The British University in Egypt signed a Strategic Investment Agreement with AfricInvest

Newsletter

05 Sep 2023

In one of Egypt’s largest foreign direct investments in education to date, the British University in Egypt signed a Strategic Investment Agreement with AfricInvest, a leading pan-African Private Equity firm, investing approximately US$40 million to fuel its expansion and transformation plan, subject to Regulatory Approvals. Zilla Capital acted as the sole financial adviser for BUE on this transaction.

IMF unlikely to conduct 1st loan program review for Egypt in September. The International Monetary Fund (IMF) is not expected to conduct the first review of the 3 billion USD bailout program for Egypt this September, as was previously planned. No specific date has been set for the review yet, but it will take place this year. This indicates a possible EGP devaluation before the end of this year. In April, Bloomberg reported that the IMF was waiting for Egypt to implement more of the “wide-ranging reforms” it vowed prior to conducting the first review of the loan. In December 2022, the executive board of the IMF approved a 46-month arrangement worth about 3 billion USD under the EFF to Egypt. (Asharq Business) In this regard, Standard Chartered expects 4th EGP devaluation.
Standard Chartered Bank is still expecting a fourth devaluation, possibly the last, of the Egyptian pound. The anticipated devaluation would not occur before securing a sufficient net foreign reserve. Egypt's net foreign reserves increased slightly in July to 34.88 billion USD from 34.81 billion USD in June. Meanwhile, the issuance of pound bonds by the International Finance Corporation (IFC) will expand the investor base, and may help alleviate some of the dollar shortage in Egypt. They also expect that the issuance will not exceed 250 to 500 million USD during the next six months. (Asharq Business)
We believe that the Egyptian government’s approval for the IFC to issue bonds in pounds in foreign markets, amid the weakness of the local currency, is not a new matter.
As the institution has issued more than one type of bonds in local currencies in the countries in which it operates, to prevent an imbalance. The institution usually offers bonds in Egyptian pounds, but it obtains dollars from investors, and places them with the CBE in exchange for obtaining the local currency, with a hedging agreement to obtain the dollar later at the forward rate to pay it to investors, with a risk-free return between 5% and 6%. (Asharq Business)
The Egyptian government hedged up to 35% of its estimated oil imports for the current fiscal year that ends in June 2024.
The contracts lock in crude purchases at around 75-80 USD per barrel, below the 85 USD per barrel price projected in the FY 2023-2024 budget. The government expects the country to import around 100 million barrels of crude this year. The oil market has been on a tear so far, this fiscal year. The price of Brent crude has climbed more than 20% since the end of June on the back of tightening global supply caused by OPEC+ production cuts and rising demand in Asia. Brent rose to its highest level since January last week, closing Friday’s session up 1.9% at 88.55 USD per barrel. (Asharq Business)
Italian energy giant Eni and its partners will invest USD 7.7 bn in their Egypt operations over the next four years.
The company was among the five multinationals Oil Minister Tarek El Molla recently said will spend 1.8 billion USD in fresh gas exploration. Eni, along with Chevron, ExxonMobil, BP and Shell, will drill 35 exploration wells over the next two years. Eni, along with its partners, is responsible for producing around 60% of Egypt’ natural gas and operates the country’s largest field, Zohr, alongside the Egyptian General Petroleum Corporation. It also owns 50% of the Damietta LNG plant, one of the country’s two liquefaction facilities that are key to the government’s long-term export ambitions. Earlier this year it said it had made a “significant” gas discovery in the Eastern Mediterranean in cooperation with Chevron.
The government wants to ramp up exploration efforts. Egypt is in need of fresh discoveries.
The Oil Ministry is planning to launch an international tender for 8-10 oil and gas concessions before the end of the year. And we’re still waiting on the results of a tender for 12 exploration blocks launched back in December. The country’s gas output fell to a three-year low in 2Q 2023 on the back of production declines in the Nile Delta and disruptions at Zohr, which has been reported to be facing water infiltration issues. Decreasing gas supplies have contributed to the ongoing electricity shortages, which have caused rolling blackouts across the country since late July. Gas is a key source of hard currency for Egypt, and one whose importance has only grown in light of the ongoing FX crisis. (Asharq Business)
Prime Minister Moustafa Madbouly has approved amendments to the executive regulations of the Anti Money Laundering Act
that empower the government’s AML and terrorism funding unit. The unit will be put in charge of implementing the law, including by deciding the legal requirements to be imposed on financial institutions and businesses, and handling interagency communications. (Al Mal)
Madbouly arrives in Nairobi to participate in Africa Climate Summit.
Prime Minister Mostafa Madbouly has arrived in the Kenyan capital of Nairobi to participate in the Africa Climate Summit meetings, on behalf of President Abdel Fattah El-Sisi. The summit, to take place on September 5th and 6th, will be held under the theme “Driving Green Growth and Climate Finance Solutions for Africa and the World.” The premier is scheduled to deliver three speeches during the first day of the summit, dealing with various aspects of climate action, in light of Egypt's presidency of COP27. (Arab Finance)
UAE’s Global Investment acquires 30% stake in Eastern Company.
UAE-based Global Investment Holding has signed a 625 million USD deal to acquire a 30% stake in Eastern Company. Moreover, Global Investment will also provide 150 million USD to Eastern Company to purchase tobacco materials needed for production. Under the deal, the Chemical Industries Holding Company (CIHC) will keep a 20.9% stake in Eastern Company. The deal implies a value for Eastern Company of 28.9 EGP per share, noting that it indicates a price-earnings ratio (PER) of 9.09 times for fiscal year (FY) 2022/2023 estimates. (Economy Plus)
Afreximbank to establish headquarters in New Administrative Capital.
African Export-Import Bank (Afreximbank) has penned a contract with the Administrative Capital for Urban Development (ACUD) to establish its headquarters in the New Administrative Capital, with initial investments of 32 million USD. The contract entails the bank purchasing a 50,000-square-meter plot of land, on which an integrated complex will be built to house the bank's largest headquarters in Africa. A trade center, a hotel, and conference and exhibition halls will also be included in the complex. It will also purchase six plots of land to serve as the bank's senior executive management headquarters. (Arab Finance)