius to position itself as a major global hub in this dynamic space underpinned by strong governance and regulation to ensure trust”.

In a blog post he noted that Mauritius has also set up a National Regulatory Sandbox Licence Committee to consider sandbox licensing of fintech activities. “Sham ICOs have to be stopped and robust KYC / AML processes and rules must be put in place. In addition technology if developed and deployed well can ensure that some of the crypto exchange hacks we have heard of in other parts of the world can be avoided. Ultimately the current regulatory confusion will correct itself as there will be a flight to quality to those jurisdictions with robust laws and regulations in place. The unregulated bucket shop exchanges with poor controls will cease to exist, as properly run and secure technology enabled digital exchanges and digital asset custodians come into the market to facilitate increased institutional business and wholesale retail business.”

Commodity platform – gold from mine to vault
In June, GMEX had announced it was part of the initial consortium to launch Mauritius International Derivatives and Commodities Exchange (MINDEX), which will become a multi-commodity and derivatives exchange platform. The Mauritius Financial Services Commission will exercise full regulatory oversight.
GMEX has been working closely with the British High Commission Mauritius and Department for International Trade (DIT) Mauritius since it opened a regional headquarters in Mauritius International Financial Centre (IFC) during 2017.

MINDEX Clearing will act as central counterparty clearing house (CCP) to clear all trades.

The GMEX consortium led investment in the MINDEX project amounts to $35 million to build a gold refinery, a secure vault, launch of an advanced technologically enabled spot exchange, derivatives exchange and clearing house. This is expected to create 104 direct jobs over 2 years and an additional 408 new secondary jobs over the next 2 years in Mauritius.

The Department for International Trade’s Minister for Investment Graham Stuart MP said: “As an international economic department, we are pleased to be working with GMEX in Mauritius on an investment which will sustain and create jobs in Mauritius and the UK. The MINDEX project will support an ecosystem which creates opportunities in gold mining, refining, storage, recycling, and in commodities trading and financial technology.

“We will continue support companies’ overseas investments where there is benefit to the UK by offering practical support to investors, facilitating introductions to ease market entry and using our expertise to explain political sensitivities and cultural differences to British businesses.”

Blockchain, crypto and the changes to stock exchanges in coming 2 years

Hirander Misra of GMEX, speaking at panel organized by lawyers Mackrell Turner Garrett on cryptocurrencies in London on 14 Nov, says: “We get 10 inquiries a week to set up a platform. The bar for setting up a blockchain or crypto exchange is moving much higher. In Mauritius and Abu Dhabi the bar is almost as high as for setting up a normal exchange.

“Digital currency is here to stay, in time some sovereign states will adopt it. In Venezuela, where currency collapsed, people have used bitcoin to get currency out, in Harare people have adopted it. Fidelity and others have started to dip their toes in the water.

“Independent crypto exchanges are opaque, it can be very expensive to get assets in and out. In the last 6-12 months, some of the big custodians have been getting involved, the large banks are going into custody, adopting own products, vaults, etc.

“We talk about ‘decentralized’ but everyone is protecting their own turf, we will end up in worse mess. It can be spaghetti.

“Securities exchanges are very much like they were 25 years ago, standalone, at the time when electronic trading came in. Unless you change you won’t be relevant. There will be change in the next 2 years.

“We still need for regulation and intermediaries, people still want institutions to be accountable. A lot of what we have done in last 30 years is still relevant, our challenge is to make it more efficient.”

GMEX
GMEX Group (GMEX) comprises a set of companies that offer leading-edge innovative solutions for a new era of global financial markets, providing business expertise, the latest technology, connectivity, and operational excellence delivered through an aligned partnership driven approach. GMEX uses extensive market infrastructure experience and expertise to create an appropriate strategic master plan with exchanges, clearing houses, depositories, registries, and warehouse receipt platforms. GMEX also offers the added benefit of interconnection to multiple partner exchanges, to create global networks of liquidity. GMEX Technologies is a wholly owned subsidiary of GMEX Group.

12 questions Silicon Valley investors ask – focus for African policymakers

African #tech superstar Alysia Silberg General Partner, Street Global Venture Capital, says she replies when asked what African policymakers can do to encourage investment into the tech sector in Africa, one focus is to look at the 12 investment questions of Silicon Valley:

1. Whether the government is stable?
2. Company incorporation structures and the limitation of liability?
3. The availability of reputable experts able to advise companies on their IP Protection and other assets?
4. Availability of legal recourse and the cost?
5. Whether or not there is a risk of asset seizure by government or any other organization?
6. The prevalence of fraud and corruption and whether it is a material risk?

L-R: Dawit Hailu (Wudassie Daignostic), Alysia Silberg (Street Global VC), Agnes Gitau (GBS Africa). Photo: AfricanCapitalMarketsNews

7. Reliability of infrastructure including financial and banking payments platforms and ease of international funds transfer?
8. Availability and productivity of a highly skilled workforce able to meet the needs of scaling business with a strong focus on Science, Technology, Engineering and Maths?
9. Whether or not “hotbed” exist for different niches and industries?
10. A progressive environment for diversity and women’s empowerment?
11. Whether any startups have succeeded at scale and its resultant effect on the surrounding ecosystem?
12. Availability of and ease of access to local capital for entrepreneurs, Not just for the first rounds of investment, but through a startup’s growth from startup to scaleup?

She was speaking at the UK-Ethiopia Trade & Investment Forum 2018 in London on 16 October 2018.