All signs point to the emancipation of capital markets
Amidst a prolonged depreciation of the rand and a general negative sentiment about load shedding’s worsening impact on the country’s economic difficulties, South Africa’s financial technology sector is poised to start reversing the downward spiral, particularly in light of Convergence Partners’ recent growth funding vote of confidence in 42Markets’ fintech businesses, most notably Mesh.trade.
Co-founder and Managing Director of Mesh.trade, Connie Bloem, says the time for a responsible revolution, emancipating capital markets and ushering in the future of investing has arrived.
“The future of finance is firmly migrating to the rails of decentralised technologies and the blockchain, which can deliver trust and efficiency to the market. This journey has just begun, and we are excited to be playing a pivotal role,” she says.
Mesh is an institution-grade, multi-sided financial markets platform that facilitates trade in real-world financial assets on the blockchain.
Just recently, Mesh.trade’s parent, 42Markets Group announced that a capital investment from Convergence Partners, enabled by investment from 14 leading global development finance institutions from the US, Europe and Africa, would go a long way to enabling Mesh’s next phase of growth.
42Markets CEO Andries Brink says the capital boost will fast-track Mesh’s vision to, as he explains, “become the world’s leading end-to-end decentralised financial markets platform, for cross-asset issuance and trade of quality digital financial assets, ushering in the capital markets of the future.”
Bloem says the immediate next phase for Mesh.trade includes expanding the reach of its South African operations and going to market with an operating company in the EU, to further expand its brand of ethical, decentralised financial investing, as an alternative to the current market.
With many large players and multiple fragmented offerings all adding to the cost of participation, financial and capital markets today are layered, complex to navigate, expensive to join and can only be accessed through an exclusive group of market gatekeepers.
“This needs to change” says Bloem, “ethically and transparently. We are starting to directly connect issuers and investors in the Alternative Finance (AltFi) sector, making capital raising and investing more accessible, simpler and more transparent.”
“AltFi is a massively under-serviced sector of the capital markets and we are seeing that our ability to tokenise and distribute debt instruments such as corporate bonds, has the potential to emancipate private capital in a way that wasn’t possible before.”
Recent reports by McKinsey and BCG estimate that the market for the tokenisation of capital and real-world assets (RWA), will be between $15 and $20 trillion by 2030.
Some of the world’s largest global banks are rolling out products which tokenise RWA.
At the same time, 114 of the world’s Central Banks are actively trialling or at an advanced stage in rolling out their Central Bank Digital Currency projects, with the IMF recently announcing an initiative to get central banks to agree on a common regulatory framework for digital currencies that will allow global interoperability.
“This movement is inevitable” says Bloem. One of Mesh’s key differentiators is the tokenisation and trade of all asset classes.
This represents a step-change in the issuance, distribution, transfer and settlement of assets between market participants. It removes the tangle of complexity that has arisen over decades of financial asset product development and distribution.
Bloem says that while a lot of these concepts are still new for many people and even for some institutions, there is a rapidly growing understanding and appreciation of the inevitability of this shift in the industry.
The recent investment in the 42Markets Group and Mesh.trade in particular she says, is a validation of this, as Convergence Partners has always appreciated the potential of technology to break down silos and democratise access, focusing through this investment on emancipating financial markets, on this continent and beyond.
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