The Nairobi Securities Exchange Launches New Trading Platform

On 17 December 2020, the Nairobi Securities Exchange (the NSE) launched an Unquoted Securities Platform (the USP). The USP will function in accordance with its operational guidelines (the Guidelines) published on 11 December 2020. The Guidelines are available here.

The USP is an over the counter securities platform that utilises broker-dealer networks for the trade of securities. It has less stringent listing requirements and issuer obligations have opened a viable alternative for unlisted companies to access capital markets and long-term funding as issuers are enabled to raise finance through private placements. The USP also provides a boost to institutional and retail investors as it provides investors on the platform an accurate free-floating price of the securities of unlisted companies.

Key Considerations for Issuers

For admittance onto the USP, prospective issuers of the USP securities must meet the eligibility requirements of the Management Committee appointed by the NSE. The eligibility requirements are listed in the Guidelines, with the key requirements being, among others, the incorporation status of the issuer, articles of association amenable to USP securities and details of the board and management of the issuer. However, the eligibility requirements are non-exhaustive and the Management Committee may request further criteria as deemed necessary.

A prospective issuer will also need to appoint a registrar, to maintain a record of beneficiary holders of securities, and a custodian (licensed by the Central Bank of Kenya) for the safekeeping of USP securities, cash and other assets on behalf of the investors. Once the application documents have been submitted, the Management Committee will relay their decision to the prospective issuer within twenty-one (21) days.

If an application is accepted by the Management Committee, the issuer will have continuing obligations to the NSE, including disclosure requirements, which entail the disclosure of all material information in relation to the issuers business, financial statements and copies of notice of AGMs and EGMs. Additionally, issuers will be under an obligation to avoid the events of default under the Guidelines, such as: failure to distribute declared dividends and non-payment of interest of USP securities in accordance with the published timetable. Failure to meet continuing obligations may result in the suspension or expulsion of the issuer from the USP.

Key Considerations for Investors

To start trading on the USP, investors must be registered to an NSE authorised USP Trading Participant Agent (broker). In order to register with a broker, individual investors will be required to provide the broker of their choice with their full name, identity documents, contact details and passport (if they are foreign nationals). Investors that are entities will need to provide the broker with documents, such as, among others, the legal status and constitutive documents of the entity, board resolutions allowing the entity to invest and the identities of the directors.

Each investor authorised to trade on the USP is furnished with a unique USP securities trading account with a unique Trade Identification Code. The USP is open for trading on working days from 0900Hrs to 1500Hrs and investors can trade freely within this period. Trades made after the closing of the USP will be transacted at the next opening of the platform.

Investors will need to consider the maximum order size as trades over this limit will require prior disclosure with the NSE. In accordance with the Guidelines, trade volumes that exceed 20% of the total free float of an issuers USP securities will have to be disclosed to the NSE a day prior to the transaction.

For further information please contact Benedict Nzioki or Walid Khan.

2 FTSE 100 stocks to buy that I’d consider right now

I reckon it’s a good idea to invest in a few good quality FTSE 100 shares. I think these two pay decent dividend yields and have reasonable prospects for growing their dividends a little each year from where we are today.

Meanwhile, each firm has an undemanding valuation, which bodes well for future expansion of their share prices.

Retailing

FTSE 100 clothing, footwear, accessories and home products retailer Next (LSE: NXT) looks set to become a survivor in what has become a difficult sector. I think that’s because of the success of its catalogue and online sales strategy working in harmony with the store estate.

The second-quarter trading update released at the end of July revealed to us that sales and profits edged up by modest single-digit percentages in the period. I think that’s a far better trading outcome than many struggling retailers have been experiencing lately.

The good trading was better than the directors had previously anticipated and they increased full-price sales guidance for the second half of the year to an anticipated increase of 3% rather than 1.7% as stated earlier. Things are moving in the right direction and I think the stock is attractive.

At the recent share price close to 6,007p, the forward-looking earnings multiple runs just below 13 for the trading year to January 2021 and the anticipated dividend yield is around 2.9%. City analysts following the firm are pencilling in modest increases in the dividend ahead. I think Next looks like a stalwart that I’d be happy to add to my portfolio.

Paper & Packaging

Despite delivering decent-looking half-year financial numbers with its interim report at the beginning of August, paper and packaging firm Mondi (LSE: MNDI) saw its share price fall back on the news.

I think the move happened because the stock market is always looking ahead and trying to anticipate trading down the line. The figures were good, yes, but chief executive Peter Oswald said in the report they were achieved “against a backdrop of increasingly challenging trading conditions.” That, I reckon, was enough to spook the market.

But Oswald went on to say the firm’s “relentless” focus on continuous improvement is set to lessen the impact of trading pressures in the firm’s markets. I reckon the firm’s multi-year record of steady growth in revenue, earnings, cash flow and the dividend bodes well for future progress, despite any macro-economic wobbles we might see from time to time.

I like the stock and see the current weakness in the share price as an opportunity to hop aboard the story on better terms. The recent share price close to 1,595p throws up a forward-looking earnings multiple of just over nine for 2020 and the anticipated dividend yield is a little under 5%. I think that looks like decent value.

Disruptive trading app nears $7 BILLION valuation with fresh funding

Robinhood Markets, the operator of a free mobile trading app, is close to garnering a valuation of $7 billion or more.

CNBC, citing two people familiar with the deal, reported Robinhood has raised a minimum of $200 million in a recent late-stage fundraising round that will give it a valuation of between $7 billion and $8 billion. The round, which includes mainly existing investors, hasn’t closed yet — which means it could raise more than $200 million. When Robinhood raised money via a Series D round it had a valuation of $5.6 billion, noted CNBC. Robinhood declined to comment on its valuation.

According to CNBC, Robinhood’s co-CEOs Baiju Bhatt and Vlad Tenev have said an initial public offering is in the cards at some point — but that currently, it is focused on disrupting other areas of finance. This year it applied for a national bank charter from the Office of the Comptroller of the Currency. A spokesman told CNBC in April that getting the national bank charter will enable it to offer banking products. “Robinhood’s goal is to be able to offer its customers a full suite of financial products to serve their needs,” the spokesman said.

CNBC noted that Robinhood brought on the CEO of Wedbush Bank and Merchants Bank of California, Scott Racusin, to head up its banking efforts. Racusin was eventually named the president and CEO of the potential bank. Robinhood was forced to retreat from offering a bank account after announcing in late 2018 a checking and savings product with 3 percent interest. Backlash quickly surfaced as to how the money would be insured and if it would be protected like a bank account that has the backing of the Federal Deposit Insurance Corp. Robinhood removed all its marketing material and now calls it a cash management feature offered within its brokerage accounts.

Robinhood has been enjoying fast-paced growth thanks in large part to the fact that its stock trading app is free. In 2018 its user base jumped from 4 million during the summer to 6 million by late 2018.

Disruptive trading app set to raise over $200 MILLION

United States-based stock and crypto trading app Robinhood is set to raise at least $200 million in a new funding round, Bloomberg reported on May 24.

Per the report, an unspecified source familiar with the matter told the outlet about the company’s plans to raise further funding. Moreover, Bloomberg reports that the round would increase the firm’s value to between $7 billion and $8 billion, but that the details could change.

Other people familiar with the matter also told Bloomberg that the new funds come from existing investors, all of whom asked not to be identified and to keep the details private. While the funding talks are reportedly ongoing, a further funding round could increase the company’s worth to $10 billion, but the numbers are subject to change until the deal is closed.

Robinhood, which allows for zero-fee stock trading, first introduced bitcoin (BTC) and ether (ETH) trading in January last year.

As Cointelegraph reported earlier this week, Robinhood has officially launched its crypto trading app in New York following the acquisition of a BitLicense by the New York State Department of Financial Services in January 2019.

Also during this week, the new April 2019 Exchange Review from crypto data provider Cryptocompare revealed that centralised cryptocurrency exchanges saw a major uptick in trade volume this April.