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In a historic development, Zemen Bank S.C. has achieved the milestone of becoming the inaugural privately held entity to invest in the Ethiopian Securities Exchange (ESX), securing a substantial 5% stake in the burgeoning stock market. With a valuation of 47.5 million birr, the bank’s acquisition not only surpasses the prescribed minimum investment threshold but also signifies a pivotal juncture in Ethiopia’s financial terrain.
This groundbreaking accord, formalized during a signing ceremony attended by Zemen Bank CEO Dereje Zenebe and ESX CEO Tilahun Kassahun, underscores Zemen Bank’s steadfast commitment to transparency and its leadership role in nurturing the growth of the ESX. The Ethiopian government has made 75% of the bourse’s issued share capital, amounting to approximately 900 million birr ($16 million), available for investment by both local and foreign investors. The remaining 25% is retained by state-owned entities, including Ethiopian Investment Holdings, the nation’s sovereign wealth fund, Ethio Telecom, and Ethiopian Shipping Lines.
Zemen Bank’s strategic move aligns with Ethiopia’s momentous journey to establish its inaugural securities exchange, propelled by Prime Minister Abiy Ahmed’s ambitious economic reforms aimed at unlocking previously restricted sectors. Set to commence operations in the third quarter, the ESX aims to attract listings from banks, insurance companies, pension funds, and multinational corporations.
CEO Dereje Zenebe, addressing the signing ceremony, emphasized Zemen Bank’s role as a trailblazer in supporting the ESX. The bank’s investment not only meets the stipulated minimum threshold but also positions it as a frontrunner, instilling confidence for other financial institutions to emulate.
Valued at 47.5 million birr, Zemen Bank’s investment signifies approximately 5% of the ESX’s shareholding. Anticipated to set a precedent, this move is poised to encourage additional banks and private investors to partake in the ensuing months.
As part of its expansive fundraising initiatives, ESX aims to garner a total of 625 million birr from corporate entities and institutions to enhance its platform and services. To date, 275 million birr has been secured from four state-owned enterprises, supported by Ethiopia Investment Holdings and FSD Africa.
This infusion of capital will empower ESX to introduce innovative trading mechanisms, attract a diverse array of listed companies, and foster broader market participation. Authorities regard this successful inaugural fundraising round as a pivotal stride toward establishing the ESX as a dynamic hub for capital mobilization and allocation, contributing to the fortification of Ethiopia’s financial system and addressing the evolving requirements of its rapidly advancing economy.
