Source: The Reporter
ESX amasses 1.6 billion birr in subscribed capital
Heads of the Ethiopian Securities Exchange (ESX) eye the listing of more than 90 businesses on their boards as the country’s maiden stock market nears inauguration, sources disclosed to The Reporter.
If the ambitions hold true, the number of initial public offerings (IPOs) would instantly surpass the stocks listed on the Kenyan stock exchange, which the minds behind ESX have used as a reference point in the four years preparing for launch.
The Exchange has managed to raise 1.6 billion birr in capital, far exceeding the initial target, and despite growing interest to invest in ESX, its executives have suspended reviews of new offers, according to the sources.
“The subscription capital collected so far is adequate. We do not need to invest in property or other investments,” said one officer at ESX, who spoke on condition of anonymity.
Ethiopian Investment Holdings (EIH) holds a 25 percent stake in the Exchange on behalf of the federal government. State-owned firms Ethio telecom, Ethiopian Shipping and Logistics Services Enterprise (ESLSE), the Ethiopian Insurance Corporation (EIC), and Berhanena Selam Printing Enterprise combined hold another 25 percent stake.
Financial institutions and SOEs are expected to be the first to list on the ESX when it goes live. Firms wishing to make a public offering are required to comply with transparent institutional governance requirements, International Financial Reporting Standards (IFRS), and safeguards meant to instill confidence in investors.
“We have set out requirements to be used as reference for the selection of the IPOs. We also take into consideration the interest of investors, not only the interest of firms who want to be listed. So, what kind of IPOs investors want to see in the stock market is also decisive,” said Hana Tehelku, who recently replaced Brook Taye as director-general of the Ethiopian Capital Market Authority (ECMA).
“If investors want green companies, we onboard them. If investors want companies with a solid ESGA track, we onboard such companies,” said Hana during the Ethiopian Capital Market Summit held at the Skylight Hotel this week.
EIH has confirmed that a 10 percent stake in Ethio telecom and an unspecified stake in EIC will be listed on the Exchange. Other SOEs are being evaluated and considered for listing, sources say.
EIH oversees more than two-dozen of the country’s largest SOEs, while the Public Enterprises Holding and Administration (PEHA) manages close to a dozen.
Brook Taye (PhD), newly appointed EIH head, sees the stock market as a crucial part of the federal government economic reform policy.
“The stock exchange is not a vehicle for privatization of SOEs. Rather, it is a vehicle for Ethiopia’s wider economic reforms,” said Brook, during the panel discussion at the Summit.
Tilahun Kassahun (PhD), CEO of the Exchange, said ESX is designed to serve needs and close gaps in markets and the wider economy.
“As we prepare to launch this new capital market, we can draw whatever picture we want on the canvas, based on the needs. What happens in the market is the tip of the iceberg. The stock exchange must address both the equity market and debt market. That is the biggest opportunity the stock market will exploit,” said Tilahun.
Hana hopes to see the Exchange address the lack of access to finance in Ethiopia.
“There is a population of 120 million but the number of shareholders in the country is only around half a million. That is why we are relying on technologies like money market operators to maximize the reach and accessibility of the capital market,” she said.
Last month, the Authority approved the use of Ethio telecom’s Telebirr application for the sale of 100 million shares in the state-owned telecom operator.
“For service provision in the capital market, all money market apps, including Telebirr, will apply. We have approved legal frameworks, technological frameworks and all the necessary requirements. We went to Malaysia to study inclusivity and a Sharia-compliant capital market,” said the Director-General.
She added that Telebirr’s facilitation of share sales is only temporary.
“We picked Telebirr to maximize the reach of the stock exchange for the wider population interested in buying shares. But for the service of the other IPOs in the stock exchange, other apps will also participate. For this service, all apps including Telebirr will have to apply and pass the evaluations,” said Hana.
She disclosed that both local and foreign investors will be permitted to invest in the capital market.
“We recognize retail investors as core investors in the capital market,” said Hana.
THE AUTHOR: Ashenafi Endale
