Sherif El Zayat stepped down as CEO of EK Holding on Thursday, 1 February 2024, to start a new chapter that will see him focusing on the growth of two family-owned packaging businesses and other ventures that could see him deploy tens of mns of USD in Egypt in the years to come. His passion: Manufacturing for export.

El Zayat will stay on at EKH until the end of March, helping settle in new managing director Jon Rokk (LinkedIn), who formally took the reins on Thursday. Rokk has more than 30 years of experience in a list of industries that overlaps nicely with the business that El Zayat helped take to the next level, including oil, gas, petrochemicals, and infrastructure.

Who’s Jon Rokk? He was most recently chief operating officer of South Tees Development in the United Kingdom, where he oversaw “Europe's largest regeneration project in the energy transition and renewable energy sectors, with investments exceeding GBP 2 bn,” EK Holding will say in a statement (pdf) later this morning. Rokk has a decade of regional experience, particularly in Qatar, the UAE and Oman, and has worked on acquisitions in the UK, China and the Mideast.

El Zayat grew EK Holding’s bottom line nearly 7x since 2015 to USD 241 mn at the end of 2022 (and USD 137 mn in 9M 2023). That’s no mean feat when you consider that (a) most of the company’s lines of business generate revenue in EGP, (b) many of those businesses (gas distribution and electricity come immediately to mind) are highly regulated or have USD-linked expenses, and (c) we’ve had more than one devaluation in that period.

Longtime Enterprise readers know El Zayat as a serial entrepreneur. He and his brother Ahmed led the acquisition and turnaround of Al Ahram Beverages, which they transformed from a failing, state-owned enterprise into an industry pioneer that they later sold to Heineken in a landmark transaction. El Zayat stayed on for a period post-acquisition before leaving to build Misr Glass Manufacturing, which he exited to Middle East Glass in 2016.

We spoke on Thursday at his home in Maadi. Edited excerpts from our conversation:

ENTERPRISE: Why are you stepping down now?

SHERIF EL ZAYAT: It was simply time for someone else to take on the challenge. I told Loay [Al Kharafi, EK Holding’s chairman and largest shareholder] maybe nine or ten months ago that I felt it would soon be time to start focusing on my personal businesses. That started a search process that saw us choose Jon as the next CEO. We’ve been doing handover meetings, visiting our various investments, in the last while. I’m leaving EK Holding in good hands.

E: You had a good run with EK.

SEZ: Yes, alhamdulillah [smiles]. Look at our share price. Last year, we paid our highest dividends ever — USD 150 mn in dividends, or 11 cents per share. CIB paid out USD 50 mn and they’re what … five times … ten times larger than us?

We’ve built EK Holding into a much larger, much more resilient business, one that can perform in any economic cycle. From power generation and distribution to gas distribution, fertilizers, building materials, upstream, and district chilling, the business aligns with Egypt’s macro drivers and will thrive. EK today is robust and very well-positioned to continue growing in the years to come.

E: What are the personal businesses you want to focus on as you step away from EK?

SEZ:There are two: GoodSeal Packaging, which makes aseptic bags and bag-in-box solutions for the food industry, and United Glass Containers Co (UGC), which is best known for making ampules and vials for the pharma industry. GoodSeal is the newer of the two — we started about three years ago and today we export 70-80% of our production to Europe, including Scotland and Germany.

I love the food packaging market: The industry as a whole is worth USD 350 bn globally right now and that’s going to be USD 550 bn in the next seven years.

Our focus is all on import substitution in Egypt and on exports, exports, exports. What makes us unique is that we develop low-emission products. We’re taking market share away from high-plastic products, and the fun is working with multinationals to create and produce packaging with CO2 emissions that are 70-80% lower than mainstream options.

One of the great things about the business is that I own 70% of it and the rest of the shareholders are family and friends. It’s time to really focus on how to grow these two businesses heavily, to take them to the next level. There’s the potential to grow the two businesses by multiples — multiples. They’re smaller than EK, of course, but the growth potential is incredible.

E: Do you have any plans to invest outside of Egypt?

SEZ:No, I’m committed to investing a lot more in my country. I believe so much in Egypt as a hub for exports — in harnessing Egyptian knowledge and expertise and competitive advantages. We’re not living up to our potential as an export powerhouse. Europe imports USD 3 tn in products — and from Egypt? Peanuts.

We have a huge advantage against China, against India — even against European companies themselves. The Chinese pay a lot of customs duties. They have huge freight costs. Europeans? High labor and high raw materials costs. Egypt has zero customs access to Europe, our freight costs and time to market are much lower, we have cheaper raw materials and cheaper labor.

When you have good quality control systems and you train your people, nobody can compete with Egypt. The problem is in companies taking the time to learn the markets and hone the unique value proposition they’re offering their offshore clients.

And it’s not just Europe — I’m really excited about Africa, too, for the same reasons and more. It’s zero customs because of Comesa, for example, but when you sell to Africa, you’re eligible for export subsidies from the Egyptian government. Maybe they’re slow in paying the subsidies, but they come.

E: How are GoodSeal and Untied dealing with the FX challenge right now?

SEZ:It obviously helps that while we do sell in the domestic market, we’re very focused on exports. For us, the big thing has become simply to “think” in USD. Six months ago, I told the management team that even though our financials are in EGP, even though we’re an entirely Egyptian business, we’re going to track our P&L in USD. That’s how we measure growth, success, profitability — in USD terms.

E: You mentioned earlier that you’re mulling over some new investments…

SEZ:And I’m not going to tell you about that now. When the time comes. Look, I love my country and I’m going to build companies here — projects that will demand tens of mns of USD. I’m excited — about food packaging, for sure, and about pharma packaging, where I see massive room to grow. And there are other things.

But the joy of running a private company after being CEO of a publicly traded corporation? It will be really nice not to have everyone know everything about the business, about the strategy. You have less ability to maneuver a public business outside the spotlight. You’re judged quarter by quarter by quarter. The market doesn’t appreciate a decision that sees the margins come down because you’re making the right call to invest in something you absolutely know will pay off in much higher growth in the years to come.

E: We’ve known each other for a lot of years—

SEZ:Yes. [Smiles]

E: —and this is as happy as I’ve seen you in a long time.

SEZ:I loved my time with EKH. We took it places — and it has lots of room to grow. But in looking at the potential of my personal businesses? I don’t remember the last time I was this excited about building a business. The only thing that would make it better would be having my sons join me as they finish their university education.

If there’s one thing more fun than being an entrepreneur, it’s building the next generation of entrepreneurs. And if your kids want to join you? If there’s a chance they could share your passion? What more can you ask for in life? All I want is to have fun and see my children be happy.

Tags: