NASD looks to crowdfunding, private equity, others in market expansion initiatives

NASD plc, the promoter of a trading network that eases secondary market trading of all securities of unquoted public companies primarily in Nigeria but with a focus on the West African region is looking to crowdfunding and linked notes as new areas of market expansion.

Bola Ajomale, CEO, NASD OTC Securities Exchange who made this known to participants at the NASD organised CEOs forum in Lagos said the Securities and Exchange Commission (SEC) had received the proposal on crowdfunding, hoping that a framework will be agreed on, for its functionality.

With the intention to stimulate growth by easing the capital raising process, NASD brings together all stakeholders in capital flows to a common environment where interactions are safe, efficient, transparent and appropriately priced.

The CEO forum was an opportunity to engage and interact with stakeholders in the Nigerian capital market on key developments occurring in this OTC market for unlisted equities. Also at the forum, Ajomale outlined the Exchange’s action plans in 2016 that will position it as a more efficient market in Africa.

“Regarding funds and investments wanting to come into Africa, we think that the way it is going to come in is in private equity and the funds that want to come in are looking past the macro. They are looking for multiple returns, not percentage returns.

“So, as a result, ahead of the ASEA conference which happened few months ago, we have started work on private equity side; we have committees, they are active and working. We have engaged SEC in the process and in few months’ time we are going to be launching the private equity fund,” he said.

In line with the plans, NASD OTC Securities Exchange has aligned its system with consensus reached at the 2015 African Securities Exchange Association (ASEA) conference which includes positioning to benefit from active investors across the globe that are looking for potential in African markets to invest.

The NASD has identified about 100 companies that will be prospected for trading on its platform and is in the process of joining the ASEA and hopes to complete the process and become a full member in this second quarter (Q2).

“We do know that we still have a market that is stochastic, and when you have such market, then you don’t have a smooth index. So, we are trying to establish a smooth index. Considering when we have a smooth index, we can then take it to the Pension Fund Administrators (PFAs) and big investors and say this is the trading over a period of time. We are trying to get a smooth index and that is why we are keeping a day count,” Ajomale said.

NASD OTC market recognises the importance of disclosure and has a dedicated page for each admitted security with individual page showing trading activity, price movements, corporate information and analyst report (where available).

Operators in the NASD OTC market environment include issuers of equity and fixed income instruments, institutional and individual investors, a growing pool of accredited authorised traders and their Participating Institutions (PIs), settlement banks, clearing systems, private equity and venture capital firms with a view to increasing liquidity in the unquoted segment of the long term funding market.

Iheanyi Nwachukwu