The Ghana Stock Exchange (GSE) is gearing up for a potential wave of initial public offerings (IPOs) in 2025, a development that could provide much-needed investment opportunities for pension funds grappling with record levels of idle cash.
With domestic pension assets under management (AUM) projected to hit GH¢100 billion by the end of 2025, fund managers are under increasing pressure to diversify their portfolios beyond traditional government securities.
In recent years, the GSE has experienced a notable drought in IPOs, with the only market activity coming from listings by introduction. Unlike an IPO, which involves issuing new shares to the public, a listing by introduction allows a company already listed on one exchange to trade on another without raising additional capital. While this method helps companies expand their investor base, it does little to inject fresh equity into the market.
Abena Amoah, Managing Director of the GSE, recently hinted at the possibility of new IPOs in 2025 during an interview with the B&FT. “The money is there. We need more IPOs, more equity raises, and more companies using the fixed-income market to create opportunities for long-term investment,” she emphasized. Her comments come as pension funds face mounting challenges in reallocating capital away from government securities, which have traditionally dominated their portfolios.
The last significant IPO on the GSE was MTN Ghana’s 2018 offering, which raised US$238.5 million but fell short of its target. Since then, the exchange has not seen a single IPO, marking the longest dry spell since its establishment in 1991. This lack of activity has constrained pension funds’ ability to invest in equities, forcing them to remain heavily reliant on government bonds and other fixed-income instruments.
In response, the National Pensions Regulatory Authority (NPRA) has revised its guidelines to encourage greater diversification. Pension funds are now permitted to allocate up to 25% of their portfolios to alternative investments, including equities and private debt. However, fund managers have struggled to identify viable private sector opportunities, leaving much of this allocation untapped.
Amoah has urged Ghanaian businesses to take a more proactive approach to the capital markets. “We must bring more private sector companies to market,” she stressed, pointing to the 2022 listing of Asante Gold as an example of a well-governed, growth-oriented company that attracted institutional investors. Despite such successes, market participation has remained lackluster. Over the past decade, only four companies—Mega African Capital Limited, Agricultural Development Bank (ADB), MTN Ghana, and Asante Gold—have listed on the main bourse. The Ghana Alternative Market (GAX), designed for smaller enterprises, has fared even worse, with just six listings and minimal trading activity.
Efforts to list state-owned enterprises (SOEs) have also stalled. In September 2022, then-Public Enterprises Minister Joseph Cudjoe announced plans to list three SOEs—Ghana Reinsurance Company, Tema Development Corporation, and GIHOC Distilleries—but more than two years later, none have gone public. Analysts believe that listing viable SOEs could rejuvenate the exchange and provide pension funds with new investment options. Amoah confirmed that discussions are ongoing to bring these listings to fruition.
Pension funds remain cautious about direct investments in private companies, preferring the relative safety of fixed-income instruments. However, the recent Domestic Debt Exchange Programme (DDEP), which impacted GH¢31 billion in pension holdings, has highlighted the risks of over-reliance on government securities. “If companies can show that cheaper capital would turn their business around and they are committed to governance standards, then pension funds will invest,” Amoah stated.
To address these challenges, the GSE is collaborating with institutions such as the Association of Ghana Industries (AGI) and Stanford Seed to prepare more businesses for market participation. Financial advisors and investment banks are also expected to play a key role in structuring deals that meet the stringent requirements of institutional investors.
Looking ahead, Amoah expressed optimism about the potential for new listings in 2025. “We expect a few more companies to come to market this year, either to refinance expensive debt or fund new projects,” she said. If realized, these IPOs could mark a turning point for the GSE, offering pension funds the diversification opportunities they desperately need while injecting fresh energy into Ghana’s capital markets.
As the GSE works to attract new listings, the success of these efforts will depend on the ability of businesses to demonstrate strong governance, transparency, and growth potential. For now, all eyes remain on the exchange as it seeks to bridge the gap between idle pension funds and the private sector’s need for capital.
