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The government has offered a 10% stake in Telecom Egypt (TE) through the Egyptian Exchange (EGX), a source close to the transaction confirmed to Enterprise yesterday. The transaction is set to be executed in today’s trading session, according to local media reports.
Strong demand — and no discount: The government is said to have offered some 170.7 mn shares for EGP 23.11 a piece — the same price at which TE’s share price closed on Thursday. The sale was some 2.5x oversubscribed, according to local press reports. Bloomberg had reported last week that the shares would be sold at EGP 22.25 apiece — around a 4% discount to where shares were trading last week. If the reported figures are correct, the transaction will raise EGP 3.95 bn (c.USD 129 mn) for the government and value TE at around EGP 39.5 bn.
The sale sends a signal to investors — and the IMF: This is the first significant stake sale we’ve seen since the government announced its revamped privatization program in February (the sale of paintmaker Pachin earlier this month was for a more modest EGP 770.5 mn). 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 USD 3 bn assistance package with the IMF and securing USD bns more in foreign investment to plug our external financing gap.
But there’s a long way to go: The money raised from the TE and Pachin sales is a mere 8% of the USD 2 bn the government wants to raise via asset sales by the end of the fiscal year in seven weeks time.
Who bought in? Some 95% of the shares were earmarked for institutional investors, with the rest allocated for employee stock options, Asharq Business reported Thursday. Bids mostly came from local rather than foreign investors, it adds. The government is reducing its stake in the telecom giant to 70% from 80% through the sale, with the remainder in freefloat.
Advisors: Our friends at CI Capital are reportedly managing the transaction alongside Al Ahly Pharos, while NBE is also said to be involved as an advisor.
Up next: Military-owned bottled drinks firm Safi and fuel retailer Wataniya are set to start receiving offers from strategic investors this month, and the government is finalizing a number of other unspecified transactions, cabinet said last week.
