IPO WATCH- Rameda hires Baker Tilly-Wahid Abdel Ghaffar for fair value report ahead of IPO: Pharma manufacturer Rameda has tapped Baker Tilly International’s Cairo partner, Wahid Abdel Ghaffar & Co, to conduct a fair value study on Rameda shares ahead of a planned IPO, sources close to the matter said. The report is expected to be complete within two weeks, at which time Rameda will formally submit its listing documents to the Financial Regulatory Authority for approval. Sources had previously told Enterprise that the EGP 1.9-2.3 bn transaction will include both primary and secondary sales that will see 35-45% of the company in freefloat. The transaction will include both a domestic retail offering and an international institutional offering.

Advisers: CI Capital will be joint global coordinator and sole bookrunner, while Compass Capital will be joint global coordinator and lead manager. Zaki Hashem has been tapped to serve as counsel to the underwriters. Norton Rose Fulbright will be international counsel to the issuer, with Matouk Bassiouny as local counsel to the issuer. E&Y is Rameda’s auditor.

IPO WATCH- Hassan Allam eyeing October IPO Hassan Allam Holding’s planned IPO could go ahead as early as October and may include a global depository receipt program, the domestic press suggested yesterday, citing unnamed sources. The timeline for the transaction is contingent on approval from the Financial Regulatory Authority, which the sources said should come through in around two weeks’ time. Hassan Allam has yet to decide on the size of the offering. A senior company executive had previously told Enterprise that the transaction would include both existing shareholders offering equity for sale as well as the issuance of new shares in a capital increase.

Advisers: The company has tapped EFG Hermes and Renaissance Capital as joint global coordinators and bookrunners, and Arqaam Capital as bookrunner. Grant Thornton has been hired as independent financial adviser. White & Case is acting as international counsel and Matouk Bassiouny has been appointed local counsel to the issuer.

IPO WATCH- The state-owned Banque du Caire (BdC) is still on track to float up to 30% of its shares in an initial public offering in early 2019, a senior bank official told Enterprise yesterday. Central Bank Governor Tarek Amer had said in April to expect BdC’s IPO in late 2018 or early 2019 as part of the state’s privatization program, which is expected to kick off this fall with the sale of additional stakes from state-owned companies including Eastern Tobacco, Alexandria Minerals and Oils Company, and Abu Qir Fertilizers, among others. The IPO is part of BdC’s plan to raise EGP 10 bn from the sale of its stake in a number of companies.

Industry association lobbying to slash withholding tax on dividends: The Egyptian Capital Markets Association (ECMA) is lobbying the EGX and Finance Ministry to cut withholding tax on dividends by up to 50%, ECMA head Mohamed Maher tells Al Mal. As matters stand today, dividends paid by listed and privately held companies alike are subject to a 10% withholding tax that falls to 5% if the shareholder owns more than 25% of the company and has held its shares for at least two years (the good people at PricewaterhouseCoopers have more here and here and here). Maher is arguing that cutting the tax in half will make listings on the EGX more attractive.

Background: The Mehleb government had imposed the dividends tax back in 2014, and had been mulling a capital gains tax on stock market transactions. Under pressure from retail investors, the capital gains tax was scrapped, but the government decided to keep the dividends tax in place.

The recovery in tourism is accelerating: Tourism revenues increased 77% y-o-y to around USD 4.8 bn during 1H2018 from USD 2.71 bn in 1H2017, an unnamed government official told Reuters. Tourist arrivals for 1H2018 grew 41% to 5 mn visitors, compared to 3.5 mn visitors during the same period last year. The sector is expected to reach a target revenue of USD 9 bn by the end of 2018 with an increased traffic incoming from western Europe, Italy, Germany and Ukraine, the official said. The tourism industry is set to continue its rebound from the dog days post-2011, with recent forecasts by Colliers International expecting occupancy rates in Cairo, Alexandria, Hurghada, and Sharm El Sheikh to average at 73% in 3Q2018, compared to 61% in 3Q2017.

Egypt is considering making travel insurance mandatory for all incoming visitors, Financial Regulatory Authority (FRA) Deputy Head Reda Abdel Moaty said, according to International Travel and Health Insurance Journal. The FRA will reportedly launch a global tender to select an insurance provider once it completes a study that will be used to determine the value of premiums and collection methods,” which should be complete around mid-September. The winning company will be expected to provide tourists with coverage that extends to personal accidents, disability, death, as well as medical expenses. This comes days after the death of British couple John and Susan Cooper while on holiday in Hurghada last week.

Thomas Cook boss Peter Fankhauser arrived in Cairo yesterday to look further into the the case and is set to meet with Prime Minister Mostafa Madbouly to discuss the ongoing investigation, BBC reports. The executive is also hoping company investigators will be granted access to the room in which the couple had been staying. Earlier reports had suggested that a gas leak might have been responsible, but Egyptian investigators had ruled that out and are testing food, water, and air conditioning systems at the hotel. Around 13 other holidaymakers had complained to Thomas Cook about being served “raw meat and drinks from unwashed glasses” at the same Hurghada hotel, the Steigenberger Aqua Magic — in other words, standard tourist complaints that shed absolutely no light on how an apparently otherwise healthy couple could have died.

A UK court had ordered Thomas Cook to pay a GBP 26,000 compensation to a British family that also fell ill at the same hotel, the Guardian says. “Five other customers have lodged legal claims against Thomas Cook for illnesses allegedly caused by stays at the hotel this year.” The operator has reportedly said that the number is “low for a hotel of its size.”

The story is topping coverage of Egypt in the foreign press and is being widely picked up by British media.

Hotels to pay real estate taxes based on their investment value? The ministries of finance and tourism reached an agreement yesterday on the assessment of real estate taxes for hotels, Tourism Minister Rania Al Mashat told the press yesterday. Under the agreement, taxes for hotels will be calculated based on the project’s nominal investment value as determined by a property’s government-assigned star rating, according to Al Mashat. The minister explained that the Tourism Development Authority sets a standard investment value of EGP 50,000 for a single one-star hotel room. The move means to bring regulations in line with the 2008 real estate tax law, which stipulates that guidelines be set for the tax treatment of industrial properties in fields including tourism and oil and gas.

Background: The Finance Ministry is working on a new real estate tax formula as part of a larger overhaul that will affect both businesses and private landholdings, sources had told us in June. This new formula would set “clear and simplified” guidelines for the tax assessment of industrial properties, hotels, ports and airports. We had also learned that the ministry was also developing new provisions for taxing properties in the oil and gas industry. The move has been met with a backlash.

Tourism development strategy in the works: On a related note, the Tourism Ministry is expected to announce in October the details of a comprehensive plan to revamp and develop the sector, Al Mashat said, Youm7 reports.

EARNINGS WATCH- Orascom Construction (OC) reported net income attributable to shareholders in 2Q2018 (pdf) of USD 50.6 mn, up 113.5% y-o-y from USD 23.7 mn in the comparable period last year. Revenues came in 20.8% lower y-o-y at USD 750.1 mn compared to USD 947.2 mn in 2Q2017, which is “mainly attributable to the completion of two large chemical plants in the U.S.” The company’s consolidated backlog as of 30 June 2018 stood at USD 4.2 bn, with new awards standing at USD 997.9 mn. Infrastructure and commercial work made up the bulk of the backlog, accounting for 96% of the total. In Egypt, “the Group remains a key player across several segments including transportation, the New Administrative Capital and Alamein city, and is benefitting from its strong positioning in other growing sectors such as water treatment and desalination.” OC paid a USD 30 mn dividend to shareholders in July, CEO Osama Bishai noted.

OC-built Natgasoline passes key checkpoint: Natgasoline, the largest methanol production facility in the US, received provisional acceptance after passing licensor performance tests, Orascom Construction announced yesterday (pdf). OC had completed mechanical works at the facility, located in Beaumont, Texas, in April. The main contractor for the project was Orascom Engineering & Construction USA.

CABINET WATCH- Cabinet approves contracts with Russia’s Transmashholding, sets up unified rights committee: The Madbouly Cabinet approved yesterday the Egyptian National Railways’ agreement with Russia’s Transmashholding to supply 1,300 railway cars, according to an official statement. Egypt will pay around EGP 17 bn for the cars, with delivery expected to take place in six months to a year.

The ministers also approved establishing the Supreme Committee for Human Rights, which will be mandated with managing Egypt’s responses to all “allegations” made about our human rights record. The committee will also be in charge of studying issues pertaining to human rights in Egypt and suggesting ways to address the problems it identifies. It will also be required to issue periodical reports on the matter. The committee falls under the auspices of the Foreign Ministry.

Also given the greenlight yesterday:

• The Egyptian Electricity Holding Company’s request to sign the contracts for the USD 4.4 bn Hamrawein coal plant next month;
• A decree from the prime minister mandating the Housing Ministry with preparing a development strategy for the Sinai Peninsula;
• Raising the minimum annual budget for the Supreme Council of Antiquities to EGP 20 mn, up from EGP 10 mn;
• Direct order agreements with food companies that have met quality requirements to produce government-issued school meals.

MOVES- Wael Abou El Ela was named yesterday as Careem Egypt’s new general manager, Youm7 reports. Abou El Ela was most recently the chief marketing officer at Etisalat Misr.