State to sell down ownership in Ezz Dekheila steel? Ezz Steel is in negotiations to acquire 14% of its EGX-listed subsidiary Ezz Dekheila Steel from two state institutions, a government source confirmed to Enterprise after the news was first reported in Asharq Business.

The sellers: The National Investment Bank (NIB) and National Bank of Egypt (NBE) could both sell their stakes in the company to Ezz Steel. The NIB owns 8.1% of Ezz Dekheila Steel while the NBE owns 5.7%.

A nine-figure transaction: The acquisition would be worth some EGP 2.5 bn based on Ezz Dekheila’s opening price yesterday morning before news of the transaction broke. The stake sale could be completed before the end of the month, Asharq’s sources said.

The market likes the transaction: Shares in Ezz Dekheila closed 3.6% up at EGP 955.25 at the end of trading on Sunday. Shares in Ezz Steel closed 4.1% up at EGP 41.70.

Ezz Steel would control more than three-quarters of the company: The steelmaker currently owns 64% of Ezz Dekheila Steel, with the remainder in freefloat.

The state would retain significant minority ownership:Other state institutions, including pension funds, Banque Misr, Misr Ins. and the Egyptian General Petroleum Corporation, hold about 17.2% of the company, according to the company’s most recent financials (pdf).

THE BIG QUESTION- Does this foreshadow other stake sales by NIB? The bank is looking to offload a substantial number of the minority stakes it owns in other state-owned companies, our source says. The fresh capital raised could be used to restructure the companies, they added.

REMEMBER- Prime Minister Moustafa Madbouly’s government wants to sell assets worth USD2 bnby June as part of its plans to privatize at least 32 state-owned companies over the next year. Ezz Dekheila Steel was not included in the initial list of companies.

Tags: