Egyptian government raises billions of EGP by selling 10% stake in Telecom Egypt

Newsletter

15 May 2023

Egyptian government raises billions of EGP by selling 10% stake in Telecom Egypt. CI Capital (CICH) has recently announced the successful completion of a secondary offering of Telecom Egypt (ETEL) shares worth 3.75 billion EGP. The offering, which represents 9.5% of ETEL’s issued capital, involved a total of 162,171,802 shares. According to the statement released by CI Capital, the offering price was set at 23.11 EGP per share, which is equivalent to the closing price of ETEL shares on May 11th. This implies a market value of 39.5 billion EGP for Telecom Egypt, one of the largest telecommunications providers in the country. (Asharq Business)

It is worth mentioning that this is the first significant stake sale we’ve seen since the government announced its revamped privatization program in February.
The TE transaction should help build confidence among investors amid concerns that we haven’t been making enough headway on the program, which is key to progressing the 3 billion USD assistance package with the IMF and securing USD billions more in foreign investment to plug our external financing gap. Now, the money raised from the TE and Pachin sales is a mere 8% of the 2 billion USD the government wants to raise via asset sales by the end of the fiscal year. (Asharq Business)
In addition, Agthia, Emirati food company; one of the leading companies in the field of food and beverage production, is competing with local investors to buy Safi.
A number of local and Gulf bids are competing to buy the company, including the Emirati food company, which has expressed interest in buying the company since it is also engaged in water bottling busines. Agthia, owned by the “ADQ” fund, one of the sovereign funds of the Emirate of Abu Dhabi, has been active in several local deals during the recent period and acquired the Ismailia Poultry Company, and also acquired 60% of the “Auf” group, one of the largest companies specialized in the manufacture and sale of coffee products and meals. (Economy Plus)
Gold prices start showing on EGX’s screens.
Gold price charts have been shown on the Egyptian Exchange’s (EGX) screens starting yesterday, May 14th. The move cames in line with the Financial Regulatory Authority’s (FRA) approval for Evolve Azimut to launch the first gold investment fund in Egypt announced on May 1st. Chairman of the EGX Rami El-Dokany previously revealed that the EGX plans to take part in selling the fund’s documents. (Arab Finance)
On the other hand, local gold prices have dipped following the decision last week to allow people to bring gold into the country without paying customs.
The price of 21-carat gold has fallen around 8% since Wednesday to 2,350 EGP per gram. It is noteworthy that the decision doesn’t have any regulations yet but the government has learnt from previous experiences such as the car import scheme not to overcomplicate the rules. (Hapi Journal)
US warns of economic strain on Egypt due to war in Sudan.
The US Department of Agriculture (USDA) has warned that the economic crisis in Sudan may lead to more price hikes in Egypt. The ongoing conflict in Sudan is expected to disrupt trade and impact exports, resulting in increased inflation. The report released by the USDA on Wednesday stated that the supply shortage caused by the Sudanese conflict has led to soaring food prices in Egypt, particularly in domestic beef prices. This warning highlights the potential economic impact of the conflict in Sudan on neighboring countries like Egypt. (Enterprise)
Moving to Egypt’s monetary policy, April’s cooler inflation reading, the central bank of Egypt will have the chance to keep rates on hold at its next meeting on Thursday, 18 May.
The CBE has raised interest rates by 1000 bps over the past year after delivering a jumbo 200-bps rate hike in March. CBE Governor Hassan Abdalla last month expressed doubts on the effectiveness of monetary policy to curb inflation, and said that policymakers need to be “very careful” about tightening policy further. (Zilla Capital)
Egyptian Refining company's dues surpass 618 million USD to the government.
The Egyptian Refining Company, a subsidiary of EGPC, owes the government over 618 million USD, with Qalaa Holdings, owning 13%, suffering losses of 2.3 billion EGP in 2022, largely due to currency depreciation. Egyptian Refinery contributes to 20% of Egypt's gasoline and diesel production with a production capacity of 4.7 million tons per year. (Asharq Business)
And finally, for our investment talks, Ashok Leyland, a subsidiary of Indian conglomerate Hinduja Group, could partner with state-owned firm El Nasr Automotive to form a joint venture for locally-made electric vehicles.
The government has been searching for a replacement partner since talks with Chinese firm Dongfeng fell through in 2021. Also, Maridive & Oil Services’ board of directors approved last week Saudi conglomerate Al Gihaz Holding’s bid to acquire two non-operational marine units and a dormant Saudi unit owned by its subsidiary, Valentine Maritime, for a total of 115.6 million USD to settle the group’s bank debt and trade liabilities. (Enterprise)