Gov’t wants to lift EgyptAlum’s valuation before deciding on stake sale or SFE transfer

The government is working to lift EgyptAlum's valuation by 3x to 4x before deciding whether to sell a stake or move it to the sovereign fund, a senior government official tells EnterpriseAM. The decision is on hold until the state-owned aluminum giant advances new projects and approvals that officials believe will justify a higher valuation. The EGX-listed company currently carries a market cap of around EGP 118 bn (USD 2.4 bn).

Two routes are on the table: The first would see the government reassess the company's fair value and widen its freefloat through a strategic investor or a public offering. The official says the state has already received serious acquisition interest, including one offer from a Gulf company and two from European companies. The second route would transfer EgyptAlum to the Sovereign Fund of Egypt (SFE), giving the government more time to sit on the asset's appreciation before deciding its next move.

REMEMBER- EgyptAlum has already been on the state’s radar for a partial sale, with international players eyeing astake through a capital increase earlier this year. The company was also among the state-owned names the government had been looking to transfer to the SFE as part of a wider plan to extract more value from public assets.

Funding appetite is helping the case. EgyptAlum has received financing offers from the National Bank of Egypt and Emirates NBD to cover part of its future investments, the official adds. The company is targeting EGP 3.5 bn in capex this FY, with officials looking to use the project pipeline to support an increase in issued capital.

The main capacity lever is Trafigura. EgyptAlum is working to activate its agreement with the commodities trader and sign foreign financing agreements before year-end for an integrated industrial complex at the company’s existing Naga Hammadi site, the official notes. The project would add capacity equivalent to EgyptAlum’s current output of around 300k tons a year, taking total production capacity to around 600k tons. Trafigura took a minority stake in the Naga Hammadi smelter expansion earlier this year.

Smaller projects are also feeding the valuation case. EgyptAlum’s pharma packaging plant in Naga Hammadi is expected to start production in September at 300 tons a month, with half of the output earmarked for the local market and the rest for export orders in Saudi Arabia, Italy, and other European markets, the official says. The plant was part of EgyptAlum’s EGP 6 bn project slate for the last FY.

IN CONTEXT- International lenders were already competing to finance EgyptAlum’s USD 3 bn alumina refinery with Aluminium Bahrain (Alba), with EgyptAlum expected to fund around half the cost and land secured in Safaga. The company is also negotiating a new 600k-ton greenfield project in East Al Tafreeh with Gulf and foreign investors, which — together with the Trafigura expansion and the Alba refinery — could lift Egypt’s total aluminum capacity to around 1.2 mn tons a year, according to EgyptAlum Managing Director Mahmoud Agour, who talked to us in May.