Another Gulf wealth fund is looking at Egyptian real estate: Saudi Arabia’s Public Investment Fund (PIF) is interested in acquiring the Arab African International Bank’s (AAIB) 13% stake in Palm Hills Developments (PHD), Al Borsa reports, citing sources it says are in the know. Talks between began about a month ago and are expected to wrap by the end of the year, the sources said, adding that the transaction will be executed in USD.

PHD denies knowledge: The company said (pdf) yesterday it had not received any notification regarding a potential exit of one of its major shareholders.

This isn’t the first time we’ve heard about Saudi interest in Palm Hills: Reports circulated that unnamed Saudi investors were trying to buy out AAIB’s entire stake in the property developer In March. Prior to this, Emirati investment company Al Ain Holding was reported to be interested.

Who owns what of Palm Hills ? Mansour-Maghraby Investment and Development Company (MMID) is the single-largest shareholder with 41.9%, followed by the AAIB with a 13% stake. Palm Hills chairman and group CEO Yassin Mansour has a 7.3% stake in the company and the rest of the company distributed between other minority shareholders and freefloat shares on the EGX.

Why would AAIB exit? The bank hasn’t publicly confirmed it wants to sell its stake in PHD, but a sale makes sense when you consider its presence on the state’s list of 35 companies earmarked for privatization. The bank, one of three on the sale list, is owned by the Central Bank of Egypt and the Kuwaiti sovereign wealth fund.

Market reax: Palm Hills Development Company shares closed 3.2% lower yesterday at EGP 2.09 per share.

Tags: