In a groundbreaking move, Zemen Bank S.C. has secured its position as the first closely held company to invest in the Ethiopian Securities Exchange (ESX), taking a significant 5% shareholding in the emerging bourse. The bank’s acquisition, valued at 47.5 million birr, not only surpasses the minimum investment threshold set for investors but also marks a pivotal moment in Ethiopia’s financial landscape.
This landmark agreement, finalized at a signing ceremony attended by Zemen Bank CEO Dereje Zenebe and ESX CEO Tilahun Kassahun, demonstrates Zemen Bank’s unwavering commitment to transparency and its leadership role in fostering the growth of the ESX.
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The Ethiopian government has made available 75% of the issued share capital of the bourse, totaling around 900 million birr ($16 million), for investment by both local and foreign investors. The remaining 25% is held by state-owned entities, including the Ethiopian Investment Holdings, the nation’s sovereign wealth fund, Ethio Telecom, and Ethiopian Shipping Lines.
Zemen Bank’s move comes as Ethiopia embarks on a historic journey to establish its first-ever securities exchange, following Prime Minister Abiy Ahmed’s ambitious economic reforms, which aim to open up previously restricted sectors. The ESX is set to kick off operations by the third quarter, and the government envisions attracting listings from banks, insurance companies, pension funds, and multinational firms.
CEO Dereje Zenebe, speaking at the signing ceremony, emphasized Zemen Bank’s role as a trailblazer in supporting the ESX. The bank’s investment not only meets the minimum threshold but also positions it as a leader, inspiring confidence for other financial institutions to follow suit.
Zemen Bank’s investment, valued at 47.5 million birr, represents approximately 5% of the ESX’s shareholding. The move is expected to set a precedent, encouraging more banks and private investors to participate in the coming months.
As part of its broader fundraising efforts, ESX aims to raise a total of 625 million birr from corporate entities and institutions to expand its platform and services. Already, 275 million birr has been secured from four state-owned enterprises, backed by Ethiopia Investment Holdings and FSD Africa.
This injection of capital will empower ESX to introduce innovative trading mechanisms, attract a diverse range of listed companies, and promote broader market participation. Officials view this successful initial round of fundraising as a crucial step toward establishing the ESX as a dynamic hub for capital raising and allocation, contributing to the strengthening of Ethiopia’s financial system and meeting the evolving needs of its rapidly developing economy.
