State privatization efforts ramp up with EGP 2.8 bn Tamweely exit: A consortium of international investors has inked an agreement to fully acquire leading local microfinance provider Tamweely from its current state-owned shareholders, according to a joint statement. Investment Minister Hassan El Khatib put the transaction total at EGP 2.8 bn at a press conference announcing the news that was attended by Enterprise.

So, who are Tamweely’s new owners? The purchasing consortium is made up of SPE Capital-run equity fund SPE PEF III, European Bank for Reconstruction and Development, local private equity firm Tanmiya Capital Ventures, and the UK government’s British International Investment. The four entities now fully own the Tamweely, but we are yet to find out on how the ownership of the company is distributed between them. The entities exiting the company are the state-run Ayadi for Investment & Development, the National Investment Bank’s investment bank arm NI Capital, and Egypt Post’s investment arm Post for Investment.

It’s been in the works for a while: Negotiations for the acquisition took 20 months, said Post for Investment managing director and CEO Ahmed Ali Abdelrahman, who chalked this up to both sides’ desire to get what they wanted out of the agreement.

The government is signaling the agreement as a big W for its reform agenda: El Khatib called the agreement a “vote of confidence in the Egyptian economy and state-owned entities.” Planning and International Cooperation Minister Rania Al Mashat said the agreement “exemplifies the government's vision to empower the private sector, attract both local and foreign investments, and gradually withdraw from certain sectors,” in the joint statement released following the signing.

And the EBRD thinks it makes a good match with Tamweely: Tamweely’s focus on inclusion — particularly its provision of funds to female-owned businesses and to businesses beyond Egypt’s big cities — and potential for digitization lines up well with the EBRD’s focus on these areas, EBRD Managing Director for the Southern and Eastern Mediterranean Region Heike Harmgart told Enterprise at the press conference. Harmgart added that the EBRD is “putting our money where our mouth is” in supporting the privatization program, saying that it is in talks with the government about other potential investments, albeit at a less advanced stage.

REMEMBER- The acquisition comes after a period of stagnation on the privatization front, with the government revising down its target for 2024 from USD 6.5 bn in investment to around USD 1 bn in April.

The exit marks a good start on our new targets for the fiscal year: At his first presser as finance minister in early August, Finance Minister Ahmed Kouchouk said that the state was targeting USD 2-2.5 bn through the privatization of state-owned companies in FY 2024-25.

The sale should also help with our fourth IMF review is right around the corner: The privatization program is being watched closely by our international creditors, with the IMF noting that “greater efforts are needed to implement the State Ownership Policy” in its third review of our USD 8 bn loan program in July. Government sources speaking to Enterprise said last week that negotiations were underway to complete the sale of stakes in local companies ahead of the fourth IMF loan review, scheduled for the end of September.

Advisors: The consortium was advised by MF Strategy, Mediterranean Corporate Finance, and Helmy, Hamza & Partners — Baker McKenzie’s Cairo office — , and BLC Robert & Associates. PwC served as its financial advisor and IBIS Consulting as its ESG and Impact advisor. Adsero Ragy Soliman & Partners served as the sell side’s legal advisor.

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