The Nigerian Stock Exchange Group (NGX) has purchased a stake in Ethiopia’s first-ever securities exchange for an undisclosed amount. NGX made this acquisition through a fundraising series by the Ethiopian Securities Exchange (ESX), which achieved $26.6 million in investments, surpassing the target promised to its investors.
Prime Minister Abiy Ahmed led the positioning of the Ethiopian Securities Exchange (ESX) to raise $11.07 million to begin operations last year. This is a move by the PM to modernize and liberalize the country’s economy.
The ESX CEO, Tilahun Kassahun, mentioned that the exchange was “thrilled to have exceeded” all its expectations and is “excited by the overwhelming confidence shown by investors in the long-term prospects of ESX.”
The stake allocation states that the Ethiopian government will hold a 25% stake in ESX through the Ethiopian Investment Holding (EIH) and subsidiaries, including the Commercial Bank of Ethiopia, and Ethiotelecom. Private and institutional investors will share the 75% stake.
The top institutional investors include the NGX group, UK-backed non-profit financial institution FSD Africa, and the Trade and Development Bank Group (TDB).
According to Kassahun, these strategic foreign investments are important in enabling the transfer of technical knowledge and best practices in areas the exchange plans to explore.
The Nigerian Stock Exchange is one of the largest securities exchanges on the continent, having $41.8 billion in market capitalization. Its investment with ESX will not only be monetary, as it will support ESX with its expertise in developing the bourse structure, marketing structures, and trading rules.
The ESX also closed the fundraising with investments from local investors, including 12 insurance firms, 16 banks, and 17 private entities.
Although PM Ahmed is moving to liberalize the country’s economy, it is still largely controlled by the state with little to no private sector involvement. Currently, Ethiopia has no investment banks, meaning that businesses can only raise capital from commercial banks.
The confirmation of the ESX Launch date is still pending, but they anticipate it to be within this year.
