Egypt’s leading private education company could delist from the EGX and become the regional education platform of Saudi Arabia’s sovereign wealth fund. The transaction is the first investment by the Saudi Egyptian Investment Company (SEIC) since the float of the EGP. SEIC is a unit of the Public Investment Fund.

What’s the transaction? SEIC, a wholly-owned PIF subsidiary, will buy into Social Impact Capital (SIC), the vehicle through which the founding El Kalla family holds a controlling take in EGX-listed CIRA Education, the nation’s leading private-sector education company. SIC will use the cash injection to launch a mandatory tender offer to buy CIRA shares at a price of EGP 14 each, the two companies said in a joint statement (pdf).

CIRA shares closed up 9.8% yesterday at EGP 14.00, giving the company a market cap of a bit under EGP 8.2 bn, by our math.

SIC will look to take 75-100% of CIRA and to delist it from the EGX. CIRA is 51.2% owned by SIC with the remaining shares in freefloat, according to the company’s website. The Kallas will remain invested in CIRA, we’re told, and our friend Mohamed El-Kalla is staying on as CEO to lead the company’s regional growth.

We’ve seen this movie before: PIF has a proven track record of turning national players into regional champions, with the global growth of born-in-Egypt driller Ades Holding being a case in point. Since acquiring Ades and taking it private, PIF has helped Ades land contracts in Saudi Arabia and new markets, refine its strategy, and go public again on KSA’s Tadawul.

Faster when private? A source close to the transaction tells us that given the “restructuring, licensing, and re-gearing needed to pursue a regional growth strategy it just makes sense.” CIRA has itself delisted from EGX before and re-listed after growing.

It’s also a test of how investment-friendly we want to be. The transactions will require a range of regulatory approvals, providing investors with a highly visibly test case of officials’ willingness to fast-track things after the float of the EGP, which cleared the foreign currency overhang that had prevented a number of high-profile strategic and financial investors from pulling the trigger investments here.

The PIF has already deployed substantial capital in Egypt: The fund — which ranked as the world’s highest-spending sovereign wealth fund in 2023 — invested over USD 1.3 bn via SEIC to acquire stakes in state-held EGX-listed companies in 2022. Its holdings here include a 25% stake in Mopco, a 19.82% stake in Abu Qir Fertilizers, a 27% stake in E-finance, and a 20% stake in Alexandria Container and Cargo Handling.

The SIC-CIRA transaction was nearly two-years in the making, a source with first-hand knowledge of events tells us, but it took the float of the EGP this spring and CIRA’s clear ambition to become a regional player in education to bring it home. PIF is known to be exceptionally rigorous in its investment decision making process, employing top advisors to make certain that it invests only in companies with clear growth prospects that fit the fund’s mandate to grow Saudi and regional champions.

The fine print: “The conditional agreement between SIC and SEIC is subject to due diligence, applicable regulatory approvals, and the execution of definitive agreements” before the two sides move ahead with the mandatory tender offer for CIRA shares, they said.

ADVISORS- Rothschild & Co is advising PIF, with Allen & Overy and our friends at Matouk Bassiouny doing legal duties. Our friends at EFG Hermes are advising El Kalla family, while White & Case is legal counsel, we’re told.

Tags: