Ethiopia’s first-ever stock market records massive investor demand

Daba Finance/Ethiopia’s first-ever stock market sees oversubscribed capital raise

BREAKING NEWSApril 5, 2024 at 12:01 PM UTC

TLDR

Ethiopian Securities Exchange (ESX) experiences overwhelming demand for shares, with bids exceeding twice the amount offered.
ESX, established in October 2023, poised to become Ethiopia's first fully-fledged securities market, backed by the Ethiopian government's investment arm.
48 investors, including FSD Africa, the Nigerian Exchange Group (NGX), domestic banks, and insurance companies, participate in ESX capital raise.

The Ethiopian Securities Exchange (ESX) has reported overwhelming demand for its shares, with bids exceeding twice the amount offered to investors. Chief Executive Officer Tilahun Kassahun revealed that investors submitted bids totaling more than 1.51 billion birr ($26.6 million), surpassing the firm's target of 631 million birr.

Established in October 2023, ESX is poised to become Ethiopia's inaugural fully-fledged securities market. It is backed by an investment arm of the Ethiopian government as its founding shareholder. The exchange commenced its operations in November 2023 with roadshows held in Addis Ababa, Nairobi, and London and has issued licensing directives to operators.

Among the 48 investors who participated in the capital raise are Ethiopia's investment holding company, FSD Africa, the Nigerian Exchange Group (NGX), Trade and Development Bank, 16 domestic banks, and 12 insurance companies. The public sector will retain a 25% stake in the bourse's shareholding, with private shareholders holding the remaining 75%.

Key Takeaways

The heightened investor interest in the Ethiopian Securities Exchange (ESX) is fueled by Ethiopia's intentions to privatize either fully or partially some of its state-owned enterprises, aligning with its broader efforts to liberalize the economy and attract foreign investments. The country's ongoing market reforms, exemplified by Safaricom's establishment of its inaugural subsidiary outside of Kenya within Ethiopia, have drawn the attention of both local and foreign investors. However, these reforms have faced challenges stemming from apprehensions regarding Ethiopia's macroeconomic stability amid significant security issues. Despite these concerns, Ethiopia's commitment to economic transformation and opening up its markets continues to generate optimism and interest among investors.

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