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Thursday, 25 May 2023

What We’re Tracking Tonight
For Your Commute
Enterprise Recommends
Go With The Flow
Enterprise Explains
The Enterprise Entertainment Calendar

AI v IP showdown

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Today at a glance

1

The Big Stories Today

 El Sisi inaugurates our first quartz industrial complex + EFG Hermes Holding is now EFG Holding.
2

Enterprise explains

 The roles in a securitization issuance.
3

FOR YOUR COMMUTE

 Another day, another AI v IP rights battle — this time over Umm Kolthoum’s musical catalog.
4

ON THE TUBE TONIGHT

 Restaurants on the Edge: An aesthetically pleasing journey of revamping eateries in trouble.
5

Sports

 Man United is within arm’s reach of Champions League qualification + PSG marches towards its 11th Ligue 1 title.
6

Ears to the Ground

 All the ways the human mind can be a liability.
7

Under the Lamplight

 A short but engaging retelling of the Greek myth of Galatea and Pygmalion.

Thursday, 25 May 2023

What We’re Tracking Tonight
For Your Commute
Enterprise Recommends
Go With The Flow
Enterprise Explains
The Enterprise Entertainment Calendar
1

WHAT WE’RE TRACKING TONIGHT

THIS EVENING: El Sisi inaugurates our first quartz industrial complex + EFG Hermes Holding is now EFG Holding

Rejoice, friends: It’s finally the weekend. We’re wrapping up this week with a stacked issue to keep you entertained as you wind down.

FRET NOT- Suez Canal traffic returns to normal after a stranded ship was successfully refloated: Three tugboats refloated a large vessel that had been stranded for several hours in the Suez Canal earlier today according to a Suez Canal Authority statement. The incident began at around 5:30am CLT and the vessel was refloated three and a half hours later, with traffic fully restored by 11am, Reutersreports. The ship was identified as Xin Hai Tong 23, a 190m bulk carrier sailing under the Hong Kong flag, by shipping agent Leth Agencies.

THE BIG STORIES TODAY

#1- Our first quartz production facility is up and running: President Abdel Fattah El Sisi inaugurated today a quartz industrial complex in Ain Sokhna, Ittihadiya said. The complex is the first of its kind in Egypt, the Middle East, and Africa.

#2- EFG Hermes Holding is now EFG Holding: EFG Hermes Holding has rebranded to EFG Holding, after the company’s shareholders signed off on the change during yesterday’s annual general meeting, according to a statement (pdf). The rebranding is a reflection of the group’s growth and expansion with “three distinct verticals: EFG Hermes the investment bank, EFG Finance the non-bank financial institutions (NBFI) platform, and aiBANK the commercial bank.” EFG Holding will not change its management structure or day-to-day operations on the back of the rebrand, the statement notes.

THE BIG STORY ABROAD

Tech stocks are having a field day: Silicon Valley chipmaker Nvidia’s shares soared 25% to hit an all-time high in pre-market trading after the company forecasted USD 11 bn in sales in the second quarter of its fiscal year. The rally in Nvidia’s shares positions the company to become the first chipmaker to hit a valuation of USD 1 tn, and has also spurred a rise in Dutch firm ASML Holding and Taiwan’s TSMC. The story is leading the conversation in the international business press this afternoon: CNBC | Reuters | Wall Street Journal | Financial Times.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

COME WORK FOR OUR ADVISORY ARM-Enterprise Advisory (formerly known as Inktank Communications) is looking for smart, talented people to help us tell the stories of exciting companies. Enterprise Advisory is the region’s leading investor relations advisory company and works on investor and strategic communications issues that take you deep inside the c-suite. Our clients are in Egypt, Saudi Arabia, the UAE and beyond. Egyptian and foreign nationals alike are welcome to apply.

We’re running a four-month training program for fresh grads and career switchers and will hire every successful grad of the program.

Apply directly to jobs@enterprisemea.com and mention “advisory development program” in your subject line.

⛅ TOMORROW’S WEATHER- Another warm, albeit cloudy, day is expected tomorrow with a high of 35°C and low of 28°C with a 15% chance of rain, according to our favorite weather app. It’s less likely to rain on Saturday, as temperatures will jump to 37°C but the sky will remain overcast until Sunday morning.

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2

FOR YOUR COMMUTE

Another day, another AI v IP rights battle — this time over Umm Kolthoum’s musical catalog

Artificial intelligence and intellectual property (IP) rights collide over “cultural revival” project: Music producer Mohsen Gaber and composer Amr Mostafa are in a dispute over a song the latter wrote featuring Umm Kolthoum, CNN Arabic reported. The controversy emerged after Mostafa used the late legendary singer’s voice via AI softwares in a song he wrote and later shared in a social media post.

A violation of company rights: Music producer and Mazzika Group owner Gaber accused Mostafa of violating his company’s rights as the owners of Umm Kolthoum’s musical catalog — which Mazzika dubs its “actual treasure.” Mostafa responded by saying the project is not about a specific artist per se but a general concept of bringing back paramount cultural symbols to the fore.

Another day, another intellectual property rights debacle: Regardless of the outcome of the IP rights battle, it’s becoming increasingly evident that AI is changing the artistic and creative world, with more debates cropping up about IP rights in the film industry being upended by AI, as well as in the realm of photography. As new questions and ethical concerns emerge, Egyptian ministers approved a draft bill that would establish the Egyptian Intellectual Property Authority last November.

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3

ENTERPRISE RECOMMENDS

Restaurants on the Edge: An aesthetically pleasing journey of revamping eateries in trouble

? ON THE TUBE TONIGHT-
(all times CLT)

Restaurants on the Edge is Netflix’s latest cooking renovation show about how restaurateurs start up their establishments. With an eye on spots around the world, some often in very obscure places, the show features some breathtaking sights — a fishing village in Hong Kong, Finland’s oldest city Turku, the outskirts of British Columbia, St. Croix in the Caribbean, and many more. Nick Liberato, a restaurateur, designer Karin Bohn, and chef Dennis Presscott visit restaurants, cafes, and pubs that are on the edge of demise for several reasons, old menus, expensive ingredients, familial obligations, and a lack of identity and breathe new life into them. They understand the philosophy behind the restaurant, research the area to locally source the design materials and ingredients in the area, and advise them on management skills that can help make their venue unique and profitable. This two-season series is aesthetically pleasing and a relaxing watch to unwind to after a long working week.

⚽ Manchester United hosts Chelsea at Old Trafford at 10pm today to wrap up the Premier League’s penultimate gameweek. The Red Devils are just one point away from locking down qualification for the Champions League and sending Liverpool to the Europa League, while Chelsea will hit the field without much to gain for the team, which is in 12th place.

Over in La Liga:

  • Real Mallorca v Valencia (8:30pm)
  • Osasuna v Athletic Bilbao (10:30pm)

Tala’ea El Gaish plays against Al Ahly tomorrow at 8pm in a match postponed from the Egyptian Premier League’s 22nd gameweek. The Reds are looking to maintain their undefeated streak to bolster their position at the top of the league, while Tala’ea El Gaish needs the three points to avoid relegation.

Saturday will be the defining moment in the Bundesliga: Borussia Dortmund fans are eagerly awaiting the team’s match on Saturday to put an end to Bayern Munich’s domination of the German league. Dortmund, which currently has 70 points, needs a victory over Mainz to ensure it earns the league title — a feat it hasn’t achieved in 10 seasons. However, Dortmund could still lift the championship cup if Bayern (68 points) loses or ties against Köln. Both matches kick off at 4:30pm.

Paris Saint-Germain is marching towards its 11th title: The team will be hosted by Strasbourg at 10pm on Saturday, and needs just one more point to earn the Ligue 1 title, regardless of how Lens — currently second in the league, six points behind PSG — fares in its match against Ajaccio. If PSG earns the title, the team would have the most Ligue 1 titles, putting it above Saint-Etienne, which currently also has 10 titles under its belt.

Other important matches in the European leagues on Saturday:

  • Sevilla v Real Madrid (La Liga — 8pm)
  • Fiorentina v Roma (Serie A — 7pm)
  • Inter v Atalanta (Serie A — 9:45pm)

? OUT AND ABOUT-
(all times CLT)

The iconic Pyramids Sound and Light Show is back: The show opened at the Giza Pyramids last Thursday, with shows running again through to this Saturday, 27 May. The show will be narrated in English starting at 8:30pm and in Spanish from 9:30pm. You can purchase your tickets here.

Watch a conversation turn from civil to explosive in Ebny. The production is an Egyptianized version of the acclaimed play God of Carnage by Yasmin Reza, which will be performed by the Kenoma Theatre Company between tomorrow to next Monday, 29 May starting from 8pm at Rawabet Art Space. The play will be performed in Arabic and tickets can be purchased on Ticketsmarche.

Get your Oriental x Western fusion fix this weekend: Listen to Joseph Tawadros, oud player extraordinaire, seven-time ARIA Awardwinner and Member of the Order of Australia for Services to Music (AM)as a collaboration between the Australian Embassy in Cairo and the AUC Tahrir Cultural Centre, this Saturday, 27 May at AUC’s Ewart Hall.

Zawya Cinema’s Cairo Cinema Days rolls on: The festival, which kicked off last week, showcases the latest films from the Arab region, with this year’s edition including 16 documentaries and feature films from Egypt, Tunisia, Sudan, Morocco, Iraq, Palestine, Algeria, and Lebanon. The festival runs through 10 June — you can check out the screening schedule and find more details here.

Disco Misr at Sakia: Pop and disco musical group Disco Misr is putting on two shows at Sakia Culturewheel this Wednesday and Thursday, 24-25 May. Tickets are available for the first show here, and the second here.

The annual Flower Exhibition — which is typically held at the Orman Gardens — is opening to the public at the Agricultural Museum in Dokki on Saturday, 27 May. The exhibition was originally scheduled to open last week, and will run for one month.

Dive into Egypt’s infinitely rich contemporary art world: The “Traces of Egypt” Exhibition began in late March and will continue until Thursday, 15 June, at the Grand Egyptian Museum. The exhibit is organized by Egyptian-German artist Susan Hefuna and celebrates the country’s Khayamiya tradition through 28 dresses celebrating local artisans and their craftsmanship.

Fancy a chuckle, or more? Watch Absurd & Beyond by ACT at Rawabet Art Space on Friday, 2 June and Saturday, 3 June at Rawabet Art Space starting from 8pm.

Start training for your next half marathon: The TriFactory is hosting another edition of itsMadinaty Half Marathon on Friday, 9 June at Madinaty. You can sign up for the event through the TriFactory website.

Hiba Tawaji is back with her first concert in Cairo after three years: The Lebanese singing sensation will be performing in the Cairo Opera house on Friday, 16 June starting from 8:30pm to celebrate the release of her new album, Ba’d Seneen. The performance will be conducted by Maestro Ahmed Aweida and under the supervision of Oussama El-Rahbani. Click here to reserve your tickets.

? EARS TO THE GROUND-

How our brains deceive us:You Are Not So Smart, hosted by David McRaney, is a psychology podcast that dives into the myriad cognitive biases that can affect our thinking and decision-making. Through interviews with experts in psychology and related fields, McRaney delves into the insights and findings of contemporary research to discuss topics such as confirmation bias, groupthink, self-delusion, and the power of propaganda. Each episode brings real-life examples of how these biases can shape our perceptions, our behaviors, and our beliefs. The podcast delivers a combination of humor, storytelling, and sharp insights as it navigates the workings of the human mind and the many ways in which our brains can be both our greatest asset and our biggest liability.

? UNDER THE LAMPLIGHT-

Galatea by Madeline Miller is a short story that you will regret finishing. Based on the Greek myth of Galatea and Pygmalion, this retelling is shared from the perspective of Galatea, a marble statue crafted by Pygmalion that is so perfect, he prays to the goddess Aphrodite to bring it to life. In this modern retelling, Galatea, (whose identity we don’t discover until she unveils her story) is a patient in a psychiatric ward, where her husband, insanely jealous and very rich after her “birth,” has kept her trapped after her attempts to escape with their daughter, Paphos. She describes her long, dreary days and recalls how she had come to life, had Paphos and handled her husband and his chronic jealousy that led him to confining them to his home. Within the events of the story she begins to cleverly plot her escape and revenge from her husband. You can grab a copy of this short novella in print from Diwan.

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4

GO WITH THE FLOW

What the markets are doing on 25 May, 2023

The EGX30 fell 0.3% at today’s close on turnover of EGP 1.65 bn. Local investors were net buyers. The index is up 16.8% YTD.

In the green: Credit Agricole Egypt (+5.7%), Taaleem (+5.6%), and Edita (+3.9%).

In the red: Orascom Construction (-2.4%), Ibnsina Pharma (-2.3%) and Ezz Steel (-2.2%).

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5

Enterprise explains

Enterprise Explains: The roles in a securitization issuance

Who are the key players in securitization? 2023 has so far been a bullish year for securitization, with Aur Leasing and Factoring, Contact Creditech and Contact Credit, Al Ahly Leasing and Factoring, and many more taking securitized bonds to market. These issuances come with a dizzying laundry list of jobs — from underwriters and bookrunners to legal and financial advisors. So we’ve put together a simplified guide of the key players and their roles in the process.

First things first: What even is securitization? Securitization is a financing technique whereby a company sells off some of its receivables (i.e. income-producing assets, such as auto loans, credit card debt, mortgages, or commercial paper) to a separate legal entity — a placeholder, if you will. With the help of a squad of financial and other institutions, this entity then repackages the assets into debt securities and sells them to investors. Our separate explainer on securitization (here) gets into the nitty-gritty of the financials and procedures. For the purposes of this explainer, we’ll get down to the brass tacks of who does what.

The originator is the creator of the original assets being repackaged — i.e. the underlying receivables. The originator could be a consumer finance company, car seller, real estate firm, ins. company, leasing company, or any other institution that has receivables to sell. The sale allows the originator to remove the assets from its balance sheet, increasing its funding capacity and freeing up capital for other purposes or investments that could generate higher returns.

The special purpose vehicle (SPV) is the issuer of the repackaged assets. It buys the assets from the originator and, after the transformation is all set, sells them as debt securities to investors. A legal entity separate from the originator, the SPV is a company whose sole purpose is to carry out securitization. This setup prevents the SPV from engaging in transactions that could incur debt, which would expose it to the risk of default and thereby hinder its ability to pay investors. The SPV must be licensed by the Financial Regulatory Authority (FRA), as does each issuance it puts forth. Examples of SPVs operating in Egypt include EFG Holding subsidiary Financial Group for Securitization, El Taamir Securitization, the Egyptian Securitization Company, and Al-Tawfeek for Securitization.

The legal advisor conducts due diligence on the underlying pool of assets to ensure that they are transferable, i.e. that no third parties have any claims to them and that there are no restrictions that would prevent their transfer to the SPV. It then prepares the legal documents and files them to the FRA for approval. These documents include the securitization contracts and the information memorandum (IM), which provides investors with all essential information about the issuance needed to make an informed decision. The legal advisor also registers the securities in the Egyptian Stock Exchange (EGX) and Misr for Central Clearing, Depository, and Registry (MCDR). Any licensed law firm or lawyer can act as a legal advisor.

So does the auditor: While the legal advisor evaluates the legal validity of the receivables, the auditor looks into their financial soundness. It studies the receivables and their payment histories to project their cashflows, making sure they will remain profitable. It also works with the arranger to validate the financial model of the issuance (more on that below). Based on its studies, the auditor prepares evaluation reports, which are sent alongside the legal advisor’s reports to the credit rating agency. The most eminent auditors, known as the Big Four, are Deloitte, Ernst & Young, KPMG, and PwC, all of which are international professional services networks with offices in Egypt.

The arranger’s main job is to design the structure of the issuance. Typically an investment bank, the arranger is also known as the financial advisor because it devises the financial model behind the issuance. It studies investor demand to group the securities into classes, known as tranches, that cater to different preferences and risk profiles. The arranger designs the characteristics of each tranche, including maturity date, interest rate, and remaining principal. It is also responsible for marketing the securities and bringing in investors, for which it usually has a roster of contacts.

The underwriter guarantees payment. If the arranger is unable to find investors to cover the entire issuance, i.e. if the issuance is undersubscribed, it may buy the unpurchased portion for an extra fee — a role that is referred to as underwriting. Investment banks typically charge hefty fees in exchange for assuming the financial risks associated with underwriting. The arranger may be joined in this task by other parties, like another investment bank or a commercial bank.

The credit rating agency evaluates the creditworthiness of the securities, which measures the likelihood that debt will be repaid. The lower the risk of nonpayment, the higher the rating the agency gives. Rating agencies assess a number of factors, including the quality of the underlying asset pool, strengths of the originator, legal risks, and the soundness of the security’s structure. There is only one credit rating agency in Egypt right now: MERIS (Middle East Rating & Investors Service), a joint venture between Moody’s and Finance and Banking Consultants International (FinBi).

The bookrunner runs the investor order book. Subsequently, it places the issuance — which entails determining how much of the security is issued to each investor. This pivotal position puts the bookrunner at the top of the hierarchy of roles in securitization transactions. The bookrunner, typically a commercial or investment bank, also plays the role of collecting the proceeds of the issuance from investors.

The custodian is the safekeeper of all documents. Typically a bank or another large, reputable institution, the custodian stores the securitization documents to safeguard them against loss and theft. These include the underlying receivables and all contracts. It also offers related services like managing customer accounts, settling financial transactions, and preparing tax filings.

The types of investors authorized to subscribe to securitized assets are determined by the FRA. Also known as subscribers, investors are usually banks, insurance companies, or investment funds. The securities may be sold to investors via private placement or public offering.

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THE ENTERPRISE ENTERTAINMENT CALENDAR

MAY

17 May-10 June (Wednesday-Saturday): Cairo Cinema Days at Zawya Cinema, Downtown Cairo.

24 May (Wednesday): Last day of Omar Abdel Zaher’s Roots exhibition at the Safarkhan Art Gallery.

24-25 (Wednesday-Thursday): Disco Misr at El Sawy Culturewheel.

24-27 May (Wednesday-Saturday): Pyramids Sound and Light Show.

25-27 May (Thursday-Saturday): TriFactory’s Somabay Endurance Festival.

27 May-27 June (Saturday-Tuesday): Annual Flower Exhibition from 10am at the Agricultural Museum.

JUNE

9 June (Friday): TriFactory Madinaty Half Marathon.

10 June (Saturday): Thanaweya Amma examinations begin.

15 June (Thursday): Last day of the Traces of Egypt Exhibition at the Grand Egyptian Museum.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

JULY

18 July (Tuesday): Islamic New Year.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

27 July (Thursday): National holiday in observance of Revolution Day.

SEPTEMBER

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

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