SFE’s Soliman on the state privatization program, investor appetite, and market conditions: Sovereign Fund of Egypt (SFE) CEO Ayman Soliman talked about the fund’s approach to investments, the sectors it’s eyeing, how the fund fits into the government’s privatization plans, and how the depreciation of the EGP impacts potential investors in a wide-ranging interview with Al Arabiya.

Offerings to start after Ramadan:The SFE will wait until the end of Ramadan to start taking companies in its pre-IPO fund to market, Soliman told the news outlet. The eight companies included in the fund are being promoted to potential investors ahead of sales after the holy month, which ends in the final week of April.

Refresher:Launched last year, the pre-IPO fundaims to prepare state-owned enterprises for listing on the EGX by offering an alternative to public share sales while market conditions remain volatile. The state wants to raise as much as USD 6 bn through strategic stake sales via the fund. We expect the SFE to pursue a mix of direct share sales (to strategic and financial investors) as well as IPOs (subject to all the usual caveats about market depth, investor interest, and overall market conditions).

Elab up first? Egyptian Linear Alkyl Benzene (Elab) will be the first company to go to market via the pre-IPO fund, Soliman was quoted as saying by local media last week. The SFE has not disclosed which other firms have been added to the fund, though Banque du Caire, Misr Life Ins., and Misr Ins. Holding have all been rumored to be included. The two military-owned firms up for sale — Wataniya and Safi — are not part of the fund, Soliman said last week, refuting previous media reports.

Is Salhia Investment in?The SFE has added Salhia Investment and Development Company to the fund, Al Borsa reported yesterday, citing unnamed government sources. Salhia was one of four state-owned real estate companies to be mentioned among the 32 names included in the state’s revamped privatization program.

Easy exit route + FX availability are top priorities for investors eyeing the market: Potential investors considering making investments in Egypt are typically most concerned with “how easy it is for them to exit the market and cash out returns on their investments whenever they want to,” Al Arabiya quotes Soliman as saying. Addressing these concerns is linked to reeling in FX resources by pushing through with the state privatization program, delivering on the government’s commitments made to the IMF as part of our USD 3 bn facility, and achieving currency stability, Soliman said.

There’s a dichotomy in how GCC investors are approaching investments in Egypt: “The positive side: There’s currently a great number of investment managers and banks in Egypt through which Gulf investors are more willing to enter the market,” according to Soliman. “The negative side: Some of these investors are only willing to invest through a local partner they trust, which in many cases has resulted in poor outcomes owing to gaps in their knowledge of the market,” he added.

The SFE’s role is not limited to managing state-owned assets that have been transferred to it by the government and marketing them to regional and international investors, Soliman told the news outlet. Its role includes creating new value at the assets through a range of tools including sustainable partnerships, onboarding strategic investors, and pushing ahead public share offerings, among others, he added.

Where the SFE sees promise:Soliman namechecked export-oriented businesses and those that have proven resilient against the currency devaluations, including logistics, ports, fertilizers and petrochemicals.

Are we going to see the long-awaited green fund this year? The SFE is set to pull the trigger on the launch of its planned green fund this year, allowing investors to invest in green hydrogen and water desalination projects, among other assets, according to Soliman. The Madbouly government’s multi-bn USD water desalination program is expected to produce some 8.8 mn cubic meters per day of potable water once it is fully implemented within the next 10 years, and will rely on renewable energy sources, he added.

Green investments are attractive right now: “This type of investment is attractive and important to Arab and international investors, especially since the cost of producing renewable energy in Egypt is low compared to other markets,” Solsiman explained.

We have massive potential to become a green hydrogen powerhouse: Egypt’s capacity for producing green hydrogen — whether for water desalination projects or to decarbonize industries — stands at north of 700 GW. Egypt currently produces more than 50 GW of energy, with consumption standing at a little over 30 GW, he added. Arab investors are interested in green hydrogen investments in Egypt and maintaining the momentum from COP27, when Egypt signed framework agreements worth USD 85 bn with international firms, he said.

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