INVESTMENT WATCH- EFG, GEMS to partner up on new K-12 education platform in Egypt; could invest USD 300 mn over the next five years: EFG Hermes announced yesterday (pdf) that it’s partnering up with GEMS Education to invest in the K-12 education industry in Egypt. The project, a 50/50 joint venture, will see EFG Hermes “establish an investment vehicle managed by its private equity division” to help fund the project alongside GEMS, offering investors “unique access to Egypt — MENA’s largest education market with over 20 mn enrolled students,” said EFG Hermes Head of Asset Management and Private Equity Karim Moussa. The JV could invest as much as USD 300 mn in Egyptian education opportunities over the next five years, Moussa told the National, a UAE daily.

What is GEMS? Dubai-based GEMS says it has 51 schools in three countries; its revenues stood at USD 926 mn for the 12 months ending August 2017 (its last full fiscal year), up 17% on the previous year, according to a regulatory filing (pdf).

Sizing the market: About 10% of Egypt’s c. 20 mn students are enrolled in private schools, Moussa told the National, and some 600k new students each year enroll in the education system, whether at public, private or international schools.

Gov’t to launch phase two of the 200 PPP schools program: The EFG-GEMS partnership comes as the Education Ministry plans to issue tenders for phase two of the government’s program to develop 200 schools under a public-private partnership framework, head of the ministry’s PPP unit Amany El Far tells Al Mal. The second phase is set to include the development of the Nile international schools, she adds. Nile international schools are a series of government owned institutions that aim to offer international school education at affordable prices. Seven companies have already been tapped to take part in phase one of the program, including El Gazeera, the Middle East Education Services Group, and CIRA (the last of which has said it hopes to list on the EGX sometime in 4Q2018.)

M&A WATCH- MNHD, SODIC advisers meet for talks on potential merger: Advisers on the potential merger of leading real estate players SODIC and MNHD met last Thursday to discuss how to combine the two businesses, according to a regulatory filing (pdf) from SODIC. SODIC had appointed CI Capital and White & Case as its advisors, while MNHD tapped EFG Hermes and Zaki Hashem & Partners to advise it on the potential transaction. Talks between both companies began last month to explore the potential upside from their combined assets, resources, and experience.

M&A WATCH- NBE, Banque Misr to buy 4% of Arab Contractors subsidiary for EGP 2.5 bn: Arab Contractors will sell 4% of its share in Mostakbal Urban Developments to the state-owned National Bank of Egypt (NBE) and Banque Misr in a EGP 2.5 bn transaction, Arab Contractors Chairman Mohsen Salah said yesterday. The contracts for the agreement, which will see each bank receive a 2% share, should be signed and sealed before the end of May, he said, adding that the transaction gives Arab Contractors the right to buy back the shares within two years. Arab Contractors will use proceeds from the sale to expand its existing investments, bolster its working capital, and pay back bank loans.

Edita is planning to export to Saudi Arabia and the UAE this year, Investor Relations Director Menna Shams El Din tells Al Mal. The company will also begin exporting packaged snacks to Morocco after Ramadan, she adds. Edita is building a new factory in Morocco under a partnership with Dislog Group, which should begin operating by 3Q2019. The company hopes to finance the USD 10 mn facility through a loan, said Shams El Din. The company plans to spend EGP 180 mn in its Egypt operations this year, she added.

Kuwait Energy looks to spin-off Egyptian assets: Kuwait Energy has hired investment bank Perella Weinberg Partners to advise on possibly divesting its stakes in Egypt and Iraq, sources close to the matter tell Reuters. Plans include spinning off Egypt assets that include interests in four oil and gas fields, including the Abu Sennan concession. Kuwait Energy had reduced its stake in that field to 25% last year. In Iraq, the company is looking to sell part or all of its Block 9 field. The move comes as the company is looking for liquidity to pay back shareholders and creditors. Talks for a possible merger with the UK’s SOCO International earlier this year had reportedly had fallen apart. The firm, which lost its CEO and saw a credit downgrade last year, owes USD 290 mn due next year, and should start repayments of a convertible loan of around USD 150 mn this year to an entity controlled by private equity group Abraaj.

Emaar Misr’s dispute with El Nasr over Uptown Cairo land isn’t over: State-owned El Nasr Housing and Reconstruction reportedly plans to proceed with the arbitration suit it filed last July against Emaar Misr, which alleges that the latter owes it EGP 1 bn and 3 mn sqm of land in Mokattam. This comes despite reports over the last month that a resolution was in the offing. Sources told us last month that Emaar had presented an EGP 100 mn settlement offer. This was followed by statements attributed by Al Masry Al Youm to an El Nasr board member that the had company approved the settlement offer. El Nasr accuses Emaar of failing to develop land it acquired back in 2005. The Public Enterprises Ministry had acknowledged that Emaar was not to blame for the delays. Nonetheless, El Nasr apparently also wants to sue state officials, accusing them of siding with Emaar. Look for El Nasr to next sue the arbitrators if that doesn’t go its way…

EXCLUSIVE- Egypt and Sudan will sign contracts to connect their electricity grid in two weeks’ time. The next milestone on our march toward becoming a regional energy hub will see Egypt and Sudan sign in two weeks’ time contracts to connect their electricity grids, Electricity Holding Company head Gaber El Desouky tells Enterprise. The holding company has no plans to seek external financing for the USD 60-70 mn project, El Desouky added. The project looks to be on the fast track: Desouky said to expect development work to begin within three months of a tender. As many as eight local and global players have been invited to participate in the prospective tender, among them ABB, General Electric, Elsewedy, Schneider, Siemens, and State Grid Corporation of China. Earlier reports in the domestic press had suggested the Sudan interconnection project would cost as much as USD 500 mn and that the state was seeking international financing to push it along.

El Desouky also confirmed that contracts to connect Egypt’s grid to Saudi Arabia’s will be signed at the end of June. These agreements, which come as part of the state’s drive to position Egypt as a regional energy hub, come with a view to ultimately allowing the increasingly deregulated industry to buy and sell power regionally. Talks with Cyprus and Greece on a USD 4 bn interconnection project will kick start within the coming month when a Cypriot delegation visits.

Don’t celebrate quite yet: as is the case whenever we start cozying up to our southern neighbor Sudan, we face a hurdle: They don’t like our TV. Khartoum has summoned Egypt’s ambassador to deliver an official complaint over a TV show involving Egyptian terrorists living in the country, according to a Sudanese Foreign Ministry statement. The Ramadan series Abu Omar El Masry is “insulting to Egyptians living in Sudan and destroys the confidence and relations between the people of the two countries,” the ministry said, urging Egypt to “stop attempts at disturbing the interests of the two countries.” ON E channel, which airs the show, denied the charges in a statement picked up by Al Shorouk. The Supreme Media Council also rejected the notion that it was offensive to Sudan.

The Egypt-Sudan-mosalsal story tops coverage of Egypt in the international press this morning; wire reports from the AFP and the Associated Press are getting particularly wide play.

Gov’t pushing through stalled large-scale power projects including the Hamrawein power plant? The government began yesterday studying offers from three consortia for the 6 GW Hamrawein “clean coal” power plant, according to a Cabinet statement. A Shanghai Electric-Dong Fang-Hassan Allam consortium reportedly priced the development at USD 4.4 bn, making it the lowest offer received. GE is offering to build it for USD 5.2 bn, and the Orascom Construction-Elsewedy Electric-Mistubishi Hitachi offered USD 6.19 bn. GE and the Orascom Construction consortium each brought down the cost of their offers from USD 5.8 bn and USD 7 bn, respectively, after the Electricity Ministry had reportedly requested that the bidders re-price. The winning consortium will be announced next week, says Electricity Minister Mohamed Shaker.

Meanwhile, Siemens wants you to know that negotiations with the Electricity Ministry over the establishment of 2 GW-worth of wind farms in the Gulf of Suez have not stopped, according to statements by its Egypt CEO Emad Ghaly picked up by Al Shorouk. He denied any rumors to the contrary. The company has already received 10 land plots in the area for the projects, but talks over the the feed-in tariff (FiT) have been on-and-off since last year, with Siemens refusing to lower its tariff and insisting it should be raised instead. We had reported in January that negotiations were stalled due to disagreements over FiT.

Another step toward the Automotive Directive? Trade Minister Tarek Kabil issued yesterday a decree forming a committee in charge of implementing higher local content requirements for domestic assemblers and manufacturers. The committee will draft the executive regulations to the ministry’s directive from last month that requires 46% of the components of domestically-assembled cars to be sourced locally. It will also oversee the creation of a comprehensive database of automotive manufacturers and component producers in Egypt. Assemblers have welcomed the changes to local contact rules as a “significant step” toward the Automotive Directive, which would offer assemblers incentives to move up the value chain into manufacturing. Members of the committee include representatives from the Industrial Development Authority, the auto components and engineering industries divisions of the Federation of Egyptian Industries, and the Trade and Industry Ministry.

BUDGET WATCH- Spendthrift MPs want an additional EGP 90 bn in spending for the next budget: Parliamentary committees have recommended a total of EGP 90 bn in new spending under the FY2018-19 budget, Rep. Samir El Batikhytells Al Shorouk. Health and education get the lion’s share of the new earmarks, with parliament’s education committee looking to see spending on education increased by EGP 60 bn. The health committee is recommending an additional EGP 20 bn, while the rest is being requested for the ministries of agriculture, irrigation and manpower. As we noted yesterday, the House Budget and Planning Committee has recommended that spending on health, education, railways, and the State Information Service be increased in the FY2018-19 budget by EGP 58.2 bn. Look for much haggling between MPs and the Ismail cabinet in the days to come. Next year’s budget sees total government spending increase to EGP 1.4 tn, up from EGP 1.2 tn this year.

LEGISLATION WATCH- House Legislative Committee nixes mediation clauses from Economic Courts Act: The House of Representatives’ Constitutional and Legislative Committee removed clauses related to the mediation of disputes from the Economic Courts Act, Rep. Khaled Hanafy tells Al Mal. Members of the committee, who should begin reviewing the act once they’ve completed discussions over the FY2018-19 budget, agreed that mediating and settling disputes should not be within economic courts’ jurisdiction and require separate legislation. The act would allow economic courts to handle consumer protection-related cases and look to expedite the dispute resolution process. It would also grant economic courts jurisdiction over criminal violations of the Capital Markets Act. The Council of State had raised objections to what it saw as a lack of input from ministries and government agencies impacted by the law, including the CBE, Financial Regulatory Authority, and Finance Ministry.

***

SMART PEOPLE WANTED. We’re hiring at both Enterprise and at our parent company, Inktank. We’re looking for critical thinkers who have outstanding English-language writing skills. Don’t apply if you are not (at an absolute minimum) unafraid of numbers. We offer a great, casual work environment, the opportunity to work with smart people who care about what they do, and plenty of intellectual challenge. You’ll do your best work here, whatever your profession is. Check out the open positions, from creative director to reporter, from Enterprise editor to senior investor relations advisor at Inktank.

***