Gov’t to sell up to 15% stake in Eastern after receiving interest from multiple investors

Wednesday, 23 Aug 2023

Gov’t to sell up to 15% stake in Eastern after receiving interest from multiple investors

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Today at a glance

Privatization

Gov’t to sell up to 15% stake in Eastern after receiving interest from multiple investors.

IPO

ADES to IPO in Riyadh next quarter?

Fintech

Valu announces rebrand as it pushes into the fintech space.

Economy

Unemployment dips to 7% 2Q 2023, with women making the most gains.

DEBT WATCH

EBRD to extend USD 50 mn loan to Egyptian pipe maker.

EARNINGS WATCH

National Bank of Egypt + Banque Misr report higher net income in 2022.

Also on our Radar

Mohamed Alabbar wants to redevelop gov’t buildings in downtown Cairo.

Also on our Radar

Cheiron strikes oil in the Gulf of Suez.

HARDHAT

New unified contracting system aims to regulate Egypt's government procurement market.

What We're Tracking Today

Expand or not to expand? The Brics aren’t seeing eye to eye

Good morning, wonderful people, and happy Wednesday to you all. Corporate news dominates the headlines this morning, with the sole story of note out of government being a modest dip in unemployment.

(That said: The Big Two state-owned banks literally “made bank” last year, according to financials released yesterday.)

ELECTION 2024- The National Election Authority (NEA) will soon announce the timetable for the 2024 presidential election, the chairman of the authority Walid Hamza told the media yesterday. The NEA is currently finalizing logistical arrangements for the poll, he said. National Dialogue and State Information Service boss Diaa Rashwan has previously said to expect the process to get underway this December.

COVID WATCH- New covid variant lands in Egypt: Authorities have detected the first two cases of the new sub-variant of covid-19 — EG.5 / Eris — that is currently spreading elsewhere around the world, the Health Ministry said yesterday. The ministry said that this new strain of the virus has mild symptoms, adding that it is closely monitoring the situation both locally and globally.

Eris isn’t all: Scientists around the world are now tracking another new variant, BA.2.86, which although described as a “radically different” strain of the virus, doesn’t yet appear to be any stronger or more transmissible than existing variants.

HAPPENING TODAY-

Brics summit continues: The leaders of Brazil, Russia, India, China and South Africa will continue discussions about trade, investment, and geopolitics in Johannesburg today on the second day of the Brics annual summit.

First day divisions: Chinese president Xi Xinping — who has been pushing for the bloc to aggressively challenge the G7’s geopolitical dominance by expanding its membership — didn’t attend an event with the other leaders yesterday, though met with South African President Cyril Ramaphosa ahead of the summit to discuss how to expand its global influence. Remarks made by Brazilian president Luiz Inacio Lula da Silva, though, pointed to division in the ranks. “We do not want to be a counterpoint to the G7, G20 or the United States,” he said during an online broadcast yesterday,according to Reuters. “We just want to organize ourselves.”

Egypt is one of the countries who wants in: Egypt is among the 20 countries to have submitted a bid to become a member of the bloc, having earlier this year became a member country of its multilateral lender. President Abdel Fattah El Sisi is among the heads of state that have received invites to Johannesburg, though the presidency is yet to confirm whether he plans to attend.

#2- Tansik results out today: Prospective students who applied for places in public universities during the second phase of tansik will know by Wednesday where they’re heading, the Higher Education Ministry said yesterday. The third and final phase will be announced after the results are announced.

HAPPENING THIS WEEK-

#3- The financial markets will have their eyes on Wyoming this week when global central bankers, economists and policymakers head to Jackson Hole for an annual meeting of central bank officials. US Federal Reserve Chairman Jerome Powell’s speech will be the headline event as investors try to gauge where interest rates are heading in the coming months. The event runs Thursday through Saturday.

PSA- The Egyptian Tax Authority is reminding lan dlords who rent properties to notify the authority within a month of the start of the lease so they can start paying tax on their rental income.

THE BIG STORIES ABROAD-

It’s a mixed picture on the global front pages this morning: The war in Ukraine, the recent wildfires in Hawaii, Trump’s legal troubles, and the Chinese economy are all making headlines, with no single story dominating the global conversation.

Another US debt ceiling debate this year? Goldman Sachs thinks so, writing in a note that it thinks it “more likely than not” that the government shuts down later this year as Democrats and Republicans argue about federal spending, according to Reuters.

CHECK OUT OUR AGENDA-

The Enterprise Finance Forum is taking place on 18-19 September at the St. Regis Hotel in Cairo. This flagship forum is the latest in our must-attend series of invitation-only, C-suite-level gatherings that allow senior members of our community to openly and frankly discuss critical issues in key sectors of the economy.

This is our first two-day event,which should give us plenty of time to dive into the nitty gritty of this industry we love. Our panels will see CEOs, bankers, investors and founders gather to discuss the future and trends shaping banking, finance, fintech and NBFS.

Our full agenda will be out at month’s end. Among the topics we’ll be discussing:

Looking into the crystal ball: Top industry CEOs will join us on stage to answer tough questions on where we are as an industry, the forces that will shape all of our businesses going forward, and their views on dealflow in the year ahead.

Surviving nuclear winter: We discuss how private equity and venture capital players are tackling challenges including fundraising and deployment in an environment in which it’s awfully difficult to price your local asset in USD terms.
The robots are coming: We explore what the coming AI and big data means for the industry in our part of the world and what can bankers, NBFI, and fintech players do to capitalize on them.
What do you do when nobody wants to be a banker — and when those who are already (investment or commercial) bankers are either (a) dreaming of doing their own startup or (b) moving to Dubai (or, increasingly, Riyadh)? We go deep into the weeds with industry leaders on how they’re building talent for tomorrow.
NBFIs are a bubble. Prove me wrong: We chart the explosive rise of NBFIs and ask whether the industry is ready for a wave of consolidation. We’ll dive into whether consumer finance is starting to mature as a segment — and ask which sector is next.
Handicapping the winners and losers in fintech in 2024: We dive deep into which categories are getting traction, where the untapped opportunities are, what business they would start today if they could, and what we can expect of the sector in the year ahead.
What’s a bank, anyway? Wherein we talk challenger and neobanks with the players looking to shake up the brick-and-mortar industry.

** NEW: MORE NETWORKING TIME- Our agenda includes expanded networking time, including an expanded coffee break and a post-event networking room for you to interact with your peers and speak one-on-one with the team at Enterprise.

STAY TUNED for more detail about our exciting agenda in the weeks to come.

TAP OR CLICK HERE if you want to express interest in attending. We’ll be sending out the first batch of invitations soon.

Do you want to become a commercial partner? Ping a note to Moustafa Taalab, our head of commercial.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: Could the government’s new digitized contracting system help level the playing field for private sector construction and contracting players?

Tags:

BRICS DIPLOMACY politics What We're Tracking Today

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Don't miss your chance to take #ThreeDaysOff and flow with us at Solasi at Somabay. Head to solasifestival.com to find out more and book your pass today.

Privatization

Egypt to sell up to 15% stake in Eastern after receiving interest from multiple investors

Eastern Company confirms reports of potential stake sale: The government could sell up to 15.3% of state-owned tobacco manufacturer Eastern Company after receiving offers from several foreign investors, the EGX-listed firm said in a regulatory filing (pdf) yesterday. Talks are at an early stage and the firm is yet to identify its preferred offer, the statement reads. The company did not disclose the identity of the investors.

ICYMI- The filing came after reports earlier in the week that Philip Morris’ United Tobacco had entered talks with the government to acquire a minority stake in the company.

JTI is reportedly in the running: Japan Tobacco International (JTI) is among the companies in talks with the government to snap up the stake, Asharq Business reported yesterday, citing two unnamed sources it said are familiar with the negotiations. An Emirati state institution is also mulling an acquisition, according to a report in Al Mal back in June.

Gov’t wants to maintain at least a blocking minority: The government’s Chemical Industries Holding Company (CIHC) holds a 50.95% stake in Eastern and wants to maintain control over at least 35.67% of the company, according to figures in yesterday’s disclosure. This would allow it to maintain its position as the company’s single-largest shareholder and would give it a large enough position to have a deciding vote in key matters. Figures show South Africa’s Allan Gray holds 7.2% of Eastern, while the union of employee shareholders owns 5.2%; the remainder is in freefloat. Eastern is a regular dividend payer, traditionally attracting a range of institutional shareholders whose individual shareholdings fall short of the 5% threshold requiring they disclose their ownership.

What’s next: The company will file a disclosure once it has finalized terms with one of the investors, it said.

What’s Eastern worth? CIHC will be looking for a strategic buyer to pay a premium. Eastern’s shares rose 8.5% yesterday to close at EGP 19.80, making it the EGX30’s best performer of the day. That gives the company a market cap of EGP 44.1 bn. CIHC last sold shares in 2019, netting some EGP 1.72 bn and attracting heavy appetite from foreign investors.

Tags:

Eastern Company Japan Tobacco International M&A Watch Philip Morris privatization watch state privatization program UNited Tobacco

IPO

Egypt-born ADES International eyes Saudi IPO in 4Q 2023 -Al Borsa

ADES IPO slated for 4Q 2023? Cairo-born regional oil and gas services company ADES International will make its long-awaited Tadawul debut in 4Q 2023, Al Borsa reports, citing sources it says are in the know. The company is planning to offer a 30% stake with the aim of raising some USD 1.2 bn, which will go towards its Saudi expansion plans, the sources are quoted as saying. Company sources Enterprise spoke to yesterday were unable to confirm the news.

Refresher: ADES has been mulling a Riyadh listing since at least last year but the process has reportedly stalled due to unfavorable market conditions.

A four-month window : The Saudi Capital Market Authority in June approved ADES’ application to offer 338.7 mn shares — 30% of the company’s share capital — on the Saudi exchange. The approval is valid until 21 December.

From Cairo to London to Riyadh: The news comes a few years after Ades delisted from the London Stock Exchange following a takeover backed by Saudi Arabia’s Public Investment Fund (PIF).

O wnership structure : ADES went private in 2021 through a vehicle dubbed Innovative Energy, which purchased 98.6% of the company. At the time, Egyptian conglomerate Intro Group owned a majority 57.5% stake in Innovative through a subsidiary, while the Saudi PIF held a 32.5% stake, and Zamil Investments held 10%.

The hometown angle: The company started life here in Egypt, where it maintains a significant presence. It derived 18% of its revenue locally in 2019 (ahead of a sustained push to expand its regional operations), according to a 2020 investor presentation (pdf) . It is currently the country’s largest offshore driller.

EGX-Tadawul dual listing still in the cards? The company could also look into a dual listing on the Egyptian Exchange after its Saudi debut, Intro Group Chairman Mamdouh Abbas had previously told local media.

Tags:

Ades International Intro Group IPO watch oil and gas Tadawul

NBFS

Valu announces rebrand as it pushes into the fintech space

Valu rebrands to reflect an expanded footprint in the fintech industry: Valu has announced a strategic rebranding to reflect its push into the region’s growing fintech market, it said in a press release (pdf) yesterday. Having made its name as one of the region's first and most successful buy-now, pay-later firms — and attracted investor interest from Amazon — Valu has since expanded its product offering to include savings and investment services, digital payments, and B2B solutions. Valu is a unit of EFG Holding.

In with the new: The company has revamped its mobile app and refreshed its visual identity to reflect its position as a fintech company, it said.

What they said: “Valu today is no longer a consumer finance company; we now offer an instant cash redemption program, savings solutions, investment products, B2B services platform, and more,” said ValU CEO Walid Hassouna. “It was about time for Valu to undergo a brand restructuring to reflect the breadth and depth of its brand portfolio.”

Remember: Valu had a good 2Q. The company almost tripled its revenues y-o-y to EGP 207 mn in 2Q 2023 on the back of gains from securitization and an expansion of its loan book, EFG Holding said in its earning release (pdf) recently. Valu’s revenues were up more than 2x year-to-date in 1H 2023.

Fintech license on the way? Valu will apply to the Financial Regulatory Authority to acquire a fintech license, Asharq Business quotes Hassouna as saying. Several investors are interested in Valu and may be potential partners for the company should it look at growing outside of Egypt, he added.

As is a fresh bond issuance: The company plans to take a new securitized bond issuance worth EGP 1 bn to market in September to finance its on-loans portfolio, Al Mal reports, quoting Valu CFO Shokry Bidair. Valu has securitized EGP 2.28 bn of its portfolio so far this year, according to our math.

BY THE NUMBERS- Valu has more than 1 mn active customers and booked total gross merchandise valued at EPP 5.8 bn on the platform last year. Amazon bought in May 2022 EFG Holding global depositary receipts with an option to swap the investment into an equity stake in Valu.

Tags:

consumer finance EFG Holding Fintech non-banking financial services ValU Walid Hassouna

DEBT WATCH

EBRD to extend USD 50 mn loan to Egyptian pipe maker

EGIC could be up next for an EBRD loan: Local pipes and fittings manufacturer Egyptian German Industrial Corporation (EGIC) could receive a USD 50 mn credit facility from the European Bank for Reconstruction and Development (EBRD) to finance its operations, according to the lender’s website. The long-term loan has passed a final review and is awaiting approval on 12 September.

All about FX: The loan will cover part of the prominent exporter’s hard-currency working capital needs in 2024, supporting its ability to import raw materials and reduce its reliance on short-term funding, the EBRD said.

REMEMBER- Manufacturers have been struggling to import key components for more than a year after the war in Ukraine helped trigger a nationwide FX crunch that has made it difficult to secure the hard currency needed to cover shipments.

PLUS- Better governance: EGIC will commit to “an agreed quota for female staff to foster more open and diverse career progression opportunities for them” under the terms of the loan, the statement said. The company will also launch a leadership program meant to “enhance staff members’ skills towards promotion into middle-managerial and more senior roles.”

We’ve seen a ton of EBRD money lately: The lender is expected to approve a USD 125 m n loan in October to finance Damietta Port’s second container terminal, and is investing EGP 927 mn in water and power infrastructure in our new cities. It’s also in the process of granting a USD 400 mn loan to the National Bank of Egypt and USD 100 mn to Banque Misr.

Tags:

debt watch development finance EBRD EGIC Manufacturing

Economy

Egypt’s unemployment dips to 7% 2Q 2023

Unemployment inched down to 7.0% in 2Q 2023, down 0.1 percentage points from the first quarter of the year, according to data (pdf) released by statistics agency Capmas yesterday. Unemployment was down 0.2 percentage points compared with the same period last year.

REMEMBER- By definition, the official unemployment rate only includes people who are looking for work. The labor force participation rate — which counts everyone aged 15-64 either in work or actively looking for work — recorded 43.0%, unchanged from last quarter and up from 42.6% in the same quarter of 2022.

Unemployment among women dipped significantly: The jobless rate among women dropped 1.9 percentage points q-o-q to 17.3%, while unemployment among men inched up 0.3 percentage points to 4.8%. Unemployment among women is consistently much higher than men.

And slightly fewer young people are out of work: The rate of unemployment among 15-29 year-olds accounted for 61.8% of all jobless people in 2Q 2023, compared to 63% the previous quarter. Capmas doesn’t provide an official rate of youth unemployment.

Tags:

economy employment

EARNINGS WATCH

National Bank of Egypt + Banque Misr report higher net income in 2022

NBE + Banque Misr release full-year earnings: Egypt’s two-largest state-owned banks both reported higher net income with the release of their full-year 2022 earnings yesterday. In late 2021, both banks changed their financial years to January-December. In their financial statements and earnings releases, they benchmark their FY2022 performance against an 18-month comparable period running 1 July 2020 through the end of December 2021.

THE NATIONAL BANK OF EGYPT-

NBE’s net income climbed 17% from the 18-month comparable period on the back of rising net interest income, according to the bank’s financials (pdf). The bank reported a 13% increase in net interest income to EGP 111.9 bn and post-tax profits of EGP 34.7 bn for the year.

Large corporates drive loan book expansion: The lender’s loans portfolio increased 47% to EGP 1.7 tn, according to figures in its earnings release (pdf). Large corporates dominated the bank’s lending, rising 50% to EGP 1.36 tn. Meanwhile, lending to SMEs rose 30% to EGP 143 bn and personal loans grew 42% to EGP 227 bn. Customer deposits rose by a third to EGP 3.2 tn in 2022.

BANQUE MISR-

Banque Misr’s net income posted a double-digit gain in 2022 compared to the 18-month comparable period despite a slight decline in revenues from interest, fees, and commissions, according to the bank’s financials. The lender’s pre-tax profits fell 3% to EGP 44.9 bn following 1% declines in net interest income (EGP 70.2 bn) and revenue from fees and commissions (EGP 13.4 bn). The bank’s bottom line climbed 11% to EGP 25.9 bn.

Growth in loans + deposits: Banque Misr’s loan book grew 16% to EGP 686 bn in 2022 on the back of growth in personal and corporate loans, according to its earnings release (pdf). Customer deposits grew 42% to EGP 1.7 tn in FY 2022 against the 18-month comparable period.

Tags:

banking Banque Misr earnings watch National Bank of Egypt

Moves

Egypt shakes up top management at public-sector oil and petchem firms

Oil Minister Tarek El Molla has reshuffled the top management of state-owned oil companies. Some of the key appoint ments:

Salah Gaber Rizk Bahnasi was appointed acting chairman and managing director of Middle East Oil Refining Company (Midor).
Ahmed Mahmoud Mohamed El Sayed was appointed acting chairman and managing director of Misr Fertilizer Production Company (Mopco).
Hisham Riyad Hussein Suleiman was appointed acting chairman and managing director of the Egyptian Company for Ethylene and Derivatives Production (Ethydco).
Ashraf Bahaa El Din Aboul Fotouh was appointed acting chairman of South Valley Egyptian Petroleum Company (Ganope).

Tags:

energy Ethydco Ganope MIDOR Mopco moves oil and gas Oil Ministry Tarek El Molla

LAST NIGHT’S TALK SHOWS

There was no shortage of topics on the airwaves yesterday with a new oil discovery in the spotlight

Last night proved to be a busy evening on the airwaves: Diplomacy, food security, an oil find in the Gulf of Suez, and the ongoing Brics summit all received coverage.

The Brics debate: Coinciding with the opening of the Brics summit in South Africa yesterday, Ala Mas’ouleety’s Ahmed Moussa invited several economists into the studio to discuss what we can expect from the summit, whether the organization will be able to challenge the G7’s geopolitical dominance, and what it would mean for Egypt to become a member. The consensus: it will be long before we see the bloc pose serious competition to the current world order (watch runtime: 59:23).

What’s in it for Egypt? With Egypt among the 20 countries that have formally applied to join the bloc, a large part of the conversation focused on the potential benefits of becoming a member. Entering the Brics would gradually wean Egypt off the greenback, bring in more investments from member states, allow us to enter into foreign partnerships in local currency, and get loans at better terms especially considering our joining of the Brics bank, banking expert Sahar El Damaty told Moussa (watch, runtime: 59:22).

And what’s in it for them? The other Brics members would benefit from Egypt’s strategic geographical location, economic expert Mohamed Shady told Masaa DMC (watch, runtime: 10:37). None of the current member states have any objections to Egypt’s entry but the bloc still needs time to evaluate the economic impact of the potential expansion, shady added.

Boosting local wheat production: Masaa DMC (watch, runtime: 4:22) and Ala Mas’ouleety (watch, runtime: 4:42) both covered President Abdel Fattah El Sisi’s instructions to the prime minister and the agriculture minister yesterday to increase the supply of fertilizer and equipment to farmers. In an interview on Ala Mas’ouleety, Agriculture Ministry spokesman Mohamed El Kersh said that it had obtained around 240k tons of fertilizer to support planting 4 mn feddans of wheat. In a speech at the weekend, El Sisi said the government would begin cultivating another 3 mn feddans in the coming months.

ALSO GETTING ATTENTION ON THE AIRWAVES-

Cheiron strikes oil: Masaa DMC (watch, runtime: 8:55) and Al Hayah Al Youm (watch, runtime: 2:02) both covered yesterday’s news that Cheiron Energy has discovered oil in the Gulf of Suez. We have more in this morning’s Also on our Radar, below.
Sisi x El Safadi: Masaa DMC (watch, runtime: 4:22) gave airtime to President Abdel Fattah El Sisi’s meeting with the Jordanian foreign minister yesterday. More on that, below.

Tags:

Abdel Fattah El Sisi BRICS LAST NIGHT’S TALK SHOWS oil and gas wheat

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Also on our Radar

Mohamed Alabbar wants to redevelop gov’t buildings in downtown Cairo. PLUS: New oil find, more wheat incoming + budget flights from London to Cairo

REAL ESTATE-

Emaar and Eagle Hills eye defunct gov’t buildings: UAE real estate developers Emaar Properties and Eagle Hills have submitted requests to the government to build and restore government-owned properties in Cairo, Emirati businessman Mohamed Alabbar — who is the founder of Emaar and chairman of Eagle Hills — told Al Arabiy a.

Emaar’s sights are set on the North Coast: Emaar wants to increase the number of hotel rooms in Egypt to 3k rooms with a focus on the North Coast, where growth rates in recent years have exceeded the company’s expectations, Alabbar said.

The companies’ local arms are intertwined: Emaar Misr in August 2022 acquired 25% of Eagle Hills Egypt’s capital following an agreement to partner up on a project on the North Coast, according to an EGX disclosure (pdf).

ENERGY-

Cheiron discovers oil in Gulf of Suez: Oil and gas player Cheiron Energy, one of the country’s largest independent producers, has made a new oil discovery in the Geisum and Tawila West concession in the Gulf of Suez, according to statements by the company and the O il Mini stry. The GNN-11 exploration well is currently producing more than 2.5k barrels per day, taking the concession’s total output to 23k bpd.

More drilling to come: The well is the fourth to be completed from a potential seven in total, according to the statements. Cheiron in March said that it had started pumping oil from the first of the new oil wells at the field, which it discovered in 2019.

Who owns what? Cheiron holds a 60% working interest in the concession. The remainder is owned by Kuwait Foreign Petroleum Exploration Company (Kufpec).

The news got ink in the international business press: Reuters.

INFRASTRUCTURE-

El Sisi signs off on new terminal at East Port Said port: President Abdel Fattah El Sisi has ratified the bill allowing the Suez Canal Economic Zone to give a 30-year contract to Sky Logistics and Reliance Logistics to establish a new multipurpose terminal worth USD 65 mn at the East Port Said port. The decision was published in the Official Gazette on Monday. The companies will be responsible for the design, construction, management, operation and maintenance of the terminal, which will feature a 900-meter container berth.

COMMODITIES-

Romanian wheat incoming: GASC has purchased 60k metric tons of Romanian wheat in a tender for shipment between 5-20 October, Reuters reports, citing a statement from the state grains buyer. The Romanian supplier submitted the lowest bid in the tender, offering to sell the grain at USD 270.25 on a free-on-board basis. The purchase is being funded by the International Islamic Trade Finance Corporation (ITFC).

TRANSPORT-

Bidding for Alexandria Raml tram extended: Companies interested in operating and maintaining the Alexandria Raml tram project now have until September to bid in a National Tunnels Authority tender, Al Mal reports, citing a source it says is in the know. The tender had initially been set to close in June.

REMEMBER- Work to overhaul the tram line was awarded to a consortium including French companies Systra and Egis Rail, and Egypt’s ACE Moharram Bakhoum and Projacs in 2020.

TOURISM-

Budget flights from London to Cairo: Easyjet will launch a new route between London Luton and Cairo’s Sphinx Airport this winter, the budget airline said yesterday. The airline will operate three flights a week starting 31 October.

Tags:

ALSO ON OUR RADAR Cheiron Energy commodities Eagle Hills EasyJet Emaar Properties energy food GASC infrastructure Mohamed Alabbar oil and gas ports railways real estate Sky Logistics Suez Canal Economic Zone tourism transport wheat

PLANET FINANCE

Microsoft is still chasing Activision and Goldman is dumping part of its “mass market” wealth management division

Microsoft’s Activision takeover: Attempt 2. Microsoft has submitted a new proposal to acquire gaming firm Activision Blizzard to the British competition regulator, which earlier this year rejected the acquisition on concerns it would hamper competition in cloud gaming. In a bid to allay the concerns, Microsoft is pledging that it will not acquire cloud rights for Activision games for 15 years. (Competition and Markets Authority)

ALSO WORTH NOTING-

More credit rating downgrades for US banks: S&P Global followed Moody’s to downgrade the ratings of five US lenders amid tough operating conditions, including funding risks and weaker profitability on the back of rising interest rates. (Reuters)
Goldman Sachs’ retreat to the VVIP room: The global investment bank is mulling divesting a USD 29 bn portion of its “mass market” wealth management division as it refocuses its attention on ultra-wealthy clients. (Reuters)
Iran turns up the oil taps: Iran’s oil exports surged to 2.2 mn barrels per day in the first 20 days of August from 1.4 mn in July. Saudi Arabia and other OPEC+ members have been cutting back production this year to support prices. (Bloomberg)

EGX30	18,217	+1.7% (YTD: +24.8%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	19.25% deposit	20.25% lending
Tadawul	11,378	-0.3% (YTD: +8.6%)
ADX	9,766	-0.1% (YTD: -4.4%)
DFM	4,069	+0.4% (YTD: +22.0%)
S&P 500	4,388	-0.3% (YTD: +14.3%)
FTSE 100	7,271	+0.2% (YTD: -2.4%)
Euro Stoxx 50	4,260	+0.8% (YTD: +12.3%)
Brent crude	USD 83.93	-0.6%
Natural gas (Nymex)	USD 2.56	-2.9%
Gold	USD 1,926.30	+0.2%
BTC	USD 25,846	-1.0% (YTD: +56.2%)

THE CLOSING BELL-

The EGX30 rose 1.7% at yesterday’s close on turnover of EGP 2.4 bn (18% above the 90-day average). Foreign investors were net sellers. The index is up 24.8% YTD.

In the green: Eastern Company (+8.5%), Edita (+5.8%) and Mopco (+5.6%).

In the red: Oriental Weavers (-1.1%), Juhayna (-1.1%) and B Investments Holding (-0.9%).

Tags:

Financial Markets Goldman Sachs Iran microsoft Planet Finance S&P Global

Diplomacy

Egypt calls for peaceful resolution to Niger crisis

Egypt’s foreign ministry has called for a peaceful resolution to the crisis in Niger as Western African nations threaten to take military action against the junta that seized power last month. A top Ecowas official said last week that the bloc had finalized plans for the potential attack should the coup leaders not restore deposed president Mohamed Bazoum to power.

Talks between the two sides don’t seem to be making progress: Last ditch talks that took place in the Nigerien capital on Saturday failed to find a breakthrough, with the head of the junta Abdourahmane Tchiani refusing to release the president and agreeing only to step aside after three years, the Associated Press reports.

The country just got kicked out of the AU: The African Union yesterday suspended Niger from the organization and threatened to impose sanctions on the members of the junta, according to Reuters.

Egypt-Jordan talks: President Abdel Fattah El Sisi held talks with Jordan’s foreign minister Ayman Safadi in Cairo yesterday, Ittihadiya said in a statement, without providing details of the conversation. Foreign Minister Sameh Shoukry and intelligence chief Abbas Kamal were in attendance.

Remember: Jordan’s King Abdullah II was in Egypt earlier this month for three-way talks with El Sisi and Palestinian President Mahmoud Abbas to discuss recent developments in Palestine.

ALSO FROM THE DIPLO SPHERE-

US Secretary of State Antony Blinken welcomed the government’s decision to release political activist Ahmed Douma. He made the remarks during a talk with Foreign Minister Sameh Shoukry earlier this week. (US State Department)
Foreign Minister Sameh Shoukry expressed interest in Egypt attending the upcoming G77 summit in Havana in a conversation with Cuba’s foreign minister Bruno Rodríguez. (Foreign Ministry)
Irrigation Minister Hany Sweilam talked water security with Sweden’s international development cooperation minister and the head of the International Water Institute. (Irrigation Ministry | Irrigation Ministry)

Tags:

Abdel Fattah El Sisi Ahmed Douma Antony Blinken DIPLOMACY Egypt-Cuba relations Egypt-Jordan relations Egypt-Niger relations Egypt-Sweden relations Egypt-US relations Foreign Ministry Hany Sweilam human rights Irrigation Ministry Sameh Shoukry water security

HARDHAT

New unified contracting system aims to regulate Egypt's government procurement market

Could the gov’t’s new digitized contracting system help level the playing field for private sector construction + contracting players? The Finance Ministry is gearing up to launch a trial phase of its new platform for government contracting as it looks to regulate and standardize procurement procedures between the government and public and private companies. The focus of the initial trial phase will be on major corporations, sources with knowledge of the matter told Enterprise. The new measures — which include digitizing the process — are designed to ensure fairer distribution of government contracts and prevent the largest companies in the market from monopolizing contracts. The system will also reduce the direct allocation of contracts without a transparent bidding process, our sources say.

More transparency anticipated: The shift to a new digitized system focused on opening up the bidding process could lead to more competitive pricing on government contracts, our sources suggest. Currently, many contracts are awarded through direct order rather than an open tender process, which has limited access to business agreements for some companies, they said.

The goal? A level playing field: The overarching goal for the new contracting system is to boost private sector competitiveness on government projects, improve quality, and ensure a more level playing field as part of the government’s broader push to boost private sector activity in the economy, according to Finance Ministry sources we spoke with. A future phase of the new system will involve gradually rolling out the new system to all administrative bodies nationwide.

End-to-end contracting digitization: The new platform will digitize all contracting procedures required under the Public Contracts Act, from assessing needs to bidding, tendering, awarding, contract management and detailed reporting, General Authority for Government Services head Mohammed Adel told Enterprise. This will support decision-makers and bring more transparency across the contracting cycle. The platform also provides secured electronic contracts via printed barcodes and centralized digital archiving to protect the rights of both contracting parties.

REFRESHER- Tender procedures have undergone a facelift in recent years: Back in 2018, the House of Representatives passed the Public Contracts Act (formerly known as the Auctions and Tenders Act) in a bid to decentralize and streamline tender procedures for public project contracts. The executive regulations, which were issued the following year, stipulated that the government would set up an e-procurement system for its projects. However, the legislation had raised concerns about potentially opening the door for the government to expand the use of no-bid contracts, although the Finance Ministry said at the time that the regulations would fight “monopolies” and “concentration of economic power.”

It’s still early days, but there’s progress underway: So far, the new digital platform covers 3,555 government entities with 63 tenders currently open for bidding, according to the website. Suppliers and contractors are beginning to register on the system to be eligible for the digital bidding process, sources at the Finance Ministry who requested to remain anonymous told Enterprise.

What kind of contracts are up for grabs? The e-procurement portal allows companies and individuals to browse project contracts, with the option to filter these contracts by the nature of the contract (i.e. whether it will be a direct order, an open bidding process, an open auction, a local auction, or international auction or tender). Projects can also be filtered by the type of work or agreement, which includes buying, selling, or renting real estate; providing technical services; contracting work; and usufruct agreements, among several other categories.

REMEMBER- There’s plenty of infrastructure spending underway, creating windows for local construction and contracting players to reel in liquidity: The move to shake up the government contracting process comes as the Madbouly government continues to invest in its infrastructure development push over the coming years. The government’s sustainable development plan for the current fiscal year earmarked around EGP 1.05 tn for public investments in infrastructure, including transport, construction, and water and sewage projects.

The business community is happy with the move towards limiting direct order contracts and ramping up competition in open bids, particularly as unifying contracting under one entity will improve oversight and transparency, Egyptian Federation of Construction and Building Contractors head Mohammed Sami Saad told Enterprise. The construction industry has long called for limits on direct allocation without tendering, which have deprived many firms of project opportunities, he added.

Your top infrastructure stories for the week:

Cairo Airport glow-up: Cairo International Airport Company signed an MoU with infrastructure consulting firm Aecom and tech security company Pangiam to work on the construction of a fourth terminal, as well as a consultancy agreement with Singapore’s Changi Airport to upgrade the airport.
Gov’t wants more for the Gabal El Zeit wind farm: The government is in talks with emerging markets private equity giant Actis to up its bid for the 580-MW Gabal El Zeit wind farm to USD 600-800 mn.
Port money: The European Bank for Reconstruction and Development is expected to approve a USD 125 mn loan for Damietta Port’s second container terminal,
Train money: Cabinet approved a EUR 250 mn loan from the Asian Infrastructure Investment Bank to redevelop Alexandria’s Abu Qir railway.

Tags:

construction Egyptian Federation of Construction and Building Contractors Hardhat infrastructure Public Contracts Act

CALENDAR

AUGUST

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

23 August (Wednesday): Networking Summit and Industrial Service Providers Meeting, Green Desert Hotel, Sadat City.

24-26 August (Thursday-Saturday): Jackson Hole Economic Symposium.

28 August (Monday): The start of Flat6Labs’ inaugural 12-week contech accelerator program.

SEPTEMBER

September: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

September: Sustainable Debt Coalition Initiative agreed at COP27 to launch.

September: IDH to open first branch in Saudi Arabia.

September: The Egypt-Germany trade and investment joint conference in Cairo.

September: JETRO’s second delegation arrives in Cairo.

1 September (Friday): Application deadline for the Smart Green Projects initiative.

3-5 September (Sunday-Tuesday): Pharmaconex, Egypt International Exhibition Centre, Cairo.

4-6 (Monday-Wednesday): Africa Climate Summit, Nairobi, Kenya.

7-8 (Thursday-Friday): Regional Forum for Sustainability & Development, Cairo.

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

10-12 September (Sunday-Tuesday): The International Agricultural Exhibition for Africa and the Middle East, Sahara.

13-14 September (Wednesday-Thursday): Hydrogen Egypt Summit, Nile Ritz Carlton, Cairo.

13 September (Wednesday): Deadline for settling outstanding military service in FX.

15 September (Friday): IMF to review USD 3 bn program.

15 September (Friday): Deadline for FX bureaus to comply with new capital requirements.

17-18 September (Sunday-Monday): Arab Security Conference and Exhibition, Nile Ritz Carlton, Cairo.

17-19 September (Sunday-Tuesday): Sharm Rendezvous, Rixos Premium Seagate, Sharm ElSheikh.

18-19 September (Monday-Tuesday): Enterprise Finance Forum, St. Regis Hotel, Cairo.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

20-23 September (Wednesday-Saturday): Cityscape Egypt, Egypt International Exhibition Center, Cairo.

21 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

25 September (Monday): Nasdaq deadline for Swvl Holdings Corp to increase its market value of publicly held shares to a minimum of USD 15 mn.

25-26 September (Monday-Tuesday): Egypt to host the Asian Infrastructure Investment Bank’s annual board meeting, Sharm El Sheikh.

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

27 September (Wednesday): Deadline for bidding in the fifth phase of the investment map offered by the Industrial Development Authority (IDA).

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

28-29 September (Thursday-Friday): Medical Tourism Conference, Sharm ElSheikh.

30 September (Saturday): The start of the new academic year for Egyptian universities.

30 September (Saturday): The start of the new academic year for Egyptian schools.

OCTOBER

October: Deadline for ins. providers to link their databases with the FRA.

October: Egyptian-Jordanian Business Council, Amman, Jordan.

1-3 October (Sunday-Tuesday) International Expotec for water economics management, Egypt International Exhibition Center, Fifth Settlement, Cairo.

2-4 October (Monday-Wednesday): Sharm Rendezvous - Ins. Market, Rixos Premium Seagate, Sharm ElSheikh.

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

6 October (Friday): Armed Forces Day.

9 October (Monday): The Narrative PR Summit, Somabay Red Sea.

9-11 October (Monday-Wednesday): Arabs Savings and Financial Literacy Conference, Four Seasons Hotel.

10-12 October ( Tuesday-Thursday) Ceramica Expo, Cairo International Convention Center.

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

Late October-14 November: 3Q2023 earnings season.

15-17 October (Sunday-Tuesday): Egypt Automotive Aftermarket Exhibition, Cairo International Convention Center.

26 October (Thursday): Daylight saving time ends.

29-31 October (Sunday-Tuesday): Egypt Energy, Egypt International Exhibition Center.

29 October - 2 November (Sunday- Thursday): Cairo Water Week.

30-31 October (Monday-Tuesday): Intelligent Cities Exhibition and Conference, Dusit Thani LakeView, Cairo.

30-31 October (Monday-Tuesday): Global Business School Network (GBSN), American University of Cairo.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

2 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

9-15 November (Thursday-Wednesday): Intra-African Trade Fair, Cairo.

14-15 November (Tuesday-Wednesday): Destination Africa, Royal Maxim Palace Kempinski Hotel.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

19-22 November (Sunday-Wednesday): Cairo ICT, Egypt International Exhibition Center.

23 November (Thursday): Worldview Education Fair, Cairo. (Register here)

30 November-12 December (Thursday-Tuesday): COP28, Dubai.

DECEMBER

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

21 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

3Q 2023: E-Finance to launch in Saudi Arabia.

4Q 2023: EGX to launch its new futures exchange.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

2024: Standard Chartered Bank to open a branch in Egypt.

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to initiate operations.

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