EGX looks to revise or eliminate post-IPO lock-up period: The EGX and the Financial Regulatory Authority (FRA) are mulling a regulatory update to either scrap or revise the duration of the lock-up period on the ownership of substantial shareholders post-IPO, especially for government-owned companies, EGX boss Ahmed El Sheikh told Al Borsa.

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The rationale: This proposed change aims to facilitate government exits, particularly as the government plans to offer up stakes in ten state-owned companies via direct sales to strategic investors and/or through EGX listing as part of a broader privatization initiative. El Sheikh explained that the adjustments would encourage state-owned firms to initially list smaller stakes, establishing a market-driven price benchmark before further divestment.

The current regulation: Under the current rules, substantial shareholders must lock 51% of their shares in newly-listed government-owned companies for a minimum of two years from the first day of trading, during which they can’t offload any of their holding. It’s noteworthy that the lock-up period in Saudi Arabia and the UAE for all newly listed companies is typically 6 months and can go up to 12 months.

REMEMBER- The most recent IPO of a government-owned company was that of United Bank. Late last year, where the CBE initiated the sale of a 30% stake in the lender, marking the country’s second IPO of the year.

ALSO FROM THE EGX-

Index tracking funds: The bourse is currently reviewing requests from asset managers to launch index tracking funds, including those for the EGX33 Sharia, EGX30 Capped, and the S&P/EGX ESG indices, he added.

Gold investment funds: The bourse is also working on a new mechanism for trading gold investment funds through its systems, El Sheikh said. This development aims to simplify the subscription and redemption process for gold fund certificates, which have gained significant popularity among investors, especially in 2024. The move is expected to increase liquidity in the gold funds market and provide a regulated alternative to traditional gold investments like coins and bars. The number of investors in gold funds increased to 166k investors, with investments totaling EGP 1.6 bn by the end of December 2024. There are currently three gold investment funds in Egypt.

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