A look at SFE’s opening move for its state company takeover plan: The first phase of the Sovereign Fund of Egypt’s (SFE) plan to take over all public enterprises will target some 370 profitable firms, over half of the total 709 companies owned by the state, a senior government source told EnterpriseAM. While the fund is currently looking into the companies’ ownership structures as it prepares to tap the top performers for the first phase, it may hold off on the selection process until the end of the fiscal year on 30 June, our source said. This is to ensure the firms’ continued profitability and account for the full impact of the EGP float on their finances, the source explained.

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ICYMI- Investment Minister Hassan El Khatib last week unveiled a plan by the government to transfer the administration of all state-owned companies to the SFE as part of a strategy to maximize their returns. The SFE, whose role will focus on attracting private players and potentially going public with the companies, has formed a committee to take stock of state-owned companies.

What companies are making the cut? The first phase will focus on firms that were profitable in the FY 2024-25 and have simple ownership structures — avoiding the many companies whose ownership is tangled between government agencies and banks and those whose assets are tied up in complex arrangements.

Manufacturers top the agenda: The SFE will start by taking over industrial players, with a particular focus on primary manufacturers that support other industries, as their production capabilities can be leveraged to attract investments needed in the strategy’s early stages, our source explained. The Public Enterprises Ministry owns nearly 30% of the industrial sector’s state-run companies.

Real estate companies will take second priority, our source said, adding that government companies possess vast tracts of unused land that could potentially be used in major real estate projects.

Further down the line: The 138 state companies operating at a loss will be targeted in a later stage that might involve repurposing their assets or changing their line of business, the source said, adding that studies needed for this process will take time.

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