Egypt prepares to offer a 40% stake in Banque du Caire as early as April

The Madbouly government isn’t backing away from plans to sell a stake in Banque du Caire, a senior government official told EnterpriseAM at the end of last week, even as the US-Israeli war on Iran accelerates.

Officials are talking amongst themselves about a valuation for the bank that feels comfortable and are eager to see investment bankers line up cornerstone investors, we’re told.

There are two big questions to watch on Banque du Caire: The first is the size of the transaction — one variable that remains firmly in the hands of policymakers here in Cairo. We previously reported that up to 30% could be on offer, but the math speaks in favor of a larger offering. The official we spoke with suggested a 30-40% stake could be up for grabs — the upper end of that range would be an improvement, but we’d prefer to see 49%. That’s the maximum that selling shareholder Banque Misr is allowed to part with under listing regulations.

Why larger? Investor appetite for Banque du Caire was strong in an early-look roadshow that saw CEO Hussein Abaza and CI Capital investment bankers sit with potential cornerstone investors from across the world. The roadshow stopped late last year for investors in London, New York, the UAE, and South Africa.

Heavy appetite from potential international investors speaks to an order book that could fill up quickly. At 30%, that would have bankers scrambling to fit in non-anchor international investors as well as local institutions — and they’ll still want overhead left for retail investors who provide the daily trading liquidity that allow institutions to get into and out of positions.

Officials would like to see BdC go to market in the April-June window, the official said, confirming our reporting of late last year.

SOUND SMART #1- Anchor investors are funds that could have the appetite and AUM base to write a meaningful ticket for an IPO that, in this case, could be worth up to USD 500 mn. Anchor investors are typically assured they’ll get whatever size stake they ask for, but would customarily have to agree to a lockup period.

Uhm, Enterprise? You said *two* things to watch? Yep. The other is market conditions. With investors in a risk-off posture amid the war in the Gulf, the first thing that usually gets shelved is an IPO. That officials are trying to stay the course is a good thing — it’s still early days — but don’t read this as a policy failure if they put the sale on ice. If it slips, bankers could still try to catch the fall IPO window if investor sentiment improves.

Banque du Caire isn’t the only state-owned bank that could be on the auction block. A piece of Arab African International Bank — Hassan Abdalla’s alma mater — may be up for grabs, and we’ve previously reported that officials want to part with the 20% of Alexbank that’s not owned by Italy’s Intesa Sanpaolo.

With drones and interceptors flying in the Gulf, last week was a surprisingly busy week for the privatization program. In addition to pushing for progress on the BdC sale, officials told us they plan to temporarily list 13 state-owned companies and that the Sovereign Fund of Egypt is seeking an investment bank to quarterback the upcoming IPO of Misr Life.

SOUND SMART #2- With BdC, the building blocks of a strong IPO are in place. CEO Hussein Abaza — a perennial favorite among emerging markets investors and a multi-time Extel honoree — has sharpened the bank’s competitive edge, which includes unique brand equity and a strong balance sheet. The sale of a significant stake in BdC would be Egypt’s first compelling listing in years and the clearest signal yet to the IMF that the state is taking seriously demands that it step back from direct competition with the private sector.

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