State ownership policy, v3: The government is aiming to draw USD 5 bn in investment through the privatization of state-owned companies and assets in the nine months between October 2023 and June 2024, according to an updated state ownership policy document leaked to the press yesterday. Under the revised plan, the government is aiming to sell two wind energy plants, two military-owned companies, the combined-cycle power plant in Beni Suef, and a number of desalination plants before the end of the current fiscal, which draws to a close on 30 June 2024.

^^ We have more details on all of these transactions in the news well, below.

Refresher: As part of its USD 3 bn assistance program with the IMF, Egypt earlier this year rebooted its long-stalled privatization program in a bid to attract FX inflows and shore up its external position. Prime Minister Moustafa Madbouly said in February that the government would look to sell down its ownership in 32 companies and assets by the end of 1Q 2024, and set itself the target of raising USD 2 bn in the fiscal year that ended in June 2023.

The privatization push is part of the country’s state ownership policy which outlines how the government intends to more than double the private sector’s role in the economy to 65% and attract USD 40 bn in private investment by 2026.

Here’s what’s changed:

#1- 32 becomes 35: The original list of 32 state-owned companies has been expanded to include Telecom Egypt (TE), Eastern Company, and Al Ezz Dekheila. The government earlier this year sold a 10% stake in the state-owned telco to investors, and is currently preparing to sell down its entire 31% stake in the Ezz Steel subsidiary as well as a 15% stake in Eastern.

#2- 1Q 2024 becomes 2Q 2024: The government has extended the deadline for delivering on its targets until the end of June 2024. Under the original strategy, Madbouly pledged to have sold stakes in each of the companies by the end of 1Q 2024.

THE STORY SO FAR-

In the bag: The government raised USD 3.1 bn last summer by selling sizable stakes in key EGX-listed industrial and financial companies to Gulf sovereign wealth funds including the UAE’s ADQ and Saudi Arabia’s Public Investment Fund. Among the sales were almost half of Mopco and Abu Qir, 17.5% of CIB, and a 25% stake in e-Finance. This year, it has sold seven historic hotels to a consortium led by Talaat Moustafa Group for USD 705 mn, offloaded its shares in Al Ezz Dekheila, completed the sale of a 10% stake in TE, and sold paint manufacturer Pachin.

Close to the finishing line: The government hopes to sign final contracts with ADQ before the end of September for the sale of shares in Egyptian Ethylene and Derivatives Company (Ethydco), Egyptian Linear Alkyl Benzene (Elab), and Egyptian Drilling Company (EDC). It announced in June that the Abu Dhabi-based wealth fund had agreed to purchase minority stakes in the companies for USD 800 mn.

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