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Wednesday, 30 Aug 2023

What We're Tracking Today
Privatization
Privatization
Privatization
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Diplomacy
Hardhat
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Privatization, privatization, privatization…

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Today at a glance

1

Privatization

Egypt aims to raise USD 5 bn from privatization by June 2024.
2

Privatization

Taqa Arabia submits offer for military-owned Wataniya + 2 investors want Safi.
3

Privatization

Gov’t to sell 70% stake in Siemens-built power plant. PLUS: Updates on Zafarana, Helwan Fertilizers sales.
4

What We're Tracking Today

RUMOR WATCH- On potential sales of stakes in Eastern Company, EBank, and EIPICO.
5

Also on our Radar

Singapore chemicals firms to invest USD 700 mn in 2 factories.
6

What We're Tracking Today

HSBC has GAFI on the road in Singapore, Beijing.
7

Also on our Radar

BP to drill 4 exploratory gas wells before the end of the year.
8

Diplomacy

El Sisi holds talks with Sudan military chief.
9

HARDHAT

With inflation + depreciation, real estate remains an investment favorite.

Wednesday, 30 Aug 2023

What We're Tracking Today
Privatization
Privatization
Privatization
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Diplomacy
Hardhat
Calendar
1

What We're Tracking Today

Privatization info-dump day

Good morning, ladies and gents, and a very happy almost-THURSDAY to you. We have an exceptionally heavy issue for you this morning, so strap in and let’s get this show on the road:

Yesterday was privatization info-dump day: Between a leak that appears to be a version of the state ownership policy document, fresh rumors in the domestic and regional press, and statements from businesses and government officials, a deluge of privatization updates hit the news cycle yesterday.

What we know: It was more fill-in-the-blanks details than blockbuster revelations, with new timeframes, updated targets, and a few new names attached to long-anticipated transactions that should hopefully be sewn up in the coming weeks and months.

Cabinet ministers, assemble: Prime Minister Moustafa Madbouly yesterday gathered key cabinet ministers and the governor of the central bank for an update on what the International Finance Corporation (IFC) has been doing re. privatization. In June, the government appointed the financial institution to develop its privatization strategy and advise it on implementation.

The message? Privatization is still front and center of the government’s agenda.

WHERE THERE’S NEWS, THERE ARE RUMORS-

#1- Eastern Com pany worth USD 4.5 bn +? Probably not. Reports circulating of the potential value of the government’s sale of a stake in state-owned tobacco maker Eastern Company are “far from correct,” a source at Eastern’s state-owned parent firm Chemical Industries Holding Company (CIHC) told Enterprise. Al Borsa reported yesterday several investors had offered to pay around USD 700 mn for c.15% of the company, a figure which would value the firm at almost USD 4.6 bn. Eastern Company said in an EGX filing (pdf) on Tuesday that it had not been informed of any updates on the potential sale.

Remember: CIHC is looking to part with up to 15.3% of Eastern Company — meaning Al Borsa’s figure would value the shares on offer at at least a 246% premium to Eastern’s closing share price on 21 August, before news of the transaction broke.

When will the Eastern sale go through? As with any such transaction, timelines are mutable. CNBC Arabia said yesterday it would take place in 1Q 2024, Al Borsa says 1H 2024, our source said simply “this year.” This much is clear: It’s high on the state’s list.

#2- EBank says its not earmarked for privatization: The state-owned Export Development Bank (EBank) yesterday denied knowledge (pdf) of any government intention to sell shares to private investors via the privatization program. An early study was underway to explore the idea

of the bank bringing on board new investors via a capital increase, local media reported back in April.

Ownership breakdown: Ebank is 84% owned by state financial institutions, with the National Investment Bank holding the controlling 40.75% stake. Banque Misr owns 23.1% and the National Bank of Egypt has a 19.8% stake.

#3- EIPICO denies rumors of exit by main shareholder: There are “no offers or negotiations” from EIPICO’s main shareholder to sell down its stake in drugmaker EIPICO to a strategic investor, the company said in an EGX disclosure (pdf). The filing came in response to what the company called “rumors” of an alleged stake sale. The company’s largest shareholder is Acdima.

HAPPENING TODAY-

HSBC Egypt takes GAFI on the road: GAFI and our friends at HSBC Egypt are showcasing Egypt’s Vision 2030 sustainable development strategy at the Africa Singapore Business Forum, which kicked off on Tuesday and runs through to Thursday in Singapore. The forum will bring together business and government leaders from over 30 countries to explore partnerships and growth opportunities between Africa and Asia with a particular focus this year on how companies can find business and investment opportunities in manufacturing, sustainability and the digital economy. More than 600 Asian investors and corporations are set to attend.

That’s not all from the double act: The two will also be speaking at the Singapore Business Federation before HSBC take GAFI to Beijing to participate in an HSBC China-hosted MENAT Summit taking place tomorrow

HAPPENING THIS WEEK-

FDI WATCH- Deadline day for the Smart Green Projects initiative: Submissions for the second phase of the Smart Green Projects initiative will be due on Friday, 1 September. The second iteration of the government-led initiative is accepting applications for projects working on addressing issues like energy, emissions reduction, sustainable agriculture and green buildings. Shortlisted projects will get the chance to present their vision during COP28. The top three contenders in six categories are also awarded prizes between EGP 250k and EGP 750k.

TIME FLIES- As we near the final month of 3Q — here are the key news triggers on which to keep your eyes as we head into September:

  • PMI: S&P Global will publish Egypt’s PMI figures for August next Tuesday, 5 September.
  • Foreign reserves: The central bank will release August’s foreign reserves figures next week.
  • Inflation: Capmas and the CBE will publish the latest inflation data on Sunday, 10 September.
  • Interest rates: The CBE’s Monetary Policy Committee will gather to discuss interest rates on Thursday, 21 September.

ALSO- Does September = an end to rolling blackouts ? Please, God.

FURTHER AFIELD-

Could the gov’t finally take steps towards a wheeling framework for electricity producers? The Madbouly government will meet with businesses and investors on 2 October to discuss liberalizing Egypt’s electricity grid, Al Borsa reported yesterday, citing unnamed sources. The government will likely move to open the grid up to the private sector in 2025, the sources said, adding that five local and Arab companies have voiced their interest in investing in the grid.

It’s been a while coming: Private-sector players have long been asking for the ability to use the state’s electricity grid to transmit electricity to their end clients. The European Bank for Reconstruction and Development (EBRD) is working to advise the Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) on opening up the market.

THE BIG STORIES ABROAD-

Hurricane Idalia: Much of the US press is focused on the latest storm to hit the US. Hurricane Idalia is expected to make landfall in Mexico in the coming hours. (Associated Press | Reuters | Washington Post | New York Times | Wall Street Journal)

For the market / MENA watchers: The Wall Street Journal thinks Saudi is serious about making peace with Israel after offering resume financial support to the Palestinian Authority. Meanwhile, leading the Financial Times front page is a story looking at Goldman’s use of Chinese state money to invest in a number of American and British cybersecurity firms.

WATCH THIS SPACE-

More businesses could soon be eligible for export support: The Export Development Fund could bring five new manufacturing sectors into the next phase of the export subsidy scheme, which starts next month, according to Al Borsa. The fund has completed a study into whether to make the sectors — which include sanitaryware, aluminum, and construction equipment — eligible for government support, the newspaper reports.

Subsidy allocations are rising significantly this year as the government looks to boost exports: The government has allocated EGP 28 bn towards export subsidies this fiscal year, 4x higher than in FY 2022-2023. The larger allocation is aimed at helping the government reach its target to increase exports to USD 100 bn a year by the middle of the decade.

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.
  • What does 2024 hold in store for fintech: We dive deep into which categories are getting traction, which segments will account for the lion’s share of future growth, 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: The devaluation of the EGP and rising inflation have led consumers to pour their savings into real estate, spurring demand and encouraging further investment in the sector and its infrastructure, according to a new report.

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Get ready to embark on a sensational journey of entertainment. From October through December, London will be illuminated by the brilliance of three remarkable events, sponsored exclusively by Somabay. The laughter will be unstoppable at the uproarious Egyptian Trilogy comedy tour, followed by the enchanting Samar Tarik. Brace yourselves for a captivating finale with the mesmerizing Farah El Dibany. Somabay brings you an unforgettable trifecta of events that will leave you utterly captivated and eagerly anticipating each spectacular moment.

2

Privatization

Egypt aims to raise USD 5 bn from privatization by June 2024

State ownership policy, v3: The government is aiming to draw USD 5 bn in investment through the privatization of state-owned companies and assets in the nine months between October 2023 and June 2024, according to an updated state ownership policy document leaked to the press yesterday. Under the revised plan, the government is aiming to sell two wind energy plants, two military-owned companies, the combined-cycle power plant in Beni Suef, and a number of desalination plants before the end of the current fiscal, which draws to a close on 30 June 2024.

^^ We have more details on all of these transactions in the news well, below.

Refresher: As part of its USD 3 bn assistance program with the IMF, Egypt earlier this year rebooted its long-stalled privatization program in a bid to attract FX inflows and shore up its external position. Prime Minister Moustafa Madbouly said in February that the government would look to sell down its ownership in 32 companies and assets by the end of 1Q 2024, and set itself the target of raising USD 2 bn in the fiscal year that ended in June 2023.

The privatization push is part of the country’s state ownership policy which outlines how the government intends to more than double the private sector’s role in the economy to 65% and attract USD 40 bn in private investment by 2026.

Here’s what’s changed:

#1- 32 becomes 35: The original list of 32 state-owned companies has been expanded to include Telecom Egypt (TE), Eastern Company, and Al Ezz Dekheila. The government earlier this year sold a 10% stake in the state-owned telco to investors, and is currently preparing to sell down its entire 31% stake in the Ezz Steel subsidiary as well as a 15% stake in Eastern.

#2- 1Q 2024 becomes 2Q 2024: The government has extended the deadline for delivering on its targets until the end of June 2024. Under the original strategy, Madbouly pledged to have sold stakes in each of the companies by the end of 1Q 2024.

THE STORY SO FAR-

In the bag: The government raised USD 3.1 bn last summer by selling sizable stakes in key EGX-listed industrial and financial companies to Gulf sovereign wealth funds including the UAE’s ADQ and Saudi Arabia’s Public Investment Fund. Among the sales were almost half of Mopco and Abu Qir, 17.5% of CIB, and a 25% stake in e-Finance. This year, it has sold seven historic hotels to a consortium led by Talaat Moustafa Group for USD 705 mn, offloaded its shares in Al Ezz Dekheila, completed the sale of a 10% stake in TE, and sold paint manufacturer Pachin.

Close to the finishing line: The government hopes to sign final contracts with ADQ before the end of September for the sale of shares in Egyptian Ethylene and Derivatives Company (Ethydco), Egyptian Linear Alkyl Benzene (Elab), and Egyptian Drilling Company (EDC). It announced in June that the Abu Dhabi-based wealth fund had agreed to purchase minority stakes in the companies for USD 800 mn.

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3

Privatization

Taqa Arabia submits offer for military-owned filling station operator Wataniya + 2 investors are eyeing water brand Safi

Military asset sales in the spotlight: The sales of military-owned firms Safi and Wataniya were spotlit in the latest iteration of the government’s state ownership policy out yesterday. The Wataniya transaction appears to have gotten extra traction after Taqa Arabia became the first company to publicly acknowledge interest in the firm, while the race for Safi remains, well, not very safi (pun intended).

ICYMI- The Sovereign Fund of Egypt has been working to sell at least 10% — and potentially as much as 100% — of filling station operator Wataniya and bottled water firm Safi under the privatization program. The government tapped CI Capital to quarterback the process, for which a roadshow kicked off in March.

TAQA EYES WATANIYA-

Taqa Arabia wants a stake in Wataniya: Qalaa Holdings’ Taqa Arabia has submitted a non-binding offer to buy an unspecified stake in fuel retailer Wataniya, the company said yesterday in an EGX disclosure (pdf). The government hopes to wrap up the sale between October and November.

Remember: The military’s National Service Projects Organization (NSPO), which owns 100% ofWataniya, last month acquired a 20% stake in Taqa in an EGP 1.6 bn transaction. The seller, Qalaa Holdings, has an option to repurchase the stake at a later date.

Taqa has competition: Taqa Arabia is among four firms that have been granted permission by the Madbouly government to conduct due diligence on Wataniya, according to the updated state ownership policy document leaked yesterday. The four firms were cleared for due diligence from among eight original bidders, according to the document.

So, who else is bidding? Abu Dhabi National Oil Company ( Adnoc ), the Emirates National Oil Company ( Enoc ), and Saudi firm Petromin were named by Asharq Business yesterday, which cited a senior government official. These are the same three companies Al Borsa claimed last month to be in the running for the company. None of the companies have commented publicly on the speculation.

The price tag? Bids for Wataniya have so far ranged between USD 250 mn and USD 280 mn, the government official reportedly told Asharq.

Taqa could pay in EGP: The state ownership document says that “in most cases” payment will be made in USD, though Taqa’s offer will not be paid fully in hard currency. Taqa told the EGX it is yet to decide on the means of financing the potential acquisition. Three banking sources told Asharq that the company is working to secure a loan of at least EGP 3 bn from a syndicate led by CIB.

Restructuring ? The government has spun off 174 of Wataniya’s 300 gas stations into a separate entity, according to the document. It’s not clear what this company is called, who owns it, or whether the assets will remain part of the transaction.

ICYMI- It’s been a big summer for Taqa: The company made its EGX debut last month in a direct offering to investors via the EGX.

TWO INVESTORS WANT SAFI-

Two unnamed investors are looking to acquire a stake in bottled drinks firm Safi, according to the document. The government expects to reach an agreement on the sale by December.

Has Safi been restructured? The NSPO-owned company has been restructured to spin off its factories and 75 distribution outlets from the rest of its business, the document says, without providing further details. As with Wataniya, it’s not clear which entity is being offered to investors. Local media had previously reported that potential investors were keen to buy the water business on a standalone basis without the firm’s olive oil, pickled olives, and salt subsidiaries.

REMEMBER- Agthia is out. ADQ-owned food company Agthia is reportedly no longer interested in acquiring the firm.

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4

Privatization

Egypt to sell 70% stake in Siemens-built power plant. PLUS: Updates on Zafarana, Helwan Fertilizers sales.

Energy as sets in focus: The Madbouly government is making the sale of several energy assets a priority, according to what appears to be a revised state ownership document that leaked yesterday. The long-talked-about sale of one of the Siemens-built combined-cycle power plants, together with two of the country's largest wind plants, are high on the priority list as the government looks to meet its USD 5 bn target before the end of the current fiscal year in June 2024.

POWER PLANT EXIT-

Gov’t to sell 70% stake in first of three Siemens power plants: The government is looking to sell a c. 70% stake in the 4.8-GW Beni Suef combined-cycle power plant, according tothe document.

What’s it worth? The document assigned an “indicative” value of USD 1.4-1.9 bn to the asset. Bloomberg reported in June that the transaction would be worth as much as USD 2 bn, including outstanding debt that, according to the document, currently totals EUR 735 mn in foreign-currency debt and EGP 3.5 bn in local-currency debt.

Actis and Edra in pole position: Private equity outfit Actis and Malaysian power company Edra are both considering making offers to acquire as much as 100% of the plant, media reports said in June.

Remember: The plant can’t be sold without the l enders’ blessing. Under the terms of the financing, Egypt can only sell the three power plants if it pays off the loans in full or gets the lenders’ permission. German development bank KfW, Deutsche Bank, and our friends at HSBC are the primary financiers of the project, lending Egypt EUR 4.1 bn of the EUR 6 bn price tag for all three plants. The Egyptian Electricity Holding Company began repayments in 2019.

HSBC on board to advise on debt restructuring: The government will this month sign to bring HSBC on as an advisor to help come to an agreement with the other twobanks, a government source confirmed to Enterprise. That agreement could involve restructuring the terms of the plant’s existing debt to account for changes in global interest rates, or having the government act as a guarantor to the new investors buying in, our source said. HSBC is also advising on the sale process, we understand.

How long will it take? The government is targeting to close the acquisition by the end of the fiscal year next June, according to the state ownership document.

ANOTHER SALE OF ZAFARANA-

More investors to get a piece of Zafarana? A further stake in the Zafarana wind farm will be offered to international investors aside from the portion that the government has in principle agreed to sell to multinational shipping giant Maersk, according to the document. The Danish firm will receive the first four phases of the 545-MW power plant while the remaining four phases will be allocated to investors for green hydrogen projects, according to the document.

How long will it take? The state ownership document says the transaction should close by December.

HELWAN FERTILIZERS-

Strategics could get their hands on more of Helwan Fertilizers: The government is looking to sell up to 40% of the state-owned Helwan Fertilizers Company to a strategic investor, government sources confirmed to Enterprise. Local media had previously put the stake on offer at 20%, adding that Saudi wealth fund PIF and Abu Dhabi wealth fund ADQ were both eyeing stakes. Asharq Business originally reported the news.

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5

Moves

Beltone Financial appoints Mamdouh Abdelwahab as comms chief

#1- Beltone Financial Holding has appointed Mamdouh Abdelwahab (LinkedIn) as its chief communications officer. The news came after a regulatory filing (pdf) in which Beltone noted that Abdelwahab would have responsibility for investor relations at the financial services firm. Abdelwahab joins Beltone after an eight-year run at real estate blue chip PHD, where he was associate vice president leading on investor relations and investments. He has 24 years of experience in investor relations, investment, corporate finance, and communications including stints at Global Telecom, Veon, EFG Hermes, CIIC, and Orascom Development Holding (OD Egypt’s Swiss parent company).

Abdelwahab’s track record includes more than USD 1 bn raised in transactions including listings on Nasdaq and SIX Swiss Exchange as well as other capital raisings and rights issues. He holds a master's degree in banking and finance from the Maastricht School of Management.

#2- Amr Adel Hosni (bio)has been reappointed for another year as acting head of the Administrative Control Authority (ACA) effective today, according to a presidential decree published in the Official Gazette yesterday. Tamer Ferganiwas also last week appointed as acting deputy head of the Authority, effective 2 September.

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6

LAST NIGHT’S TALK SHOWS

El Sisi’s meeting with Al Burhan dominated the airwaves yesterday

It was crickets for business news on the talk shows yesterday,with the pundits allocating airtime to President Abdel Fattah El Sisi’s meeting with Sudan’s army chief and de facto ruler General Abdel Fattah Al Burhan in El Alamein yesterday. Ala Mas’ouleety (watch, runtime: 14:57) | Al Hayah Al Youm, (watch, runtime: 6:57) | Masaa Dmc (watch, runtime: 1:15). Masa DMC’s Ramy Radwan also had two segments on the significance of our future accession to the Brics (watch, runtime: 25:29) and he reviewed the new industrial incentives package (watch, runtime: 6:23).

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7

Also on our Radar

Singapore chemicals firm to invest USD 700 mn in 2 factories. PLUS news from BP, Orascom Construction, aiBank, Visa, Glamera, and Waterway Developments.

CHEMICALS-

Singapore chemicals outfit to invest USD 700 mn in Egypt: Singapore-based chemical company Indorama is set to invest around USD 700 mn to establish two factories to produce phosphate fertilizers and silicon metal for solar panel production, cabinet said yesterday. This follows an MoU signed last month between the chemicals company and the Sovereign Fund of Egypt (SFE). The firm is also interested in exploring options in several sectors including phosphate extraction and medical fibers.

Indorama’s owner already has operating assets in Egypt: Thailand-based sister company Indorama Ventures owns half of a plastic factory situated in the Ain Sokhna freezone that produces 540k metric tons of polyester a year.

ENERGY-

More details on BP’s exploration plans: BP intends to drill four new exploratory wells looking for natural gas in offshore Mediterranean concessions in 4Q 2023, the Oil Ministry said yesterday following a meeting between BP CEO Bernard Looney and Oil Minister Tarek El Molla. The British oil major will drill two wells at its King Mariout Offshore concession and two at its Raven natural gas field at the North Alexandria concession. The company was awarded 100% exploration rights at King Mariout last year. BP has been producing gas at the Raven field since 2021.

Remember: Ittihadiya said on Monday that BP plans to spend USD 3.5 bn on exploration and production operations in Egypt over the next three years.

REAL ESTATE-

Orascom Construction x Eagle Hills: Our friends at Orascom Construction will build part of the first phase of a new North Coast project planned by Emirati real estate developer Eagle Hills Properties, the companies said in separate statements (here, pdf and here, pdf) yesterday. The EGP 1.9 bn contract will see the contractor deliver two sections of the initial phase of the Soul Luxury Beach Resort within three years. Eagle Hills is owned by Emaar Properties founder Mohamed Alabbar.

FINTECH-

aiBank x Visa: Visa will provide digital payments services to EFG Holding’s aiBank under a long-term agreement signed by the two sides, according to a joint press release (pdf).

STARTUPS-

Glamera gets Saudi fintech license: Egypt-born B2B beauty startup Glamera has secured a fintech license from the Saudi central bank to provide soft POS services in the kingdom via Glamera Pay, it said in a statement (pdf) last week.

Remember: The company closed a USD 1.3 mn seed funding round led by Riyadh Angel Investors last year.

WASTE MANAGEMENT-

Our first recycling plant for construction waste? Local real estate developer Waterway Developments, the National Center for Housing and Building Research, and an unnamed German construction research institute will explore establishing a construction waste recycling facility in Egypt, the Environment Ministry said yesterday. Waterway Developments is owned by Ahmed Elsewedy and Hossam Hassan.

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8

Planet Finance

Crypto soars after court rules against SEC in Grayscale case

Crypto soars after court rules against SEC: BTC jumped more than 7% yesterday after a US court ruled against the Securities and Exchange Commission, which sought to block crypto asset manager Grayscale from setting up the first-ever BTC exchange-traded fund. The Financial Times, CNBC and the Wall Street Journal have more.

ALSO- KSA foreign assets fall to lowest level since 2009: Saudi Arabia’s net foreign assets hit a 14-year low in July, dropping by over USD 16 bn to USD 407 bn, as the kingdom stepped up investments via the Public Investment Fund, Bloomberg reports.

EGX30

18,629

+0.2% (YTD: +27.6%)

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

11,443

-0.2% (YTD: +9.2%)

ADX

9,762

+0.1% (YTD: -4.4%)

DFM

4,085

-0.4% (YTD: +22.4%)

S&P 500

4,498

+1.5% (YTD: +17.1%)

FTSE 100

7,465

+1.7% (YTD: +0.2%)

Euro Stoxx 50

4,326

+0.8% (YTD: +14.1%)

Brent crude

USD 85.57

+1.4%

Natural gas (Nymex)

USD 2.56

-0.9%

Gold

USD 1,937.60

+0.9%

BTC

USD 27,633

+6.4% (YTD: +68.5%)

THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 2.7 bn (31.1% above the 90-day average). Local investors were net sellers. The index is up 27.6% YTD.

In the green: Elsewedy Electric (+6.9%), Qalaa Holding (+6.4%) and GB Corp (+3.7%).

In the red: Edita (-2.2%), ADIB (-2.0%) and Sidpec (-1.6%).

Asian markets are all in the green this morning, joining yesterday’s rally in Europe and the United States. Futures suggest stocks will open comfortably in the green in London, Frankfurt, Paris, Athens, New York, and Toronto when exchanges open later today.

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9

Diplomacy

Egypt’s president holds talks with Sudan military chief

President Abdel Fattah El Sisi discussed efforts to end the civil war in Sudan with the country’s army chief and de facto ruler General Abdel Fattah Al Burhan in El Alamein yesterday. A statement from Ittihadiya provided little information about the substance of the talks.

No mention of negotiations or a ceasefire: Neither Ittihadiya nor Al Burhan made reference to restarting peace talks with the Rapid Support Forces, though in a post-meeting presser the Sudanese general did express keenness for finding a solution to ending the war. In an uncompromising speech ahead of his trip to Egypt, Al Burhan vowed to defeat the paramilitary group on the battlefield, accusing them of betraying the Sudanese people. This came a day after RSF leader General Mohamed Hamdan “Hemedti” Dagalo voiced support for restarting ceasefire talks.

Next up: Al Burhan is expected to visit Saudi Arabia, which has sponsored several rounds of ceasefire talks alongside the US.

The visit got attention globally: Associated Press | Reuters.

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Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

Read Hardhat
10

HARDHAT

With inflation + depreciation, real estate remains an investment favorite

When it comes to infrastructure investments in Egypt, real estate remains king: The devaluation of the EGP over the past several months and rising inflation have led consumers to pour their savings into real estate, spurring demand and encouraging further investment in the sector and its infrastructure, according to a Knight Frank report (pdf). International buyers and Egyptian expats have also been looking to take advantage of recently-introduced amendments that lift the current cap on the number of properties foreigners can own, allowing them to purchase as many properties as they like, the report says.

A lay of the land: Egypt has some 185 mn sqm of “active real estate” across the country, according to the report. Residential and mixed-use real estate projects from private sector developers worth c. USD 309 bn were under construction across Egypt in 1Q 2023, accounting for around half of all real estate projects and 83% of real estate investments, according to a recent report from real estate intelligence firm Property Finder. By Knight Frank’s count, Cairo alone saw USD 20 bn in real estate investments in 2022, with USD 16 bn of those poured into the residential sector, which “continues to be the focus of investment.”

Price points in the capital: Knight Frank’s data indicates that sales prices for New Cairo apartments are currently around USD 450 per sqm, with villa prices standing at some USD 690 per sqm. Across town, Sheikh Zayed apartments are valued at USD 430 per sqm and villas stand at USD 625 per sqm.

The second home market is also booming: Summer homes — particularly on the north coast — have seen “sustained strong demand,” with Knight Frank expecting this trend to continue in the short to medium term. Summer home sales reached USD 2.1 bn in 2022, according to the report, which forecasts a 30% increase this year.

Part of that demand is driven by tourism from our friends in the Gulf: Summer homes are seen as an attractive investment, seeing as they bring in high yields on rent and have high potential for capital appreciation. Additionally, Gulf tourists have been steadily pouring into the country, particularly during the summer, which is further driving demand, according to Knight Frank. “In the past few years, there has been a growing interest from GCC nationals in the real estate market on Egypt’s North Coast. This increased demand can be attributed to a combination of currency depreciation and the pleasant summer climate that the North Coast offers in contrast to the hot weather in GCC between June and September,” the report notes.

Price points on the coast: North Coast chalet prices are estimated to start at somewhere around USD 950 per sqm, rising to USD 3k per sqm “for premium units in high-end developments,” according to Knight Frank. Villas on the higher end of the price spectrum range between USD 1,450-3,550 per sqm, the report says.

But there are financial constraints on consumers: “Affordability remains a significant consideration for most buyers due to the country’s hyperinflationary environment,” Knight Frank says. Annual urban inflation came in at 36.5% in July, its highest rate on record. “Unsurprisingly, around 60% of the current residential demand is focused on small-sized apartments as buyers grapple with the soaring cost of living as well as rising interest rates.”

…and rising costs for developers to grapple with: Developers are taking a more “cautious approach” amid soaring construction and finishing costs, leading them to sell new projects as either semi-finished or “shell and core” as they look to cut down on expenses, the report says. The inflationary environment has also led developers to face delays in constructing and completing their projects, leading to a 30% y-o-y rise in demand for resale properties, according to the report.

Your top infrastructure stories for the week:

  • A new package of incentives for industrial projects: President Abdel Fattah El Sisi called for fresh tax breaks, discounts on land prices, and an expansion of the single-approval “golden” license in a bid to accelerate projects in priority industrial sectors.
  • Construction starts on Luxor strategic warehouse: The government broke ground on its EGP 1.5 bn strategic warehouse in Luxor.
  • Medlog to take over Tenth of Ramadan dry port: Medlog, the cargo subsidiary of Italy’s Mediterranean Shipping Company (MSC), has inked a contract with the government to design, construct, operate, maintain, and finance the new Tenth of Ramadan dry port and logistics center.
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CALENDAR

AUGUST-

29-31 August (Tuesday-Thursday): Africa Singapore Business Forum 2023, Singapore.

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.

End of September: ADQ to acquire stakes in Elab, Ethydco and EDC.

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 applications to EGYAID scholarship 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.

October: Gov’t expects to finalize sale of Gabal El Zeit wind plant.

October - November: Gov’t expects to finalize sale of military-owned fuel retailer Wataniya.

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.

2 October (Monday): Government meeting with investors to look into liberalizing electricity grid.

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

December: Gov’t expects to finalize sale of military-owned bottled drinks company Safi.

December: Gov’t expects to finalize sale of Zafarana wind farm.

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.

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

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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