Capital Market Authority Rolls Out World Bank-funded IPO Incubation Program

The Ethiopian Capital Market Authority (ECMA) and the World Bank have begun accepting applications from businesses looking to make an initial public offering (IPO) after a stint at an incubation hub under the Authority.

The IPO Clinic Project Office will begin with a pilot phase that involves the assessment of the readiness of companies for public markets, including the development of a gap analysis report with recommendations and an implementation roadmap, according to a document published by the ECMA this week.

“Selected companies in the pilot phase would subsequently join the first cohort of companies to be admitted into the IPO Clinic benefiting from specialized training, workshops, and one-on-one advisory sessions to prepare for an IPO,” reads the call for applications.

Businesses have until February 21, 2025, to apply.

The Authority categorizes potential applicants as ‘growth’ and ‘matured’ businesses. Companies with less than 250 million birr in annual revenue fall into the former category, while anything higher falls under the latter.

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Growth businesses are expected to have a year-on-year revenue growth rate of more than 20 percent, while the floor is five percent for the matured class. Mature businesses are also expected to have half the EBITDA margin of 10 percent specified for their growth counterparts.

Private companies, public companies, private share companies, family-owned businesses, and PLCs can register as ‘growth companies,’ while state-owned enterprises are limited to registering in the second category.

Interested businesses will have to submit their company’s profile, including an overview of the business, sector, products/services, history, board and management structure, and an analysis of financial performance over the last two years.

Proof of tax compliance and audited financial statements are also required, among other documents.

Officials at the Authority want to see technology firms and women-led businesses benefit from the clinic. Applicants can expect to undertake an IPO within 12 to 24 months after joining the initiative, according to the Authority.

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