Capital Market Boon for Startups: ESX

Mekelle:  14 April 2024 (Tigray Herald)

Ethiopian Securities Exchange (ESX) gets prominent foreign strategic investors such as FSD Africa, the Trade and Development Bank Group (TDB), and the Nigerian Exchange Group (NGX)

The approval of the capital market in Ethiopia will bring greater opportunities for the growth of startups in the country, the CEO of the Ethiopian Securities Exchange (ESX) remarked.

Ethiopian Securities Exchange CEO, Tilahun Esmael Kassahun told ENA that capital market and startups have supplementary relationship.

Tilahun emphasized the crucial role startups play in a nation’s future, particularly within the technology and innovation sectors, pointing out that many of the world’s leading tech giants began as small startups.

Previously, Ethiopian startups faced major hurdles, including securing capital and operational funds from the major financial institutions.

However, Tilahun expressed assurance that the new capital market will enduringly address this bottlenecks.

The government is providing great policy support to startups in the country, the CEO noted.

The capital market will allow startup entrepreneurs to access financial services based on their ideas, he explained.

This will also open doors for startups to become major players within the capital market themselves.

Beyond just attracting capital, Tilahun believes the capital market will positively contribute to Ethiopia’s financial inclusion.

According to him, startups will not only have access to investment capital but also benefit from various financial instruments that can address operational cash flow needs.

A strengthened Investment Bank, coupled with the ability of commercial banks to increase their deposit capacity through the sale of diverse financial instruments, will create a more favorable financial environment, he elaborated.

“This will indirectly benefit those segments of society who are currently excluded from traditional financial services.”

The CEO anticipates the launch of the Ethiopian real estate market in 2025, offers further investment diversification, stating that it presents a fantastic opportunity for Ethiopians to participate in the privatization of government enterprises and become shareholders.

Ethiopian Capital Market Authority, in full gear to soon launch the first-ever capital market in the African nation, announced the international consulting firm @Deloitte through its Ethiopian subsidiary, as the 1st licensed securities investment advisor.

The Ethiopian Securities Exchange (ESX) announced today the successful closing of itscapital-raising exercise, surpassing by more than two-fold thef funds it sought tostart its operations. Initiated in November 2023, with intensive eorts by its management andadvisors and roadshows in Addis Ababa, Nairobi, and London, the Exchange witnesseddramatic interest by domestic and foreign commercial investors, obtaining a whopping ETB1.51 billion (US$ 26.6 million), representing subscription of 240% of its initial targetcapital raise of ETB 631 million (US$ 11.07 million), with participation by a total of 48domesticforeign institutional investors across financial and non-financial sectors.

ESX was established in October 2023 through a pioneering public-private partnership with theGovernment of Ethiopia through the Ethiopian Investment Holdings (EIH), its strategicinvestment arm, as the founding shareholder, with a mandated total public shareholding of upto 25%, with the remaining 75% to be private shareholding.At present, the list of investors includes foreign strategic investors, including FSD Africa, the

Trade and Development Bank Group (TDB), Nigerian Exchange Group (NGX), along with 16domestic private commercial banks, 12 private insurance companies, as well as 17 otherprivate domestic investors. Public sector interests, jointly representing 25% of shareholding,include EIH and its subsidiaries such as Ethiotelecom and the Commercial Bank of Ethiopia,among others.

The overwhelming interest as investors rallied around

Exchange, up to the close of the

capital raise period, signals the enthusiasm and confidencethe ESX heralds a majormilestone in the country’s journey towards financial sector development and economictransformation. By facilitating the mobilization of capital, enhancing transparency, andapromoting corporate governance standards, ESX aims to unlock new avenuesinvestment,spur entrepreneurship, and catalyze sustainable development across various sectors of theeconomy.

“We are thrilled to have exceeded all our expectations in terms of the capital raise and areexcited by the overwhelming confidence showny investors in the long-term prospects ofboth ESX and Ethiopia’s capital markets more broadly,” said Tilahun Esmael Kassahun (Ph.D),CEO of the ESX, adding that “strategic foreign investments by TDB, FSD Africa, and NGX Groupare particularly important in allowing the transfer of technical knowhow and best practices aswell as other areas of long-term strategic value that we will explore.”

ESX also announced today other progress, including the release of its draft ExchangeRulebook for public consultation, the completion of the technical evaluation for the selectionof its technology provider, a major milestone to operationalizing the Exchange’s trading, andissuer and investor education plans in the coming months leading up the launch of thisexciting development for the Ethiopian economy.


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