ESX Targets Nine IPOs By September

Dashen Bank issues prospectus ahead of offering 2.2 million shares

The Ethiopian Secuuritis Exchange (SX) has ambitions to list the next nine companies before the end of the Ethiopian Calendar Year in September, according to the Ethiopian calendar.

“Our plan for this year is to list nine companies in the ESX and I think we can exceed that target,” said Tilahun, who was appointed to head the Exchange in November 2023.

Although the country’s maiden stock exchange went live almost a year ago, its floor has yet to begin trading. So far, only four companies have taken the first steps towards listing on ESX.

They include the state-owned Ethio telecom, whose disappointing initial public offering (IPO) from earlier this year is slated to go live on the Exchange in the near future. The others are private commercial banks Wegagen, Gadaa, and Dashen.

Dashen Bank published a prospectus this week after officials at the Ethiopian Capital Market Authority (ECMA) approved its registration documents for its planned IPO and registered more than 14.3 million active shares.

The bank plans to offer 2.2 million additional shares to its shareholders first, while any leftover shares will then be offered to “qualified investors and/or the public,” according to a statement issued by the Authority this week.

Last year, Tilahun told The Reporter that other state-owned companies under Ethiopian Investment Holdings (EIH) were set to follow Ethio telecom in listing on the Exchange. On the list were the Ethiopian Shipping and Logistics Services Enterprise and the Ethiopian Insurance Corporation.

“We’ve received applications from four companies,” Tilahun told The Reporter this week.

Firms that are not yet listed will continue trading through the Over-the-Counter (OTC) market until they fulfill listing requirements with ECMA.

“Whenever the registration at ECMA is done and companies have an objective of listing, we’ll register,” said Tilahun, noting that draft prospectuses are jointly reviewed by ESX and ECMA before approvals in principle are granted.

Tilahun explains that listing timelines differ depending on whether a company intends to raise new capital. Companies opting for listing by introduction, also known as direct listing, can complete the process faster, while those planning public capital offerings require additional regulatory review and preparation.

Dashen Bank’s prospectus provides a practical example of this process.

The bank has chosen a phased approach in which its listing on ESX is separated from its planned capital-raising exercise. While Dashen has already completed registration with ECMA and secured its place on the exchange list, its public capital raise is scheduled to follow in February 2026, allowing regulators and investors to observe how listing and capital mobilization function as distinct processes within Ethiopia’s capital market framework.

Meanwhile, regulators are enforcing mandatory dematerialization of securities, replacing paper-based share certificates with electronic records held by the Central Securities Depository (CSD). The reform, anchored in the Capital Market Proclamation, is a prerequisite for trading on the Exchange.

Under the dematerialization process, shareholder data are transferred from company share departments to the CSD, after which shareholders must open accounts with licensed brokers to enable electronic trading.

“In this regard, Gadaa and Wegagen banks [Wegagen Capital Investment Bank] have finalized the dematerialization process,” Tilahun said. “Going forward, when other banks come, their shares will be moved, accounts will be created, and trading can start.”

Tilahun explained that trading is generally expected to begin automatically after listing, although delays may occur if account opening or operational requirements are incomplete. In some cases, listing may occur before capital raising, while in others trading can commence immediately once shares are transferred to the CSD.

He emphasized that securities registration deadlines are strictly enforced. Securities required to be registered by November 2025 will not be permitted to trade if registration and dematerialization are not completed.

“ECMA has clearly stated that if companies fail to dematerialize their documents and move securities to the CSD, trading is impossible,” he said.

He further noted that dematerialization alone is insufficient without ECMA registration.

“If the security is not registered, dematerialization alone cannot enable listing and trading,” he said, adding that companies that fail to complete both steps will be barred from the Exchange.

As a regulatory measure, companies that do not dematerialize their securities will be prohibited from trading, limiting shareholders’ ability to transfer ownership, receive dividends, or exercise shareholder rights.