IPO WATCH - CI Capital-led consortium snags Enppi IPO: A consortium led by CI Capital was tapped by the government as lead managers and bookrunners of the listing of energy company Enppi — the first IPO of a state-owned company in 12 years. The consortium also includes Jefferies International Limited and Emirates NBD Capital Limited, according to a statement from the Investment and International Cooperation Ministry. Investment and International Cooperation Minister Sahar Nasr told Reuters that shares in Enppi would be traded in 4Q17. The government hopes to raise up to USD 150 mn from the listing of up to 24% of the company, which will pilot the government’s IPO program of state-owned enterprises in which it aims to raise around EGP 5-7 bn this fiscal year. The program will take place over the next three to five years. The story is also receiving detailed coverage on Bloomberg.

“Proceeds of the sale will be used to bolster investments and expansions in the state energy sector,” said Oil Minister Tarek El Molla, adding the Enppi was the most ideal energy company to lead the IPO program.

Among other assets slated for sale is Banque Du Caire, the third-biggest state-owned lender. The government has yet to decide on how much of the bank to put on offer in the IPO, which will be managed by EFG Hermes and HSBC. But there were previous reports that it was considering an international offer to institutional investors of 29% and a domestic offer to retail investors on the EGX of 15%, while 5% of the company’s shares would trade as global depositary receipts on the London Stock Exchange. The Middle East Oil Refinery (MIDOR), has also been slated for an IPO.

In other CI Capital-related news, CIB announced the sale of 9.99% of CI Capital in a regulatory filing on Wednesday. CIB will retain a minority stake of 13.46% of CI Capital for the time being. CIB had sold a 74.75% stake in the investment bank to a group of investors which included Arafa Group’s Alaa Arafa and CI Capital’s management team.

Egypt’s net FX reserves grew a measly USD 180 mn to USD 31.3 bn in June, up from USD 31.1 bn in May, the CBE said in a statement. The growth was one of the smallest month-on-month gains in net FX reserves since the CBE floated the EGP back in November.

...On the flipside, CBE Governor Tarek Amer confirmed in an exclusive to Enterprise that Tuesday saw FX inflows hit a single-day record of USD 704 mn. We had noted reports yesterday that the figure amounted to USD 618 mn. Other CBE sources tell Al Masry Al Youm that Monday’s inflows had reached USD 420 mn, for a total of USD 1.1 bn over those two days. A report by MENA news agency citing CBE officials on Monday had noted that inflows since the EGP devaluation had hit USD 54 bn. It would appear that these record numbers had been behind the rally in the EGP which began on Monday. A spike in demand for the EGP had seen Banque Misr draw in its own single-day high of USD 75 mn, said bank chairman Mohamed El Etreby, according to Al Ahram.

The worst is now probably over for Egypt, with Egypt’s economy looking set to accelerate in FY2018-19, according to a report on MENA economies by Capital Economics (pdf) which came out on Wednesday. The research firm forecasts GDP growth in 2019 to reach 5.3%, up from 4.3% in 2018 and 2.5% in 2017. The inflows which flooded into Egypt since the EGP growth had been the primary driver of this growth in the economy, which will be coupled with further fiscal tightening to rein in the large budget deficit and bring down the public debt-to-GDP ratio. A rise in the value-added tax (VAT) rate and further subsidy cuts will play a role in this recovery.

As for inflation, Capital Economics expects this to drop over the next 11-12 months, with consumer inflation falling to 29% in 2017, and to 12.5% in 2018, before dropping below the 10% mark in 2019 to 8.5%.

The firm’s outlook on the region is also positive, saying that the slowdown in MENA should bottom out in the second half of the year, with growth averaging 2.5% for the year. A notable exception would be Saudi Arabia, whose economic contraction is expected to continue. Morocco is likely to be the region’s top-performing economy, according to the report.

Separately, the EGP float had also contributed to Egypt being the third biggest market for contract awards in the MENA region in 2016, despite recording a 23% drop in the value of main contract awards, a report by Middle East Business Intelligence (MEED) said on Wednesday. Egypt signed USD 18.4 bn worth of contracts during the year, beating ou GCC countries like Qatar and Kuwait with only the UAE and Saudi Arabia signing more. Top contracts for last year were the Zohr field, the Dairut power project, and the Cairo Metro. MEED anticipates that the biggest growth in new contracts this year is likely to come from construction, with USD 129.4 bn of projects in the pipeline. The next biggest sectors are power, with USD 117.4 bn, and transport, with USD 57.4 bn.

The House of Representatives has finally approved the long-awaited Natural Gas Act without any amendments, Al Shorouk reports. The 53-article legislation would deregulate the natural gas market and leave the state to play the role of regulator. The law — which will allow the private sector to trade gas using the state’s infrastructure and pipeline network and establish a new authority to regulate and monitor the market — had been gathering dust since 2015, with a number of companies already having applied to import natural gas and had been waiting on the law. This should be welcome news for everybody.

MPs also signed off on the new Mineral Resources Act, according to Ahram Gate. Under the new act, we should be seeing reduced fees and royalties on quarries and mines, unified license procedures and fees, reducing the time it takes to obtain permits for mining in Sinai, according to earlier reports. Very little by way of detail on the law has emerged.

The House also approved amendments to the Police Act that reduce the minimum age of joining the force to 19 from 23 years currently and make it easier for women to join. Additionally, MPs also sanctioned a number of international agreements, including:

• A EUR 345 mn agreement for the Gulf of Suez wind farm with the European Investment Bank, Germany’s KfW, the French Agency for Development, and the EU;
• A KWD 18.5 mn agreement with the Kuwaiti Fund for Development for the Port Said water desalination plant;
• A USD 560k grant from the African Bank for Development for slum rehabilitation;
• An EUR 800k grant from Italy to renovate Cairo’s museum of Islamic art;
• An economic cooperation agreement with Djibouti.

House’s talks on Investment Act regs postponed indefinitely: With that busy schedule, the House’s Economics Committee was left with no time to discuss the the Investment Act’s executive regulations before adjourning their session for the summer. Luckily though, the government is not obliged to wait for MPs to return before issuing the regulations, which should be out in August, according to Prime Minister Sherif Ismail’s earlier statements. Surprisingly, the House’s committee on housing has decided to postpone its break a little while longer to discuss the new building code and a legislation for building code violations. Bon Voyage MPs

Ride-hailing Apps bill misses the whole point of the share economy: It looks like the share economy model for ride-hailing apps is effectively dead under the Ride-hailing Apps Act, as the legislation appears to turn freelance drivers who pick their own hours and buy their own cars into paid employees with benefits. The law — which was approved by the Ismail cabinet in April — limits working hours for drivers to seven hours a day, unnamed government officials tell Al Borsa. Drivers will also have to obtain professional permits and badges for their vehicles. The law will also seek to set a standard base fare for all rides. Previous reports had stated that the law may include provisions for on-demand group transport on micro-buses. No word has yet been said about reports on ride-sharing companies having to divulge user data to the government.

The law comes as the industry is expected to see more growth. A new ride-hailing app for white taxis, Professional Taxi, is also set to launch this month on iOS and Android, the company’s CEO Mahmoud Ahmed says, Al Borsa reports. Meanwhile, Careem is looking to double its number of drivers in Egypt to 100k by year’s end, the company’s co-founder and CEO Mudassir Sheikha tells Al Mal.

Prime Minister Sherif Ismail formed yesterday a committee to review amendments to the Traffic Law that would incorporate tuk tuks into the official system and regulate their operations, Ahram Gate reports. As we had noted yesterday, Oil Ministry officials are blaming the delayed roll-out of fuel smartcards on issues with regulating tuk tuks.

Investment and International Cooperation Minister Sahar Nasr has finished laying out Egypt’s investment roadmap, Al Ahram reports. The plan will be updated regularly as new opportunities become available, Nasr said, but currently includes 600 new projects across different sectors that the government intends to pitch to local and foreign investors. New Valley got the lion’s share with 150 investment opportunities, followed by Fayoum with 40, and Qena with 24.

Nasr had also signed yesterday a USD 200 mn agreement with the Arab Bank for Economic Development in Africa to support Egyptian investments in Africa (BADEA), according to a ministry statement (pdf). Nasr signed the agreement with BADEA Chairman Youssef Albassam, who lauded Egypt’s economic reform program and recent improvements to its business climate. Separately, the SME Development Authority (which replaced the Social Fund for Development) is set to secure a USD 50 mn loan from the Arab Fund for Economic and Social Development within days, the authority’s executive director Nevine Gamea tells Al Mal.

Egypt is planning to cut down on yellow corn imports during FY2017-18 to 7 mn tonnes, down from 8.5 mn tonnes during the previous year as local production rises, Agriculture Minister Abdel Moneim El Banna said, Reuters reports. The government will purchase each tonne of corn for EGP 3,400 this fiscal year, up from EGP 1,700, which is expected to increase the total area of land used to cultivate corn, El Banna said. However, local farmers say the new price is unfair and is not reflective of the increased costs they have incurred over the past year, Al Mal reports. Farmers will hold a meeting with the House’s Agricultural Committee to force the government to purchase the corn for EGP 4,000 per tonne, head of the Farmers and Agricultural Producers Syndicate Farid Wasel said.

M&A WATCH- Akwan for Real Estate Development is looking to make a mandatory tender offer for Alexandria National Company for Financial Investment, a subsidiary of Abu Dhabi Islamic Bank. Akwan has sent a request for a fair value report, according to a filing with the EGX.

Did Medical Union Pharma make an acquisition offer for United Pharma IV? We’re hearing conflicting statements on whether Medical Union Pharma made an official offer to acquire United Pharma IV. United Pharma IV Chairman Abdallah Mahfouz denied yesterday news that Medical Union had formally presented an offer for the company worth EGP 280 mn. Medical Union’s Managing Director Ahmed El Kelany and Health Minister Ahmed Rady, however, both confirmed the news on Wednesday, according to Al Borsa. The company is still waiting for an official offer from Medical Union and studying the offers it received last month, Mahfouz said. US investment fund Lincoln Investment, ACDIMA, and a Compass Capital fund are going head-to-head in a race to acquire United Pharma IV Solutions

Zombie project Alex Port multipurpose platform project brought back to life again? The agreement with China Harbour over the undead and phantom multiplatform facility at the Alexandria Port is still on and being revised by “sovereign entities”, the port’s deputy head Mohammed El Dakkak said on Wednesday, according to Al Mal. The agreement had been scrapped and resurrected at least twice since it was signed by China Harbour at the EEDC in March 2015. Egypt is planning to hire international consultants to give a final ruling on the matter.

The Housing Ministry is in talks with several international and private schools to set up new branches in the first residential phase of the New Administrative Capital, Al Borsa reports. Representatives from the International School of Choueifat, the Canadian International School in Egypt, Misr Language School, Saint Joseph School, and the Modern School group were reportedly among those who met with Housing Minister Mostafa Madbouly. The first residential phase of the new capital has eight plots of varying sizes set aside for private schools, Madbouly said, calling on school owners to submit requests for land allocations as soon as possible.

MOVES- Bahrain’s Gulf Air appointed Wael Mattar as new country manager for Egypt, according to a press release.

Steel magnate Ahmed Ezz was released from prison on EGP 250k bail and placed on a no-fly list. Ezz faces charges of illegally obtaining a steel production license “depriving the state of EGP 660 mn,” Al Masry Al Youm reports. Ezz and former Industrial Development Authority Chairman Amr Assal, a co-defendant in the case, were arrested in March. The two were previously handed down 10-year prison sentences for the case, but were granted a retrial on appeal in 2012.

A handful of international stories worth a skim this morning:

• Libya’s eastern commander Khalifa Haftar’s forces recaptured Benghazi from Islamist militants and other armed groups, Reuters reports.
• Volvo is joining in on the auto industry’s recent shift towards electric vehicles, announcing yesterday it will “offer only hybrid or full-electric motors on every new model launched in 2019 or later,” according to Bloomberg.
• American payment processing company Vantiv is set to purchase Britain’s Worldpay in a USD 10 bn merger, pushing up Worldpay’s shares by nearly 28%, Reuters reports.