Dashen Bank has launched an offer of rights to existing shareholders to raise some ETB 6.4 billion ($41.1 million) in new capital and is preparing for a listing on the Ethiopian Securities Exchange (ESX), planned for 23 February.
On 24 December, the Ethiopian Capital Market Authority (ECMA) approved the registration of the bank’s securities in terms of the authority’s Public Offering and Trading of Securities Directive (1030/2024). The announcement can be found here (English below). This approval covers 16.5 million shares, including the 14.3m existing shares held by the shareholders.
It also includes 2.2m new shares to be issued in a rights offer to the existing 4,937 shareholders. According to the prospectus, existing shareholders can purchase new shares at ETB 2,900 each, in proportion to their current shareholdings, during the offer period which runs from 25 December to 11 February.
The existing and new shares will all be ordinary shares with the same rights. The target timetable is that the new shares will be issued and credited to investors’ accounts at Ethiopia’s Central Securities Depository (CSD) on 16 February and listed on the ESX on 23 February.
The ESX congratulated the bank on the successful completion of its registration: “As required under the Public Offering and Trading of Securities Directive, ESX has granted approval in principle, subject to the fulfilment of the remaining applicable listing requirements.”
How the offer works
The offer is being facilitated through tradeable rights, each giving the right to purchase one rights offer share. The existing shares and tradeable rights are uploaded onto the CSD and prospective investors need to open brokerage accounts at licensed brokers. The existing shareholders can exercise their rights by paying in full before the end of the rights offer period, or they can sell to another existing shareholder with the price determined between buyer and seller, or they can assign the tradeable right, renounce it or let it lapse.
If existing shareholders do not take up all the new shares, the surplus rights offer shares will be offered to qualified institutional and high-net-worth investors, and to retail investors. The offer is only available in Ethiopia.
The new capital injection is to bolster Dashen Bank’s regulatory capital (see page 205 of the prospectus for details), accelerate digital transformation including expanding its SuperApp and to fund growth in its four divisions: i) corporate, ii) retail, iii) micro, small and medium enterprises (MSME), and iv) interest-free banking (IFB) operations which are shariah-compliant.
The minimum subscription will be ETB 3bn, determined by the company’s assessment of forthcoming regulatory requirements.
Transaction advisor is Deloitte through its Ethiopian affiliate D and T Ethiopia Management Consulting PLC and the legal counsel is Tamrat Assefa Liban Law Office. Expenses of the offer are estimated to be ETB 102.8m, mostly to Deloitte, giving net offer proceeds of ETB 6.3bn if all shares are subscribed.
Fast growing revenues and assets
In its financial results for the year ended on 30 June 2025, Dashen Bank announced total revenue reached a ETB 31.4bn, up 34% on the previous year (ETB 23.4bn). The corporate division generated ETB 18.5bn, MSMEs ETB 4.1bn, retail ETB 2.4bn and IFB nearly doubled from ETB 768m in 2024 to ETB 1.4bn in 2025.
Pre-tax profit was ETB 6.7bn, up 5.1%. Total assets climbed to ETB 254.5bn (up 38.5%) of which ETB 123.3bn was loans and advances to customers and ETB 58.7bn was cash and balances with banks. The advances to customers include ETB 6.3bn of loan to related parties including the successful businesses linked to the Midroc Investment Group, including ETB 1.3bn in loans to Midroc Gold Mine, ETB 1.2bn to Horizon Plantation and ETB 8111m to Moha Soft Drinks Industries.
Total deposits grew by 38.7% to ETB 202.2bn of which retail put in ETB 83.4bn, corporate ETB 77.3bn, MSMEs ETB 25.8bn and IFB reached ETB 15.8bn.
Bank’s President Asfaw Alemu told the general meetings of shareholders on 25 December (Ethiopian Christmas was on 7 January) that the bank is seeking to recruit skilled individuals as it plans to launch investment banking, according to Birrmetrics.
The prospectus gives a key breakdown of financial information for the last three years (to end June 2023-2025) including a climbing cost-to-income ratio (69.3% in the year to June 2025, up from 61% in 2024 and 58% in 2023) which the company says is “primarily due to strategic investments in branch expansion, digital infrastructure, and risk management, coupled with inflationary pressures on operating costs.”
The capital adequacy ratio climbed marginally to 14.0% (from 13.9%), well above the National Bank of Ethiopia’s minimum requirement of 8.0% of risk-weighted assets. The non-performing loans ratio fell to 4.6% (from 7.4%).
Switching to digital
Dashen Bank was founded by 11 shareholders in 1995 and started commercial banking in 1996. It had 906 branches and 19,100 staff in June 2025 (up from 882 branches and 18,556 staff in 2024). In June 2024, it ranked as 3rd largest private commercial bank out of 30 by total assets, deposits, loans and advances, with some 11% market share and 14.6% of the private banks’ profits.
More recently it has been cutting back the number of cardholders (by cancelling uncollected cards), taking away outdated or inactive automated teller machines and deactivating Dashen Mobile Plus accounts from 5.6m in 2024 to 2.6m in 2025 by deactivating accounts that did not meet “know your customer” (KYC) requirements.
The bank is focusing on digital transformation and the Dashen SuperApp had 636,000 active subscribers and had transacted ETB 48bn by June 2025, its first year. Mobile Plus transactions also soared, to ETB 104.4bn.
The bank had increased its share capital from 6.9m shares at 30 June 2022, with the issue of 2.5m shares at ETB 1,067 each in the year to June 2023, 2.7m shares at ETB 1,059 each in the following year and another 2.3m shares issued at ETB 1,000 each through capitalizing part of the annual net profit through a mandatory dividend capitalization. The number of shareholders climbed from 2,368 in June 2024 to 4,930 by June 2024 and 4,937 by June 2025.
Is the price right?
The pricing is set by Board (p 204 of the prospectus), based on a valuation report by Deloitte. According to the prospectus, Deloitte used a combination of i) income approach using free cash flow projections and ii) a market approach by comparing price/book (P/B) or price/earnings ratios based on valuations of comparable banks in East Africa with adjustments for size, country risk, control and other factors. No detail is given and the valuation report is not included in the supporting documents.
Commentary: It is a pity that Dashen Bank does not offer more transparency such as details of the valuation for the rights offer price, which is nearly 3x the price of previous share issues. It could be argued that since all share offers are to existing shareholders, the pricing is less important. Historically the pricing of bank share offers and transactions in Ethiopia has been close to par value (usually ETB 1,000 per share), partly related to uncertainties about taxation, including capital gains tax.
Back-of-the envelope calculations on the ETB 2,900 share price suggest a price/earnings (market capitalization to net profit for the year to June 2025) of approximately 8x (8 times). Leading Kenyan banks are on P/E ratios of 3.5x to 6.4x and the African banking industry average is 7.2x.
Investor Relations specialist Rob Stangroom commented in a post on LinkedIn: “Here’s why I am concerned for the Ethiopian Stock Exchange. The Dashen (rights offer) is taking place in a market needing substantive credibility: the Ethiopian Telecom IPO share allotments were only confirmed 6.5 months after the IPO closed. Ethio (Telecom) shares have still not started trading. Surely market confidence is an issue?
“In the Dashen Bank IPO/rights offer
- There is no primary price discovery through irrevocable undertakings, a bookbuild or underwriting
- No disclosure of previous share price trades between shareholders
- No proactive disclosure of the valuation ratios by Deloitte.”
Photo: Dashen Bank CEO Asfaw Alemu launched the 30th anniversary celebrations recently, photo from Dashen Bank Facebook page.