What can we expect from Concrete Fashion Group post demerger?

Introducing Concrete Fashion Group: Our friends at Arafa Holding are wrapping up a demerger that will see them rebrand as Concrete Fashion Group for Commercial and Industrial Investment and spin off subsidiary GTEX Holding. We spoke yesterday with newly-appointed deputy CEO Mohamed Talaat (LinkedIn, a veteran of Arafa Holding) to talk about what’s next for Concrete.

Remember- The demerger has been underway since Sunday, when the EGX halted trading on Arafa Holding. Shares of the two companies will start trading on the EGX starting Sunday, 24 March.

The rationale: The demerger and birth of Concrete Fashion Group aims to concentrate the group’s efforts on the fashion brand Concrete (a play on the size and rapid growth of the domestic market) and exports (reflecting Egypt’s new cost competitiveness as an international manufacturing hub after the float of the EGP),Talaat told Enterprise.

It’s all about delivering a clearer equity story and centering the group on proven success stories: “Arafa had multiple investments, and the multiple investments had different dynamics,” Talaat said, explaining that bringing them together under the umbrella of Concrete Fashion Group was the way to go.

The pandemic had a big role to play in the demerger decision: The changing dynamics of the global supply chain following the Covid-19 pandemic set the stage for the company’s expansion, Talaat said. Egypt is well-positioned to take advantage of changes in the supply chain dynamics, he added, explaining that Europe is now looking at Turkey and Egypt to develop its supply chain.

Concrete’s expansion is already underway: The group set up a branch in Dubai last year, which is poised to become the “spearhead” for expanding Concrete products offshore, Talaat explained.

The decisonmakers: Maria Luisa Cicognan (LinkedIn) will chair the group. She’s a European finance veteran with regional experience. Our friend Hani Berzi, founder and chief executive of Edita, has joined Concrete as an independent board member, and Hassan El Khatib, the former global head of equities at the European Bank for Reconstruction and Development, as a non-executive board director, according to a press release (pdf).

And to help accelerate the group’s global expansion: The group earlier this year appointed Matteo Zappalà (LinkedIn), who has spent over 20 years working with top Italian fashion groups, as chief operating officer to help accelerate the company’s international expansion, Talaat said.

Untapped export potential: “The export of readymade garments is a major source of foreign currency and job creation, which is something that we really need at the moment and will need for so long,” Talaat said. The local clothing industry is well-positioned for growth as more international brands look to relocate their supply chain, Talaat explained, adding that Concrete “has strong relations with the top fashion houses,” which translates to more brands coming to manufacture in Egypt.