IPO WATCH- Ibnsina has listed its shares on the Egyptian Exchange (EGX) ahead of itsplanned initial public offering of c. 37.5% of its total share capital via a primary offering of newly issued shares and a secondary offering of existing shares held by current shareholders, the company said in a statement last night (pdf). In parallel, Pharos Holding has submitted its fair value report on Ibnsina to the Financial Regulatory Authority (FRA, formerly EFSA) for review and approval. “We have also concluded our pre-marketing roadshow and have recorded strong interest from investors in London, Frankfurt, the United Arab Emirates, Saudi Arabia, South Africa, and the United States, and look forward to our [transaction] roadshow during the second half of November,” said Ibnsina Executive Chairman Mohsen Mahgoub. Ibnsina is targeting a December close to the transaction, subject to market conditions and regulatory approvals.

Background: Ibnsina is Egypt’s fastest-growing and second-largest pharma distributor serving over 35k clients with products from over 325 local and multinational pharma companies. Proceeds from the transaction will be used to grow Ibnsina’s core distribution business and support its expansion into new, higher-margin revenue streams. The company has a market share of c.19% and expects to close 2017 with revenues in excess of EGP 9.5 bn. Ibnsina has seen revenues grow at a CAGR of 30% over the past five years compared to an industry CAGR of c.17%. Ibnsina’s intention to float is here.

Advisors: Beltone Investment Banking is acting as sole global coordinator and bookrunner for the transaction, while Matouk Bassiouny is acting as counsel to the issuer. Pharos Holding is independent financial advisor, and Inktank Communications is investor relations advisor.

Remember the days when the local market could barely support one offering at a time? Ibnsina is in the market right now, EFG Hermes is in the final days of its Dice transaction, and we rate as “serious” at least five of the dozen or so companies that have said they’re preparing to IPO. We’re liking 2017 very much, thank you, and are increasingly optimistic about the outlook for 2018. Now if only interest rates would come down…

EARNINGS WATCH- Our friends at CIB reported record third quarter results overnight, with net income up 23% year-on-year in 3Q2017 to EGP 2.1 bn, the bank said in its earnings release (pdf). Revenues advanced 45% compared to the same period last year to close the quarter at EGP 4.2 bn. On a nine-months basis, that gives CIB net income of EGP 5.7 bn (up 27% on 9M2016) on revenues of EGP 11.0 bn (up 35%). Strong fundamentals and balance sheet growth allowed CIB to deliver “strong financial results in the third quarter of 2017” despite “challenging macroeconomic and regulatory conditions,” management said in comment accompanying the results.

CIB notes that it was able to grow its net interest income “despite intense market competition, which pushed all banks to raise their cost of deposits in order to compete efficiently with the rates offered by public sector banks.” The bank’s performance in an “eventful 2017 largely owes to successful balance sheet and treasury management performance,” management said. Notably, the bank’s cost-to-income ratio decreased, supporting profitability as efficiencies outweighed inflationary pressure on the bank’s cost base.

What to expect next: “The road ahead remains challenging, especially after the CBE’s latest decision to increase the Required Reserve Ratio back to its historical 14%, which is expected to impact banks’ interest margins in the short run, after which pressure would start to ease off as banks gradually adjust their cost of deposits, thereby placing downward pressure on interest rates and helping bring inflation down.” CIB is a bellwether for the wider economy, so a read through the bank’s full earnings release here (pdf) is worth your time if you have a moment this morning.

M&A WATCH- Banque Misr, National Bank of Egypt to exit NCMP: Banque Misr plans to sell its 42.9% majority stake in the National Company for Maize Products (NCMP) through Misr Financial Investment Company, Al Mal reports. The National Bank of Egypt will also exit its 9.6% stake in the company after the Financial Regulatory Authority (FRA, formerly EFSA) approved yesterday Cairo Three A’s mandatory tender offer to acquire 100% of NCMP’s at EGP 45 per share.

Still a horse race? The remaining bidder for the stake had a unit of Archer Daniels Midland (ADM), whose offer was rejected for being lower than Cairo Three A’s at EGP 35.56 per share. ADM still plans to present a counter offer, sources tell Al Mal. The company is legally allowed five days from 21 November — the deadline for the subscription window — to submit its counter offer, which has to be at least 2% higher than the original. ADM executives were surprised by the FRA’s decision to turn down its offer, the sources add, explaining that company executives had met several times with Investment Minister Sahar Nasr to discuss the transaction, which was meant to kickoff their expansion plans in the country’s food sector.

Advisors: Pharos Holding and Banque Misr are sellside advisors to Misr Capital Investment, while CI Capital is advising Cairo Three A Group and Matouk Bassiouny is its legal counsel.

M&A WATCH- Total has acquired Engie’s 5% stake in the first train of the Idku LNGproject in Egypt as part of a larger transaction worth up to USD 2 bn that also includes other assets in the United States, Africa and Europe, the company said in a statement overnight. The transaction, which should close by the middle of next year, will see Total manage a total global LNG volume of nearly 40 mn tons per annum.

M&A WATCH- Veon Holdings is seeking approval from the Financial Regulatory Authority (FRA, formerly EFSA) for a mandatory tender offer to buy 1.998 bn shares of Global Telecom Holding (GTH) at EGP 7.90 per share, according to Reuters. FRA says it is studying the offer. Veon is the name VimpelCom gave itself in June. It already owns 57.7% of GTH.

INVESTMENT WATCH- Port operator and logistics services provider DP World announced yesterday (pdf) the details of its agreement with the Suez Canal Economic Zone (SCZone), which will see it “develop an integrated industrial and residential zone” in Ain Sokhna. The agreement, which was signed on the sidelines of the World Youth Forum in Sharm El Sheikh, will see the two parties establish a joint venture that will be 51% owned by the SCZone, with DP World holding the balance. The new JV should begin operations by 1Q2018 and look towards attracting foreign investment to the 95k sqm zone, offering “a range of investment incentives.”

Priority sectors: Look for auto parts, food processing, petrochemicals, electronics, building materials, textiles, and medical equipment to be the stars of the show. The zone will also cater to SMEs and offer logistics services through the Ain Sokhna Port, which is also set to see an inflow of investment under the agreement.

The residential side of the project, which is expected to house around 500,000 people, will feature seaside villas and smaller residential units. Built over a 20k sqm stretch, the area will also include shopping and administrative centers, schools, hospitals, entertainment facilities, and sporting clubs.

You now need general assembly approval to buy back treasury stocks: The Financial Regulatory Authority (FRA) has made it mandatory for companies to seek general assembly approval before buying treasury shares, Al Shorouk reports. The decision aims to protect the rights of minority shareholders by putting a policy in place to ensure that all investors are receiving fair and equal treatment, according to the newspaper. This is the latest in a series of regulatory changes from Omran, who has hit the ground running since becoming head of the authority. These have ranged from as big as imposing a one-month deadline on IPOs to as rebranding the English name of the regulator.

There are some concerns that state-owned Telecom Egypt (TE) is experiencing a pattern of “unfair privileges” with its entry in the mobile operator market, according to a piece by AFP. The privileges include a potential conflict of interest given its stake in Vodafone Egypt as well as an exemption from an NTRA-imposed price hike. “It is a big responsibility for the government to ensure that competition regulations are implemented in an equitable manner … [such rules] have not always been respected in the field of telecoms,” says Orange Egypt CEO Jean-Marc Harion. Although TE continues to deny having any unfair advantages, Beltone Financial analyst Ahmed Adel says its landline monopoly constitutes “a big challenge because of the number of complaints over the quality of these fixed services.”

Egypt is confident it can achieve a primary budget surplus for the first time years in FY2017-18 and is working to reduce government debt to 98% of GDP, Vice Minister of Finance Ahmed Kouchouk told the IMF delegation in town reviewing progress on the economic reform agenda. Positive indicators from the first quarter of the fiscal year support that confidence, according to minister Amr El Garhy, who said that the primary budget deficit dropped to 0.2% of GDP in 1QFY2017-18, from 0.6% last year, while government earnings rose 33.2% y-o-y for the period, and spending increased a prudent 24.4% y-o-y. The delegation has held several meetings with El Garhy and other ministry officials to complete an assessment of the reform program before unlocking a third USD 2 bn tranche of Egypt’s USD 12 bn extended fund facility, but decided to extend its stay, which was meant to end on Tuesday, to meet with other government officials once they return from the World Youth Forum, Al Shorouk says.

The delegation met with Oil Minister Tarek El Molla this week, sources tell the newspaper. On the agenda were increasing natural gas production, progress on subsidy reduction, and arrears to international oil companies. The cabinet had said on various occasions that the year would not see any additional cuts to fuel subsidies.

House preliminarily gives initial approval to Labor Unions Act after heated debate: The House of Representatives’ general assembly granted an initial nod yesterday to the Labor Unions Act following heated debate, Al Masry Al Youm reports. The House decided to postpone full debate of the law to a later date after MPs disagreed over some of its clauses, according to the newspaper. MP Mohamed Elsewedy called for stronger oversight on financing, insisting that all forms of funding (including grants and donations) should be subject to board approval. House speaker Ali Abdel Aal, on the other hand, said that enforcing additional oversight would constitute interference in the internal affairs of unions, pointing out that foreign funding is prohibited by the bill, making further restrictions unnecessary. Other MPs also objected to a stipulation that the unions’ elections would be held within 90 days of the law’s issuance, which they said is not enough time to properly prepare, and would also result in a scheduling conflict with next year’s presidential elections.

The World Federation of Trade Unions (WFTU) is not too pleased with the bill either, claiming it violates global principles on union freedoms and leaves practically no room for independent unions to grow and develop. The group called on the government to implement amendments to the law that would create more of a divide between them and the administration of labor unions, Al Mal says.

Prime Minister Sherif Ismail has approved the composition of the Ministerial Committee for Settlement of Investment Disputes to be headed by the PM himself and to include the ministers of justice, investment, trade and industry, finance, public enterprise, as well as the Deputy Justice Minister for Arbitration and International Disputes, our friend Moustafa El Bahabety. The decree also listed El Bahabety as the head of the organization’s Technical Committee, according to the Official Gazette. The Technical Committee is tasked with resolving investment contract disputes and has within its remit the ability to take any action deemed necessary to resolve the disputes.

Track record of success: The committee has reached settlement agreements this year in international arbitration cases with parties including Germany’s Utsch AG and National Gas Company in France and also reached a settlement last year with ArcelorMittal. You can read our interview with El Bahabety from last year here, in which he explained how his committee is working to save taxpayers money — and to restore investor confidence at the same time.

President Abdel Fattah El Sisi fielded questions and addressed some of the mostpressing topics facing Egypt and the region during the Meet the Press segment of the World Youth Forum on Wednesday.

El Sisi spoke on the issue of his reelection, saying he would not consider a second term until after he delivers in a few months’ time his annual state-of-the-union type address on his accomplishments in office, Al Shorouk reports. The public’s reaction to this address will determine whether he will announce his candidacy for the 2018 elections, which he had said earlier in the week would take place in March or April.

On the economy, El Sisi noted that inflation is easing but we are still an economy reeling from four years of instability, according to AMAY. He did express confidence that the EGP will appreciate in the coming period as the economy grows, Reuters reports.

There is no relation between signing the USD 30 bn Dabaa nuclear power plants contracts and restoring flights with Russia, El Sisi said. He stated that he understood Russian reservations when it came to restoring flights, adding that he has not and will not insist Russia put the airplanes back in the sky to Egypt, Youm7 reports.

(Speaking of which, Egypt and Russia will ink the final contracts for Dabaa in December, with El Sisi and Russian President Vladimir Putin attending the ceremony, an Electricity Ministry source tells Youm7.)

El Sisi also revealed that Egypt was planning to launch an international news channel, probably to provide a competing narrative to Ikhwani-loving channels such as Al Jazeera, Al Shorouk reports.

El Sisi backs anti-corruption arrests in Saudi Arabia: International media coverage of the session was more focused on regional issues, particularly with Saudi Arabia and Lebanon. El Sisi said that conditions in Saudi are stable and reassuring, while expressing confidence in the Saudi leadership, Youm7 reports. “What’s happening there is an internal matter which could happen in any country,” he added.

As for regional rivals Iran, El Sisi said that the country should must stop "meddling" in the Middle East and the security of Arab Gulf countries must not be threatened. “Gulf security is a red line for us and others should not interfere in their affairs,” he said. "The region has enough instability and challenges as it is. We don't need any new complications involving Iran or Hezbollah so we don't add new challenges to the region," he added when speaking on a possible response, according to the Associated Press.

And on Libya, El Sisi said that Egypt’s support for East Libya commander Khalifa Haftar does not mean Egypt is opposed to the UN-backed government, Reuters report.

Also worth noting from the forum: Foreign Minister Sameh Shoukry delved into Egypt’s role in rebuilding state institutions in countries emerging from conflict, according to a ministry statement. Egypt has offered technical and financial assistance to Arab and African countries through the Egyptian Agency of Partnership for Development and the Cairo International Center for Conflict Resolution, Peacekeeping and Peacebuilding, in addition to contributing to UN peacekeeping forces, according to Shoukry. Both the state and the private sector have not shied away from publically announcing their intentions to help rebuild Syria. The governments of Egypt and Iraq had also previously signed a number of agreements which would see Egypt help rebuild key and vital economic sectors. We anticipate this to be a major foreign policy push in the coming year.