EBRD, IFC sign on to Banque du Caire’s upsized IPO

Banque du Caire’s (BdC) IPO has grown by almost half and is set to price at the top of its range, with two of the world’s biggest development lenders signing on to buy in. Banque Misr will now sell 6.86 bn BdC shares, or 45% of the bank, up from the 30% it started with, after the Financial Regulatory Authority (FRA) approved the upsizing on Thursday, BdC said in a statement (pdf). The shares will sell at EGP 5.30, the top of the EGP 4.82-5.30 range, a senior government official tells EnterpriseAM, ahead of the official announcement due tomorrow. That makes the sale worth EGP 36.4 bn (c. USD 680 mn), up from the EGP 22.05-24.25 bn the original 30% was set to raise, by our math.

The extra 2.29 bn shares are split the same way as the original offering, 95:5 between institutions and retail. That grows the private placement by 2.17 bn shares to 6.52 bn, or 42.75% of BdC, and the public offering by 114.4 mn shares to 343.1 mn, or 2.25%. Banque Misr will keep 55% of the bank, which the offer price values at EGP 80.8 bn (c. USD 1.5 bn), by our math. All USD figures are at the EGP 53.46/USD rate used in the offering circular.

The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) have each agreed with BdC and Banque Misr to take up to 15.74% of the enlarged private placement, according to the statement and a supplementary disclosure (pdf) published on the EGX alongside the regulator’s letter. That puts each of them in for as many as 1.03 bn shares, worth up to EGP 5.4 bn (c. USD 102 mn) at the offer price, by our math. Combined, that comes to c. 30% of the offering, triple the combined 10% the two were reportedly eyeing in August, and some 13.5% of the bank.

The final allocations depend on the bookbuilding, and the agreements carry no voting arrangements with Banque Misr. Neither lender was among the four cornerstones named in the offering circular: Helikon, Redwheel, Sustainable Capital, and Waha Investments. Together, the six could take nearly three-quarters of the private placement, by our math.

Banque Misr changed the allocations in response to demand on both books, the official says. The private placement sold out within hours of opening last Monday and was covered some 6x by the time it closed on Friday, rising to 19x excluding the institutions that had committed in advance, sources told Asharq Bloomberg. At the offer price, 6x the enlarged tranche would mean orders worth c. EGP 207 bn (c. USD 3.9 bn), by our math. The official also tells us the offering drew investors buying into Egypt for the first time, and credits the pre-IPO roadshows and a valuation updated just before the books opened.

Retail is oversubscribed, too, with the public offering drawing orders for 454 mn shares as of Thursday’s close, the official says. That’s nearly double the 228.75 mn shares originally on offer and 1.3x the enlarged retail tranche, by our math.

REMEMBER- The prospectus allowed the sale to grow to 45% depending on demand, and a government official told us earlier this month that the banks running the offering had recommended going bigger after the roadshows drew interest from investors around the world.

ICYMI- BdC is set to be the EGX’s largest IPO in USD terms in at least five years, and the state’s first since United Bank in late 2024. The offering is fully secondary, so all the proceeds go to Banque Misr. It 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.

Room to run, even at the top

BdC is coming to market below what two brokerages think it’s worth, even at the top of the range. Arab African International Securities’ research unit puts fair value at EGP 7.8 a share, some 47% above the EGP 5.30 offer price, and rates the stock a buy, according to a note reported by Al Borsa. Ostoul puts fair value at EGP 6.55, about 24% above the top of the range, in an initiation note (pdf) on Thursday. Its bull case is EGP 7.44, while its bear case of EGP 5.05 is about 5% below what investors are paying.

How much upside there is depends on BdC’s second half. The bank booked consolidated net income of EGP 8.9 bn in 1H 2026, up 21.8% y-o-y, while its standalone net income rose 15% to EGP 8.6 bn, according to its results release (pdf). That followed EGP 16.1 bn for all of 2025. Ostoul’s full-year forecast of some EGP 20 bn implies about EGP 11.1 bn in the second half, 25% more than the first, by our math. Arab African’s forecast of EGP 18.08 bn needs only slightly more than BdC made in the first half. Arab African sees net income climbing to EGP 39.2 bn by 2031 as the loan book grows from EGP 313.8 bn this year to EGP 1.095 tn.

Both brokerages expect margins to shrink from here. Ostoul forecasts BdC’s net interest margin will peak at 8.05% this year and slide to 6.28% by 2030 as interest rates come down, taking the return on average equity from 30.65% to 26.69%. It reads that as returns settling at more sustainable levels, and sees no fundamental weakness in the business model. It also flags credit risk as the bank pushes further into SME and microfinance lending. Arab African’s list of risks includes a faster-than-expected margin squeeze, weaker asset quality as lending grows, concentrated credit exposures, missed efficiency targets, and extra share supply once post-IPO lock-ups end.

That last risk looks limited for now. Banque Misr can’t sell more shares for a year after the offering closes without the bookrunners’ consent, and EGX rules lock up 51% of BdC for at least two years after trading starts, according to the offering circular (pdf). Once the first year is up, Banque Misr will be free to sell only c. 4% of the bank. The cornerstones have also agreed to lock-ups, though the circular doesn’t say for how long.

At the offer price, BdC is valued roughly in line with listed peers on earnings and at a discount on book. Arab African’s multiples of 3.9x 2027 earnings and 0.9x forward book at the midpoint work out to c. 4.1x and 0.9x at EGP 5.30, by our math, against averages of 4.2x and 1.1x for listed Egyptian banks. Ostoul, which ran its numbers at the top of the range, has BdC at 4.6x trailing earnings, a slight premium to the 4.2x average across the 10 listed banks it uses as peers, and at 1.2x book, a discount to their 1.3x. BdC trails those peers on returns and efficiency, with a 29.4% return on equity against a 35.2% average and a cost-to-income ratio of 34.6% against 24.6%, according to the note.

Shareholders will get a slice of earnings. BdC is targeting a payout of 20-30% to shareholders while keeping its capital adequacy ratio at 18-22%, according to the circular. It paid Banque Misr EGP 10 bn in dividends last year after paying none in 2023 or 2024. Employees also get a cut under the bank’s articles of association: 19% of 2025 net income, or EGP 3.1 bn, a share BdC projects at 14-16% for 2026-2028.

WHAT’S NEXT- BdC is due to confirm the final price tomorrow, in line with the timetable in the offering circular (pdf). The offering’s advisors and Banque Misr will now screen orders in the private placement and decide each investor’s allocation, the government official says. BdC has said it will disclose how many shares each anchor gets alongside the results. Under the circular, the retail book stays open until Wednesday, 28 October, and institutional investors are expected to receive their shares on or about 2 November, the day trading is expected to start under the ticker BQDC. For 30 days after trading starts, retail buyers can sell their shares back at the offer price if the stock trades below it, under a stabilization mechanism run by CI Capital and funded by the retail tranche’s proceeds, the circular adds.

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. 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.