Karachi-based stock brokerage KASB Securities that owns and operates stock trading app KTrade has raised $4.5 million in a funding round led by Hong Kong-based investment firm TTB Partners and New York-based global VC HOF Capital. The round was also joined by fintech investor Christian Angermayer, and David Mortlock, the managing partner of German investment bank Berenberg, as well as Pakistani business families.
KASB is one of the oldest brokerage houses in Pakistan and was relaunched in 2018 by investment executive Ali Farid, with a focus on retail investing. The firm launched KTrade, a stock trading app for retail investors, in 2019 and has since served thousands of users in Pakistan. The app enables users to sign up for a brokerage account and start trading with as little as PKR 5,000 ($32). KTrade charges PKR 0.03 on the trade of stocks priced at PKR 20 or less and 0.15 percent of the stock price for stocks priced at more than PKR 20. On its website, the firm claims that this is the lowest commission in the industry.
Since its launch, over 200,000 have registered on the app to access research and virtual trading – thousands of these users have used the app to trade stocks, KASB Chairman Ali Farid told MENAbytes, adding that over 50 percent of the trading volume served by their brokerage now comes from the app. KASB also serves corporate and individual clients through a variety of other tools.
The Pakistani financial regulatory agency, Securities & Exchange Commission of Pakistan, had introduced online signup/onboarding for brokerage accounts in late 2020, which has made it relatively easier to trade. The KYC requirements, however, still include payslip and bank account statements, which means a large number of Pakistanis cannot signup for brokerage accounts.
KASB’s Chairman who previously served as Chief Financial Officer of UK fintech SafeCharge remains optimistic about the future of retail investing in the country, with the aim to reach 10 million (local and overseas) Pakistanis by 2023 through KTrade, enabling them to invest in stocks, bonds, commodities, and mutual funds through KTrade.
In a statement, he said, “People in Pakistan have traditionally turned to gold or real estate when they consider investment options. However, as the regulatory approach, authority, and credibility of the Karachi Stock Exchange has grown, more people are getting comfortable with stock market investing. This is an exciting trend but accessibility to these markets remains a hurdle for millions. KTrade will enable this mobile-first population to participate in the investment opportunity. By connecting these people to companies we can drive capital trapped in unproductive assets into the formal economy which would eventually drive a virtuous cycle of economic growth and higher investments.”
“Most people in Pakistan lack access to formal financial products and their savings in real estate or gold offer inferior returns, are inefficient and have high transactional costs. We aim to democratize access to the capital markets and enable them to make stock market investments. The strong demand for KTrade shows that the market is ready for this transformation. Other regional and emerging markets have seen similar evolution led by successful fintech companies” added the KASB Chairman.
Stock trading apps, like Robinhood, Zerodha, Flatex, and many others have made retail investing easier and accessible for investors in markets like United States, India, and Germany. With KTrade, KASB aims to replicate the success in Pakistan.
Jonathan Bond, the Managing Partner at TTB Partners, said, “Pakistan and South Asia have some of the most exciting market dynamics and demographics globally, and KTrade is well-positioned to take advantage of the democratization of finance in the region. We are delighted to be investing in the latest round of funding for KASB, and to support Ali and his first-class team on their continued journey.
“We have been extremely impressed by what KASB has built over the past few years, both from a tech perspective and from the educational overlay to investing, which the company has embraced. In particular, we believe that in KTrade, the company has a stellar solution to expanding stock market participation across Pakistan,” he added.