The completion of overdue audit reports has enabled Ethiopian Shipping and Logistics (ESL), one of the most profitable public companies, to pursue a significant capital increase to 150 billion birr.

According to information obtained by Capital from ESL, the company plans to submit a long-awaited application for this capital boost to its board of directors, chaired by Finance Minister Ahmed Shide.

This request for a capital increase comes after substantial growth in ESL’s assets, with its paid-up capital surpassing 20 billion birr approximately three and a half years ago.

ESL’s CEO, Berisso Amallo, emphasized that the company aims to enhance its capacity by expanding its vessel ownership and other assets, while aligning with international standards through rigorous auditing.

During a press conference held a week ago, Berisso highlighted that completing the audit reports for the past five years—a task that had previously posed challenges for the corporate division—was one of the key achievements of the first half of the 2024/25 budget year.

“We have finalized the four-year audit report, starting with the fiscal year 2019/20. We are now completing the audit report for the previous fiscal year in compliance with international standards,” he stated.

Berisso underscored that these audit accomplishments will enable ESL to maintain its global reputation and diversify into other industries.

He informed Capital that the logistics giant intends to significantly increase its capital from the current 20 billion birr.

The plan to raise capital is not new. Around three years ago, ESL, the continent’s sole deep-sea vessel operator, settled its largest debt with Chinese creditors for the construction of nine vessels. At that time, the company began efforts to increase its capital and diversify its assets, including expanding its fleet of owned vessels and containers.

However, Berisso noted that certain issues need to be resolved before presenting the capital increase proposal to the board.

One primary objective was completing the audit report, achieved with the support of Ethiopian Investment Holdings (EIH), a sovereign wealth fund established in late 2021 to oversee large and strategic public enterprises, including ESL.

Berisso explained that the completion of the audit report positions the logistics firm to meet its capital augmentation goal soon.

According to ESL sources, a few minor issues remain to be addressed to finalize the capital increase for this fiscal year.

Although the CEO did not confirm the exact figure, sources suggest that the capital increase request could be as high as 150 billion birr—a six-and-a-half-fold rise. Earlier in the budget year, Berisso indicated that the increase would reach 100 billion birr.

However, analysts argue that the company should revise its plan in light of its recent strong performance, particularly in terms of profit and hard currency earnings from overseas operations.

Experts recommend that ESL further enhance its capacity to prepare for impending competition from foreign firms. The logistics giant is targeting significant growth in the coming year, with plans to boost cross-trade activities and expand its fleet, particularly with larger vessels.

Currently, ESL operates ten ships, including one ultramax vessel. In addition to the board of directors, which now includes three private sector representatives, EIH’s input is also anticipated for the capital increment approval. EIH played a key role in assisting ESL with automating its financial reporting through enterprise resource planning (ERP) systems.

In the first half of the current budget year, ESL reported total revenue of 46.8 billion birr, exceeding its target of 44 billion birr by 106%. The company’s gross profit for this six-month period was 50% higher than expected, while its pre-tax profit reached 9.3 billion birr, significantly above the projected 6.2 billion birr.

Berisso attributed this success to the growth in cross-trade earnings and macroeconomic reforms that introduced a market-based exchange system. He noted that addressing issues in the Red Sea region could further enhance cross-trade operations. Notably, ESL achieved USD 271 million in cross-trade activities using foreign currency, marking a significant milestone for the company.