The Egyptian money market is awaiting the government’s IPO program after the cabinet announced the 32 companies to be offered either through a public offering or to a strategic investor.
Prime Minister Mostafa Madbouly said in a statement on Saturday that the government aims to raise $2 billion from the state bid program before the end of June.
He pointed out that a unit will be formed to manage the Government Proposal Program to speed up the pace, provided that an Advisor to the Prime Minister is appointed to manage the Government Proposal Programme, with an agreement with an international advisor, which supports the government program.
Madbouly explained that the sovereign wealth fund is negotiating with investment agencies to implement the bid program, while CBE prepares the banks to be bid.
He pointed out that in addition to Wataniya and Safi, the fund is preparing more than 10 companies linked to the armed forces to include them in the offering program.
Yasser El-Masry, chief executive of Arab African International Securities (AAIS), said the market is ready to start implementing the government’s offering program. He pointed out that offers for a strategic investor would not benefit from the Egyptian stock exchange and only public offers are in the interest of the capital market.
He stressed that the move to set up a public offerings unit is a good one, but there needs to be a senior official, not an adviser, who called for the return of the investment ministry and the involvement of the financial sector in it.
The list of companies to be offered includes three banks, four state-owned real estate companies and a number of hotels owned by the Ministry of Public Enterprises sector.
The companies offered are active in 18 different industries and activities, including the insurance sector, the electricity and energy sector and the petroleum sector, as well as companies in the fields of transport and container handling.
DNE learned that former public sector company Hisham Tawfik is among the nominees for the position of adviser to the Prime Minister on the bids.
The sources told Daily News Egypt that the companies set to go public in the next two months are Egyptian Linear Alkyl Benzene Production Company (ELAB), Chemical Industries Company Pachin, Misr Aluminum, Port Said Container and Cargo Handling Company and Damietta Container are handling, alongside United Bank.
The sources said most of these companies will be owned by a strategic investor with a goal of providing dollar liquidity, in addition to working to select eight other companies from the National Service Projects Authority for inclusion in the offering program , which increases the number of program companies from 32 to 40.
Mohamed Maher, chairman of the Egyptian Securities Association (ECMA), said the PM’s announcement was very positive, stressing that the government’s supply program needs attractive pricing at the moment given the risks of currency devaluation.
He explained in a statement to Daily News Egypt that the proof of the government’s seriousness will attract investors of different categories, led by locals and foreigners, especially in the face of a large liquidity in the market looking for investment alternatives, which is reflected in the volume of demand after bullion recently.
He added that Egypt needs an investment climate similar to that of the 1990s, with a state-owned company offered weekly, strong domestic and foreign demand and strong promotion of investment opportunities in Egyptian stocks.
For his part, Mohamed Farouk, chairman of Global Invest, said that the most important thing is the actual start of implementation in order to convince investors of the seriousness of the offering program.
He added that a clear and announced timeline needs to be established. It should contain the timing of each offer of the program companies, especially that the discussion about the offer program 2016 has started until now.
Noting that the part related to the Egyptian pound’s exchange rate against the dollar needs to be clarified for strategic investors, he stressed that the exit scenario is the first idea that a foreign investor would have before entering the market , which is why it is crucial to provide dollar liquidity.
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