42Markets Group, a financial and capital markets fintech incubator and investment group, has secured $10 million (R182 million) in growth funding from Convergence Partners, a private equity investor in the Sub-Saharan Africa technology sector.
The investment comes after businessman Andile Ngcaba’s Convergence Partners in January closed its Convergence Partners Digital Infrastructure Fund (CPDIF) at $296 million (R5.1 billion), surpassing its initial target by over 18%.
“We are thrilled with our investment in 42Markets Group, which reflects our unwavering dedication to fostering digital infrastructure expansion throughout Africa,” says Ngcaba, chairman of Convergence Partners.
“42Markets’ expertise in decentralised finance, regtech and fintech, particularly in expanding global financial and capital markets to underserved regions, aligns perfectly with our vision of utilising technology to bridge the digital divide and improve access for those in need. As blockchain adoption on the continent continues to grow, we look forward to embarking on this journey with 42Markets to democratise financial markets and enhance accessibility.”
The fresh capital will support 42Markets in accelerating the development and expansion of its portfolio companies – Mesh (Mesh.trade), Andile and FXFlow, with the bulk of the raise being deployed in Mesh.trade.
Broader reach
In a statement, Convergence Partners says Mesh.trade was founded to make the financial markets more accessible for all.
It has built a multi-sided platform, which it says makes it easier and more effective to raise capital and invest in the capital markets. It adds that Mesh.trade lets market participants issue, tokenise, trade, settle and lifecycle-manage multiple classes of digital securities at a fraction of the time and cost taken by market intermediaries in the traditional capital markets.
Netherlands-based Mesh launched in South Africa just under a year ago and is already receiving strong validation for its business model, in an industry that needs a responsible player, says the investment firm.
Mesh was co-founded in 2019 by managing director Connie Bloem and Andries Brink, 42Markets group CEO.
Bloem explains: “This injection of capital will support Mesh in its next phase of growth, which includes expanding the reach of our South African operations, investing in regulatory compliance and launching our next operating company in the EU.
“We are excited that this investment will allow us to invite more companies and individuals to join our movement, so we can continue to increase access to the financial markets for all.”
Brink adds: “This is a real vote of confidence in the positive impact that investment in digital financial infrastructure can have, both in developing and in mature markets.”
According to Brink, Convergence Partners has been instrumental in Africa digitally leapfrogging the world through key investments in fibre and data infrastructure.
“Together, we will now do the same for financial markets, in connecting central banks and other big asset generators to corporate and retail investors, safely and accurately, across the full spectrum of capital markets solutions. In a very real sense, 42Markets companies are the ‘over-the-top’ capital enablers, on the infrastructure that Convergence Partners has established. We are excited about working with them to bring real and sustainable change to markets.”
Two of 42Markets’ other group businesses operate in Africa: capital markets services and advisory firm Andile, which brings market and industry expertise to help the trade and treasury departments within banks leapfrog legacy software to streamline and automate their IT operations infrastructure; and early-stage platform business FXFlow, a foreign exchange exposure and risk management platform that creates value for importers and exporters in regulated markets.
African progress
Brandon Doyle, CEO of Convergence Partners, says: “This is one of our first investments in the digital transformation of financial markets.
“We see 42Markets as an emerging winner in this space. Their group companies have a long track record of consistent double-digit growth and a quality leadership team with deep expertise and experience in the capital markets.”
Fourteen leading global development finance institutions (DFIs) based in Europe, the US and Africa are investors in CPDIF. Brink says: “This is the connected capital we have been looking for. We are proactively engaging with these investors to explore further opportunities to work together.”
Christian Roelofse, investment officer responsible for the Netherlands DFI, says: “FMO is pleased with the efforts of Convergence Partners in identifying and supporting African entrepreneurs.
“Through their investments in companies like 42Markets, we believe that digitally-enabled financial inclusion will be advanced on the continent.
“Through our partnership with Convergence Partners, we are proud to be associated with innovative companies that are developing relevant solutions for the biggest needs of our time.”
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