By Muluken Yewondwossen
The Ethiopian Securities Exchange (ESX), still in its developmental phase, is attracting both domestic and foreign investors as it strives to meet its capital-raising goals ahead of the recently updated deadline, according to sources. In a recent development, Siinqee Bank became the second equity acquirer, following Zemen Bank, with an agreement finalized on Thursday.
While these two firms publicly announced their involvement, additional investors have technically agreed to acquire stakes in the prospective securities trading platform. ESX is set to be established as a share company by the government in collaboration with the private sector, including international investors, in accordance with the capital market proclamation article 31.1.
The proclamation stipulates that the government and government-owned organizations’ combined ownership cannot exceed twenty-five percent of the exchange’s capital. However, if there is insufficient private sector interest, the government’s ownership can be increased to ensure the establishment of the exchange.
Key players such as Ethiopian Shipping and Logistics, Ethio Telecom, Ethiopian Insurance Corporation, Berhan Ena Selam Printing Enterprise, and Ethiopian Investment Holdings (EIH) have already committed as the first investors of ESX, signing agreements at an event held on October 3, 2023.
ESX has been actively engaged in a roadshow campaign since May of the previous year, exploring potential investors, including international entities. The capital campaign officially commenced in November, initially with a three-month timeline, which was later extended to March 29 due to the international holiday season.
Presently, Siinqee and Zemen banks have formally agreed to invest 50 million birr each. Moreover, additional prospective investors have indicated their willingness to purchase stakes in the trading platform, which aims to launch the secondary market by year-end.
Foreign investors have also shown keen interest in investing in ESX, as confirmed by information received from ESX. The founding CEO, Tilahun Esmael Kassahun, disclosed last month that FSD Africa, backed by the UK government, will also hold shares in the company.
ESX welcomes individual investors to participate in the capital raising, with the minimum investment set at 10 million birr and the maximum at 150 million birr. The government and public businesses are poised to become the largest shareholders, collectively contributing over 225 million birr from the expected total capital.
The ESX board of directors, led by Helawi Tadesse, has approved the mobilization of more than 906 million birr in equity. The exchange plans to manage various financial instruments such as Treasury bills, corporate bonds, interbank markets, REPOs, commercial paper, and stocks once operational.
Forecasts indicate a substantial increase in revenue for ESX, from 5.9 million birr in its inaugural year to 1.5 billion birr by 2033. The exchange is expected to turn a profit by 2028, reaching over one billion birr in profit by 2033.
Potential members of ESX include financial institutions, brokers, dealing members, investors, and non-trading members, with an anticipated 50 trading members. With assets totaling approximately USD 36 billion, founding investor EIH oversees 26 major public firms spanning various sectors, including transportation, banking, manufacturing, commerce, hospitality, and construction, notably including Ethiopian Airlines Group and Commercial Bank of Ethiopia.
