EXCLUSIVE– The Finance Ministry is exploring a possible listing of its 20% stake in AlexBank on the EGX as early as this year after talks to sell the stake to majority shareholder Intesa Sanpaolo stalled, a senior government official tells EnterpriseAM.

Strategics are still welcome to bid: Intesa Sanpaolo, the high-profile Italian lender, already holds 80% of AlexBank and was the natural buyer for the government’s stake. Talks reportedly fell through last year, and the state is now pivoting to the public market — though our source emphasizes that the “door remains open” to a strategic investor should a better offer materialize.

The government thinks it could net USD 625-700 mn from the sale and would use the proceeds to narrow its financing gap and cut public debt, the source added. The asking price implies valuation of USD 3.1-3.5 bn for the lender — nearly double the USD 1.65 bn valuation implied when Intesa bought the IFC’s 9.8% stake in 2020 for USD 162 mn.

Open question #1: Did Intesa Sanpaolo really walk away? The Italian lender seems to be rightly calculating that no strategic is going to make an offer for 20% of AlexBank. That raises the question of whether this is a serious move on the state’s part — or a “let’s do a deal, guys” tactic designed to bring the Italians back to the table.

Open question #2: Can the market take two banks at once? On the one hand, investors are crying out for fresh paper in the EGX — and, if you’re an institutional investor, for transactions large enough that you can write a meaningful ticket. An offering of AlexBank — by any measure a very well-run institution — would tick both boxes. But if this is a serious move and not a pressure tactic, the state will wait for Hussein Abaza’s Banque du Caire to kickstart the IPO market when it goes public later this spring. A strong listing and a couple of months of solid performance in the aftermarket will provide lift for any other bank going to market.

Open question #3: At what price? We’re wary of committing maths without a license — particularly before 5am — but at the midpoint of the implied valuation here, this looks like an implied 11x P/E ratio for AlexBank. CIB, the EGX30 bellwether and proxy for the Egyptian economy, is going for what … a trailing P/E of something like 6x? That makes AlexBank look expensive right now.

Open question #4: What, if anything, does Intesa Sanpaolo’s shareholder agreement say about all of this? Does the Italian lender have right of first refusal? Consent rights, that would allow it to block a transaction?

In context

So, what does this all mean for the privatization program? Not a lot — not yet. BdC is still in the hopper — our source confirmed that, and we know that bankers have had BdC on the road to drum-up investor interest. Our source has also confirmed that (as we’ve been saying all along) the Gabal El Zeit wind farm is *not* going to IPO. It’s on the list of businesses the government will exit, but it’s never made sense for a utility like this would be listed — it’s a classic asset of interest to strategics and big infrastructure investors.

Also still on the sale list: Our source also confirmed that two of the five military-owned companies in the privatization pipeline are going to be IPOing in the first big wave of offerings and could make their debuts as early as this year. Smart money is still on bottled water maker Safi and filling station play Wataneya, though the latter could be bundled with a related asset, we’ve previously noted.

The dilemma: The state is just as interested in selling to a strategic as it is in IPOs. But with minority stakes of 10-40% on offer, strategics will be less interested: They want control.

Progress here is critical to keeping the IMF happy — and to signal to the business community that officials are serious about seeing the private sector lead economic growth. As we’ve previously reported, slow progress on the privatization program has long been a sticking point in relations with the IMF as we speed toward the wrap-up of our USD 8 bn assistance program this fall.

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