Four foreign funds line up USD 256 mn for Banque du Caire

Banque du Caire (BdC) has lined up foreign buyers for more than half of its IPO, giving the state-owned lender an early vote of confidence from institutions it courted during its international roadshows. Four cornerstone investors have committed up to USD 256 mn to the offering, with UK hedge fund Helikon, London-based Redwheel, Africa-focused Sustainable Capital, and the UAE’s Waha Investments all backing the IPO, according to BdC’s preliminary offering circular (pdf).

Together, their commitments would cover roughly 60% of the entire base offering and some 63% of the institutional tranche if the shares price just below the EGP 5.06 midpoint of the EGP 4.82-5.30 range, by our math.

Who’s putting up what? Mauritius-based Sustainable Capital, which invests in African listed equities, has committed to buying 784.7 mn shares, about 18% of the institutional tranche. London’s RWC Asset Management, better known as Redwheel, is in for another 490.4 mn shares, or 11%, through its UK business and a US affiliate. The emerging and frontier markets investor also anchored MNT-Halan’s IPO earlier this month alongside CIB. Abu Dhabi-based Waha Investments has committed to 395 mn shares, or 9%. At the top of the price range, Sustainable Capital’s order is valued at EGP 4.16 bn, Redwheel’s at EGP 2.60 billion, and Waha Investments’ at EGP 2.09 billion, by our math.

Helikon’s USD 100 mn, the biggest single ticket, comes with strings attached. The London long-short equity investor committed a fixed USD amount rather than a set number of shares, so the higher the price, the fewer shares it buys. It’s also only bound to buy “up to a price close to the mid-point” of the range. At the EGP 5.06 midpoint, that comes to roughly 1.06 bn shares, or about a quarter of the institutional tranche, by our math.

If the price goes any higher, Helikon can walk away, leaving BdC to find other buyers for that quarter of the book. The committed anchor money would then drop to USD 166 mn from the other three investors, which the circular says covers 38% of the institutional tranche at the top of the range.

That matters because the top of the range is also BdC’s fair value. The FRA signed off on the range based on a Baker Tilly study that pegged the shares at EGP 5.30. So if Banque Misr holds out for full fair value, it loses the firm commitment on its biggest anchor ticket. Helikon could still bid in the regular book, but it wouldn’t be obligated to.

A bigger sale would stretch the anchors thinner. Banque Misr can take the offering up to 45% of the bank if demand is there, according to the prospectus, with the final call resting with Banque Misr and the Central Bank of Egypt. At that size, the four anchors would cover roughly 40% of the transaction just below the midpoint. If Helikon drops out above it, the other three would cover only about a quarter, by our math.

Missing from the list are the EBRD and the IFC, which were reported in August to be eyeing a combined 10% stake in the float. Neither appears in the circular or the EGX filing, though both could still come in through the regular institutional book.

The book filled in one day

BdC’s institutional tranche, which makes up 95% of the shares on offer, sold out within hours of opening yesterday, the first day of subscriptions. Orders came in from investors in the US, Europe, Africa, and the Gulf, on top of those from institutions that had already secured allocations during the roadshows, a government source tells EnterpriseAM. The four anchors can take just under two-thirds of the tranche at most, so other institutions had to come in for the book to fill, by our math. It’s not yet clear how many times the book was covered or how much demand the retail tranche has drawn.

About the offering

Banque Misr is selling 4.575 bn shares, a 30% stake, at EGP 4.82-5.30 apiece in a fully secondary offering, so all the proceeds go to the parent. The range values the whole bank at EGP 73.5-80.8 bn (c. USD 1.37-1.51 bn at the circular’s EGP 53.46 rate), or 1.1-1.2x its book value as of June, by our math. Retail investors get just 5% of the shares (228.75 mn). They’re backed by a stabilization fund that will keep a buy order at the offer price for the first 30 days of trading, according to the circular.

At its base size of EGP 22.05-24.25 bn (c. USD 413-454 mn), BdC’s offering is already bigger than e-Finance’s c. USD 370 mn IPO in 2021. That makes it the EGX’s largest IPO in USD terms in at least five years, and roughly triple the size of MNT-Halan’s offering this month. Upsized to 45%, it would grow to EGP 33.1-36.4 bn (c. USD 619-680 mn), a big sum by EGX standards but still short of the USD 892 mn raised in Telecom Egypt’s 2005 IPO. EFG Hermes CEO Karim Awad has called the listing “a true test of large foreign investors coming back into the stock market.”

The timing matters for the state, too. BdC is the government’s first IPO since United Bank in late 2024. It also comes as the government pushes to wrap up its IMF program before it expires on 15 December, with close to USD 1 bn still to raise toward its USD 1.5 bn divestment target.

WHAT’S NEXT- Institutional bookbuilding runs through Friday, 23 October, and the final price is due on Monday, 26 October, with allocations on or about the same day. The retail book stays open until Wednesday, 28 October, and any upsize to 45% has to be announced at least three days before it closes. BdC will disclose how many shares each anchor gets alongside the offering results, it said in a separate statement (pdf). Trading is expected to start on or about 2 November under the ticker BQDC.

ADVISORS- CI Capital is lead global coordinator and joint bookrunner on the offering. Our friends at EFG Hermes are joint global coordinator and joint bookrunner, as they were on MNT-Halan’s IPO alongside Citi. Baker McKenzie is advising BdC and its parent on US and English law, while Helmy, Hamza, & Partners, a Baker McKenzie member firm, is counsel on matters of Egyptian law. Enterprise Advisory is investor relations advisor.