JSE to deploy blockchain-based investment platform

South Africa’s largest stock exchange, the JSE, said on Thursday that it has signed a deal with a company called Globacap Technology to create a blockchain-based private placements platform to allow small and medium-sized firms to raise capital.

The venture, the JSE said, will “enable the raising of infrastructure finance and allow small to medium-sized issuers to raise capital in South Africa”. The commercial arrangement includes digital registry services and remains subject to licensing approval requirements.

“As private capital markets continue to grow in importance, and are an increasingly attractive alternative source of capital for issuers, the JSE intends to create a centralised platform for issuers to raise capital effectively and efficiently,” the bourse said.

Globalcap, which is based in the UK, is a fintech company focused on “next-generation capital markets and digital registry services”. Through its regulated private placement and capital management platform, it digitally administers about £1-billion of private shares and debt instruments for 60 companies.

The JSE will invest £4-million for a minority stake in Globacap, subject to approval from the Financial Conduct Authority in the UK. The investment, it said, is in line with its intention to build a long-term relationship with Globacap.

Across Africa

Globacap’s platform provides fundraising management tools to automate private issuances in the equity and debt capital markets. It also offers second round liquidity capabilities that allow holders of equity or debt instruments to exit or syndicate their original investment, the JSE said. It offers a complementary digital registrar service, too, which digitises and simplifies the administration of shareholder registers.

Through the partnership, the JSE intends to replicate and adapt Globacap’s offering across African markets, while reducing the execution risk of expanding into new markets and products.

The investment will be funded from its existing cash reserves and is expected to be finalised in the first quarter of next year.  — © 2020 NewsCentral Media