NASD to match PE investors with firms seeking capital

Nigeria business seeking capital to pursue their growth objectives could benefit from a new initiative being championed by NASD Plc. that is designed to match private equity investors with business organisations in a transparent and easy access to financing framework.

The NASD, which promotes a trading network that eases secondary market trading of all securities of unquoted public companies, is making the intervention through the launch of a private equity and venture capital platform.

The platform, due for launch in March, would seek to bring fund seekers and fund providers, like foundations and endowments, as well as PE and venture capitals, with a view to matching them for the purpose of raising the necessary funding to grow businesses in the country.

Bola Ajomale, managing director of NASD disclose this in an exclusive interview with business a.m. in Lagos. He said the project was in collaboration with SEC as part of efforts to promote bilateral negotiated deals for increased funding opportunities. In the platform, businesses and private equity investors like foundations and wealthy individuals would be brought to interface with companies to negotiate funding deals.

Private equities are essentially investment funds organized as limited partnerships that are not publicly traded and whose investors are typically large institutional investors, university endowments, or wealthy individuals.

He said the NASD OTC works with private equities like the Faith Foundation and many others who are interested in deepening the reach of the market, and that the platform has other collaborators in PWC, Banwo Ighodalo & Co and the Bank of Industry (BOI).

Ajomale stressed that the NASD OTC market is less volatile and offers huge opportunities for unquoted firms to source funding, adding that trades in the OTC platform are very transparent.

He said there are two routes to the OTC market – investor-led, where an investor brings his securities for admission, and admission of the company, where a company introduces itself for listing.

Ajomale said the OTC market segment specifically focuses on locals rather than multinationals to provide secondary liquidity for investments, and that in the over five years since inception, the market has enjoyed tremendous growth with over 37 securities listed.

He said SEC as a regulator and the NASD have, therefore, come with the launch of the portal to address the situation as the platform would include investor readiness sessions with foundations and other types of private equities.
The NASD OTC market currently facilitates transactions through two independent trading platforms including the leased trading platform, which was recently acquired by the Nigerian Stock Exchange (“NSE”) from Nasdaq OMX.

The platform allows for multilateral trading and continuous transaction reporting. NASD leased the trading platform from the NSE and all Participating Institutions are given access to trade on this segment of the market.

Clearing is provided by the Central Securities Clearing System (CSCS), while the settlement is done by six appointed settlement banks for all NASD OTC transactions.

The other is a bi-lateral interdealer trading system (BITS) proprietary to the NASD, which allows trades to be conducted and consummated between select participating institutions.

The web-based platform allows brokers to interact from all corners of the world.

Originally, BITS was used to trade equities in all unquoted public companies, but increasingly it has become a platform for other asset classes. The NASD universe primarily covers the trading of securities in unquoted public companies.