Egypt and the US: the Reboot: President Abdel Fattah El Sisi and US President Donald Trump had a busy day of closed door meetings on Monday that was preceded by a brief joint press conference (watch, runtime 7:32) in which the US president declared that Egypt “have a great friend and ally in the United States and in me.” Trump commended El Sisi for doing a great job at a difficult time. El Sisi returned the compliments.

It remains unclear whether Egypt will see new military or economic assistance. Both leaders expressed their desire for further cooperation on security, with Trump promising to remain supportive of the other’s counter-terrorism efforts and attempts to achieve regional stability. However, Trump did say that the United States and Egypt "have a few things" they do not agree on, which we’re taking this as a suggestion (at least) that the White House isn’t in a rush to designate the Ikhwan as a terror group. A US official speaking to Reuters said that Egypt is going to be disappointed because El Sisi wants more assistance and he’s not going to get it, adding it is not yet clear whether US assistance to Egypt would be cut under Trump’s proposed cuts to foreign aid spending. Foreign Minister Sameh Shoukrytold Youm7 that continued military aid is in the interest of both countries.

Don’t expect the White House to say much more than it already has: White House Press Secretary Sean Spicer was adamant on keeping the meeting private. (Watch Spicer’s full briefing, which is always entertaining, or skip straight to this part here where questions are asked about why human rights issues are being pressed less publicly than during the Obama era.) What Spicer did say, at the beginning of the briefing: “With respect to today, the President, as you know, welcomed President Al-Sisi of Egypt to the White House this morning. The two Presidents had an honest discussion focused on areas of cooperation. The President made clear that this is a new day in the relationship between Egypt and the United States, and the President affirmed his strong support of the Egyptian people. It was a candid dialogue during which they discussed both areas of cooperation and of concern.

Behind closed doors: Beyond the expected talk of terrorism, El Sisi, Trump and US Secretary of State Rex Tillerson discussed a number of key regional issues. El Sisi pressed hard on his doctrine of “sovereignty and non-interference” and advanced the Arab plan for the resolution of the Israeli-Palestinian conflict, which centers on a two-state solution, according to an official statement from Ittihadiya picked up by Al Mal. Expect to see more talks on these fronts in the coming months, the statement added.

Will investment and not aid be used to build stronger economic ties? Investment Minister Sahar Nasr pushed the investment file forward, promised to encourage investment in energy, agriculture, and telecoms. Nasr also said that Egypt told Trump that it is interested in seeing more US investment in the Suez Canal Economic Zone. El Sisi and his delegation held a roundtable discussion with representatives from over 60 major US corporations to discuss progress in Egypt’s economic reform agenda and invite them to explore potential investment opportunities, Al Borsa says. The Egyptian President also sat down with the CEO of the US Chambers of Commerce Thomas Donohue, according to Youm7.

...On a related note, Trade and Industry Minister Tarek Kabil is reportedly in talks with US officials to add areas of Upper Egypt to the Qualifying Industrial Zones agreement after having recently included Minya and Beni Suef, Al Shorouk reports. The agreement gives Egyptian products preferential access to the US market provided they have a specified minimum Israeli component.

Prime minister pens piece for The Hill on what Egypt and the US can do together to clamp down on curb terrorism, promote regional stability: Successful anti-terror policies and peace in the Arab world demand the US and Egypt engage on four fronts, Prime Minister Sherif Ismail writes for The Hill. The first is to “support counterterrorism efforts in moderate Arab states under siege by extremists within their own borders,” which will require the right mix of equipment, intelligence-sharing and logistics support” as well as “the right alignment of strategies, tactics and shared responsibilities.” Ismail also says sources of funding and weapons to terrorist organizations should be stopped. Third: “Expand trade and investment and share technologies to shore up the economies of the Arab world and enable them to provide a living standard that discourages citizens from being attracted to extreme ideologies.” The fourth element, according to Ismail, is the need to “promote a serious and genuine reform of religious discourse.” He says the effort has to be led by moderate Arabs “to advance a culture of peace by discouraging hate speech and supporting the coexistence of all peoples.” Ismail says “progress will not always be smooth, and there will inevitably be disagreements and setbacks … But progress can be made, and my government is prepared to play a more active diplomatic role.”

“We’ve certainly seen a lot of foreign money coming in,” Emirates NBD Chief Investment Officer Gary Dugan told Bloomberg TV, commenting on the expectation that central bank reserves are expected to have surpassed USD 28.5 bn in March. A lot of foreign money came in and it has been looking to pick up those relatively high yields on the expectation that currency remains stable, Dugan says. He says most of the access points now are in the money market and the “juice” in trade over the past three months has been in three-month and twelve-month deposits. Dugan suggests that economists expect the impact of devaluation to subside in about “eight months from now” and this will usher a marked improvement in the headline rate of inflation and confidence will prompt more fund inflows (runtime 04:18).

IPO Watch- Oil and gas drilling and production services provider ADES International Holding announced its intention to proceed with a global offer of its existing shares on the London Stock Exchange yesterday. The Dubai International Financial Centre-based company is planning to raise up to USD 170 mn through the issue of new shares. The selling shareholder is also offering for sale a block of existing shares. ADES offers offshore and onshore contract drilling as well as workover and production services in Egypt, Algeria and Saudi Arabia with clients including Aramco, Sonatrach, BP, Eni. ADES will use the net proceeds of the global offer received by it to fund capital expenditures related to its scale-up in Egypt, Saudi Arabia and Algeria and to fund ventures into new markets including Gulf Cooperation Council countries “in the belief that this will create substantial risk-adjusted returns for shareholders.”

Why it’s so interesting: The company, which has deep roots in Egypt (the market accounts for about 44% of its backlog) has consistently grown its top line and EBITDA through the oil price slump by focusing on recurring revenues. “Oil has fallen from a high of USD 126 per barrel in 2012 to c. USD 57 per barrel at the end of last year, dipping below USD 30 per barrel in the interim. Our annual revenues have expanded at a compound annual growth rate of 34% in the period 2014-16 as we have cost-effectively serviced a number of profitable contracts with a strong track record of renewals. Our backlog has grown at a CAGR of 107% in the period 2014-16,” CEO Mohamed Farouk said. The company, which has 100% USD-denominated revenues and a majority EGP cost base, posted an EBITDA CAGR of 46% in 2014-16.

EFG Hermes is sole global coordinator and joint bookrunner for the offering. Citigroup Global Markets Limited is joint bookrunner. White & Case LLP is counsel to ADES, while Baker McKenzie is counsel to the sole global coordinator and joint bookrunners. Inktank Communications is investor relations advisor to the company.

Meanwhile, Raya Contact Center announced indicative pricing for its initial public offering of some 49 mn shares, saying it would price the offering in the range of EGP 16.00 and EGP 17.91 per share. At the top end of the range, the company could raise as much as EGP 877 mn, by our calculations. Shares will be offered to institutional and retail investors at the same price. The selling shareholder plans to subscribe to an EGP 100 mn capital increase to inject some of the proceeds from the sale back into the company, which CEO Ahmed Imam says is “in the midst of [a] transformation [into a] multinational BPO service provider.” Read the price range announcement here. EFG Hermes is sole global coordinator and bookrunner for the IPO. Dechert LLP is international counsel to the issuer, Zaki Hashem and Partners is local counsel to the issuer, Matouk Bassiouny is local counsel to the sole global coordinator and bookrunner.

Finally, consumer electronics, retail and luxury car player MM Group for Industry and Trade has concluded its institutional offering and priced its IPO at EGP 5.96 per share. Total demand generated by the institutional offering was in excess of EGP 5.5 bn, making it about 9.2x oversubscribed. At that price, MTI’s market cap on the first day of trading will be EGP 2.4 bn. The subscription period for the retail offering will end on Thursday and trading in the company’s shares is due to begin on 11 April. Beltone Investment Banking is the sole global coordinator and bookrunner, while Zaki Hashem and Partners is serving as local counsel.

Edita will not be channelling new investment into Egypt in 2017, Chairman and CEO Hani Berzi reportedly told Al Mal. We’re taking Al Mal’s report with a teaspoon of salt: The company has consistently telegraphed (as recently as the end of February) that it is on the lookout for either M&A or greenfield expansion opportunities, saying in its 4Q2016 earnings press release, “our strategy this year may also include direct expansion both in Egypt and in new markets.” Either way, the newspaper says, Edita does plan to continue investing in Egypt in the future. Berzi told Al Borsa Edita has no plans to increase its product prices in the near future. He expects Edita’s business to grow 15-20% y-o-y in 2017 as it targets a 10% increase in exports. The company had said in March it plans to begin operating two new production lines for wafer and cake products at its new factory in the Polaris Al Zamil Industrial Park in 2H2017.

A Mediterranean gas pipeline carrying natural gas from Israel to Europe could be built by 2025, and it looks like Egypt is being cut out, Reuters reports. European and Israeli governments gave their support to moving forward with the agreement on a 2,000 km-long pipeline that aims to link gas fields off the coasts of Israel and Cyprus with Greece, and possibly Italy, for EUR 6 bn. The plan, as laid out, does not mention any connections from Egypt or to Turkey. The agreement followed a meeting between the energy ministers from Israel, Cyprus, Greece, and Italy, with European Climate and Energy Commissioner Miguel Arias Canete saying “he believed the project would ‘meet all relevant requirements’ to make financial commitment possible.” One energy executive was skeptical, telling the Financial Times, “I think the industry doesn’t believe in it … The government would be better served growing the domestic market and finding solutions to make gas flow to Egypt, Jordan and Turkey.”

And while we’re on gas, Qatar Petroleum has ended a 12-year moratorium on new gas projects, announcing plans to start a new development in the 2 bcf/d offshore North Field, Bloomberg reports. The moratorium allowed the company to assess how its current rate of extraction affects the giant reservoir it shares with Iran. Production should start in five to seven years, CEO Saad Sherida Al Kaabi said on Monday.

Cabinet approved yesterday a draft of the Universal Healthcare Act and referred it to the State Council, Ahram Gate reports. The Health Ministry will receive the actuarial studies on its implementation within three weeks, Health Minister Ahmed Rady said, Al Shorouk reports. Once approved, the act will be implemented in Canal governorates as a first stage as soon as it the House of Representatives approves it prior to a nationwide implementation by 4Q2017, Prime Minister Sherif Ismail previously said. Under the act, the state will finance health insurance for those who cannot afford it, which the government currently estimates to be 30-40% of the population, Rady says. State hospitals will be the main healthcare providers under the program with private hospitals participating if they meet specific accreditation and quality control authority requirements. You can read more about the act in our Spotlight from last month.

Talk of price controls postponed to next week: Cabinet was also expected to discuss the Consumer Protection Act and “price controls frameworks” at its meeting yesterday, but postponed the discussion until its next meeting, Al Masry Al Youm reports.

Mandatory smart cards, fuel prices hikes expected next fiscal year: The government is planning to raise fuel prices next fiscal year in effort to keep subsidies spending on budget, unnamed government sources tells Al Shorouk. Separately, the government is also planning to make using fuel smartcards mandatory next fiscal year as part of its plan to cut back on fuel subsidies, Al Borsa reports, citing unnamed government sources. The move is part of an effort to ensure that the fuel subsidy spending meets the target laid out in FY2017-18 budget of EGP 110.148 bn. The Finance Ministry had initially estimated that fuel subsidies would cost state coffers somewhere between EGP 140-150 bn, but the planned steps to reduce subsidy expenditures will free up the EGP 30-40 bn.

Separately, the Finance Ministry will maintain export subsidies at their current levels of USD 2.6 bn next fiscal year, Deputy Finance Minister Ahmed Kouchouk said, according to Daily News Egypt.

The central bank allocated USD 23 bn to finance foreign trade since the EGP float last November, according to a statement from the Ismail cabinet following a meeting between CBE Governor Tarek Amer and Prime Minister Sherif Ismail on monetary policy. The statement and an official notice from the CBE confirmed CBE Assistant Sub-Governor Rami Aboul Naga’s comments on Sunday that FX reserves have hit USD 28.5 bn — the highest they have ever been since March 2011 — and that the banking sector drew in USD 17 bn since the float.

Terrorism in Russia? Eleven people were killed and 20 were injured in an explosion in St. Petersburg. The blast in a train carriage was carried out by a suicide bomber, Reuters suggests. The Foreign Ministry issued a statement condemning the incident, stressing that Egypt stands against terrorism in all its forms.