The head of Egypt’s Sovereign Fund stated that the current conditions are not conducive to listing companies on the stock exchange

Newsletter

07 Jun 2022

The head of Egypt’s Sovereign Fund, Ayman Suleiman, stated that the current conditions are not conducive to listing companies on the stock exchange. In light of the trend of central banks globally to confront the increasing inflation, by raising interest rates, investment and offering shares for subscription in the stock market are not in the best conditions at the present time. He added, that this fact gives time to offer private shares to investors. The Central Bank of Egypt has raised interest rates by 300 basis points since the beginning of the year in an attempt to absorb inflationary pressures in the markets. The Egyptian pound has fallen by about 15% since the interest was raised for the first time this year last March. (Bloomberg Asharq)

In addition, Soliman highlighted that the investments of the sovereign funds of Saudi Arabia, Abu Dhabi, Kuwait and Qatar already exist in the Egyptian tourism sector.
He revealed that the Saudi fund in particular is interested in identifying opportunities to invest in the new entity for Egyptian hotels that is currently being restructured and established. He stressed that the project to establish a green hydrogen plant, in cooperation between Egypt's Sovereign Fund, the Norwegian "Scatec" company, and the Egyptian "Orascom Construction", is proceeding according to its scheduled schedule, and production will start in November 2022. (Bloomberg Asharq)
Moreover, Soliman added that the state is in the process of choosing an investment bank and financial advisor to manage and advise on the sale, with an eye to tap at least the financial advisor in a matter of weeks.
Gulf sovereign funds are getting more involved in the Egyptian economy: Abu Dhabi wealth fund ADQ invested 1.8 billion USD in five EGX-listed companies in April, while the Qatar Investment Authority said it would invest 5 billion USD. The state is also planning to offer a 20-25% stake in Egypt Aluminum (EgyptAlum) to a strategic investor, potentially also an Arab sovereign fund. (Hapi Journal)
Here, it’s worthy to mention that the Egyptian Prime Minister Mostafa Madbouly had announced in mid-May that the government was working on merging 7 government hotels under the umbrella of one company in preparation for its listing on the stock exchange, and was initially looking to sell a 25% stake in the firm through an IPO on the EGX.
As well as merging the largest 7 ports under one entity in preparation for its listing on the stock market as well. These hotels, according to government data, include: the Cairo Marriott Hotel, the Aswan Cataract, the Mena House, the Steinberger hotels in Cairo and Damietta, and the Winter Palace Hotel. Egypt seeks to enhance the participation of the private sector to accelerate the pace of economic growth by offering government companies on the stock exchange and through direct participation with major investors. (Bloomberg Asharq)
Soliman disclosed that the SFE will look to bring private investors into a new green fund next year. The fund, which will manage climate-friendly projects, will be launched with minimum initial capital of 2 billion EGP.
The main assets in the fund will be the SFE’s share in green hydrogen projects that are expected to be finalized at COP27. Global companies have inked more than 10 billion USD worth of preliminary agreements for green ammonia and hydrogen projects in Ain Sokhna in the past three months alone.
The SFE had been working on launching a sub-fund that would hold assets related to national projects in wind, solar, and hydro.
The Madbouly government had been reportedly planning to transfer ownership of the assets of both the New and Renewable Energy Authority (NREA) and the Hydro Power Plant Executive Authority (HPPEA) over to this new sub-fund, which will manage investments in climate-friendly projects. Also, the SFE is conducting feasibility studies with unnamed US firms to build carbon neutral data centers for international cloud computing service providers, and plans to launch the project ahead of the COP27 summit in November, Soliman said. (Hapi Journal)
In the same line, The Egyptian Ministry of Electricity is considering reinforcing cooperating and investment opportunities with Alcazar Energy.
The two parties mulled over collaboration in the fields of electricity, new and renewable energy, and green hydrogen. Egypt targets boosting the contribution of renewable energy to the state’s electricity mix to 42% by 2035, Minister of Electricity Mohamed Shaker said in his meeting with the Co-founder and CEO of Alcazar Energy Daniel Calderon. The ministry has an ambitious plan for raising the contribution of renewable energy to reach approximately 10,000 megawatts (MW) in 2023, Shaker added. For his part, Calderon expressed his interest in straitening cooperation with the Egyptian government within various fields, particularly solar energy and wind farms, as well as clean energy resources such as green hydrogen, along with water desalination using renewable energy. (Arab Finance)
The Central Bank of Egypt (CBE) has decided to add the internet capacity upgrading finance to the tourism initiative for the renovation of hotels, floating hotels, and transport fleets with a declining interest rate of 8%.
The decision comes in line with the various key tourism events being organized by Egypt, topped by the 27th United Nations Climate Change Conference (COP-27), the CBE said. It is worth noting that the hotels renovation initiative was originally launched in 2017, with a total allocation of EGP 5 billion at an interest rate of 10%. (Arab Fiinance)
The Egyptian Minister of Finance Mohamed Maait has called on taxpayers to submit their tax returns, regardless of the tax due dates or the type of tax, no later than June 30^th.
This step will pave the way for taxpayers to benefit from facilities applicable by a draft law waiving fees for overdue taxes. The proposed facilities highlight the state’s keenness on active responsiveness to the demands of taxpayers as well as alleviation of financial and tax burdens, Maait said. The minister added that new facilities in the draft law do not violate Clause 3 of Article 110 of the Income Tax Law no. 91 of 2005, which offers taxpayers a 30% exemption of penalty fees for overdue taxes. (Al Mal)
Egypt private sector activity extends contraction in May as inflation weighs. Non-oil private sector activity in Egypt contracted for an 18th month in May as the Ukraine crisis, import restrictions and a devalued currency put pressure on prices, a survey showed on Sunday.
The S&P Global Egypt Purchasing Managers' Index strengthened to 47.0 from April's 46.9, but still remained below the 50.0 threshold that separates growth from contraction. New orders declined at the quickest pace in almost two years and input-cost inflation accelerated to a six-month high, according to a survey of purchasing managers by S&P Global. Egypt’s requirement of letters of credit for imported goods led to customs delays, causing waiting times for inputs to lengthen for the seventh month, the survey found. Meanwhile, a ban on some foreign products in April, due to certification issues, “left several businesses searching for alternatives and having to reduce activity in the short run,” it said.
And for our EGX and Companies talks, "Value" for consumer finance enters Saudi Arabia in partnership with "Al Hokair. The Egyptian company signed a partnership agreement with FAS Labs, a subsidiary of Fawaz Abdul Aziz Al Hokair, to establish FAS Finance to provide consumer finance services in the Saudi market.
Vas Labs will own 65% of the shares in the new company, while Value will own the remaining 35%. Consumer financing is every financing activity that aims to pay in installments the price of a good or service over a period of time. It includes installments for the purchase of cars, household and electrical appliances, medical and educational services, and travel and tourism services. Walid Hassouna, CEO of the non-bank finance sector at Hermes, revealed in an interview with "Al-Sharq" last March that "Value" intends to enter Saudi Arabia before the end of the first half of this year, and to acquire two new companies in April at a value of 20 million USD. (Bloomberg Asharq)
The investment banking division of EFG Hermes Holding (HRHO) has concluded advisory on the 323 million USD private placement of Ali Alghanim and Sons Automotive Company on Boursa Kuwait, ahead of the company’s initial public offering (IPO).
The anticipated IPO is set to mark EFG Hermes’ first in Boursa Kuwait to act as a joint bookrunner. Ali Alghanim and Sons Automotive has already offered 45% of its share capital, representing 124.8 million shares, at a price of 793 Kuwaiti Fils per share, indicating a market capitalization of 717 million USD. The private placement has been oversubscribed 11 times, with a total demand from investors of over 3 billion USD. Trading on the company’s stock will begin on June 7th. (Arab Finance)
The board of directors of Raya Contact Center (RACC) has approved the establishment of a 100%-owned limited liability company based in Dubai under the name of Raya Gulf Customers Experience.
The new company might have any other similar name that could be approved by the authorities in the UAE. Raya Contact Center is an Egypt-based company, operating within outsourcing services as well as contact center, back office, inside sales, and professional services. (EGX)