SFE’s pre-IPO fund to start asset sales after Ramadan -Soliman

Wednesday, 22 Mar 2023

SFE’s pre-IPO fund to start asset sales after Ramadan -Soliman

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Today at a glance

Privatization

SFE’s pre-IPO fund to start asset sales after Ramadan, Soliman says.

Privatization

Eagle Chemicals ups bid for Pachin.

Also on our Radar

One step closer to a time change: House committee approves bill to bring back daylight saving time.

What We're Tracking Today

FDI inflows hit 11-year high in 2022.

What We're Tracking Today

Ramadan trading hours are now in effect.

DEBT WATCH

Total value of securitized debt taken to market is now up 5% year on year as valU closes EGP 856.5 mn transaction.

Diplomacy

“Window is closing” to meet 1.5°C climate target, says Shoukry.

What We're Tracking Today

Fed expected to raise rates by 25 bps today.

HARDHAT

New rules on acquiring Egyptian citizenship could be a shot in the arm for the real estate industry.

What We're Tracking Today

Ramadan starts tomorrow

Good morning, friends, and Ramadan Kareem: Dar Al Ifta confirmed last night that Thursday will be the first day of the Holy Month. So prepare your sohour menus and call your loved ones.

So, when do we eat? Fajr prayers are at 4:29 am and Maghrib prayers are at 6:08 pm.

Enterprise is taking tomorrow off. Our AM, PM and Climate editions will all be off tomorrow. We’re going to recharge after delivering our new website and use the time to get caught up on some editorial work. (Longtime readers know we take a couple of editorial holidays a year; this is our first in 2023.) Enterprise Weekend will be in your inbox on Friday morning and we’ll be back to our usual publication schedule on Sunday morning.

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DATA POINT- FDI inflows hit 11-year high in 2022: Net foreign direct investment (FDI) inflows to Egypt registered USD 8.90 bn in 2022, the highest level since 2011, Daily News Egypt quotes GAFI CEO Hossam Heiba as saying. That’s 74% higher than the USD 5.12 bn in inflows registered in 2021.

WATCH THIS SPACE- A decision on the EastMed gas pipeline could come this year: Italian energy group Edison expects to make its final investment decision this year on whether to go ahead with a proposed pipeline that will carry natural gas from Israel and Cyprus to Europe, company officials told Reuters. The pipeline would ship 10 bn cubic meters of gas a year from the Mediterranean straight to Greece, and could be operational by 2027.

What would this mean for Egypt’s export ambition? The pipeline will help provide a cheaper and faster method of shipping gas across the Mediterranean than Egypt’s LNG facilities.

HAPPENING TODAY-

Ramadan trading hours are now in effect: Restaurants, malls, and other commercial spaces will now be open until 2am until the end of the holy month.

It’s Fed day: The Federal Reserve is likely to raise interest rates by 25 bps today as it tries to balance the need to curb inflation without provoking further jitters in the banking system. Most economists and analysts expect the central bank to increase the fed funds target rate range to 4.75-5%, though there remains a chance that officials could choose to pause the tightening cycle in response to the recent turmoil in US banks, CNBC reports.

Risk assets saw a second day of gains yesterday: Banking fears have calmed this week following UBS’ emergency takeover of Credit Suisse and action by global central banks to supply liquidity to the financial markets. Global stocks continued to recover from last week’s turmoil, with the S&P 500 climbing 1.3% and commodities recording gains. Safe haven assets like treasuries and gold both sold off.

The hometown angle: The Central Bank of Egypt will be looking at the Fed’s announcement ahead of its monetary policy committee meeting a week from tomorrow (Thursday, 30 March).

THE BIG STORY ABROAD-

The banking crisis is continuing to dominate the front pages of the global business press this morning: The race to save troubled US lender First Republic Bank continues, with Bloomberg, the Financial Times and the Wall Street Journal reporting on ongoing efforts to prop up the bank. The bank’s shares rebounded yesterday on reports that major Wall Street banks were discussing options, though plummeted again in after-hours trading. Reuters also has coverage.

Russia-China summit: Most of the Western press are ruminating about what Chinese President Xi Jinping’s visit to Moscow means for the war in Ukraine and the world order at large. The talks between the two leaders failed to reach any decisions regarding Russia's war in Ukraine, with China continuing to hold on to its “objective and impartial position.” The meeting also signified strengthening economic ties between the two powers, with Putin announcing plans for a new natural gas pipeline to China. Washington reiterated its opposition to a ceasefire yesterday, saying that peace talks would enable Russia to cement its territorial gains. (Reuters | New York Times | Financial Times | Wall Street Journal | CNBC)

FROM THE DEPT. OF ROBOTS- First ChatGPT, now we have Bard: Google just soft launched its own chatbot — dubbed Bard — to a limited number of users in only the UK and US, creating some competition for ChatGPT in the rapidly-growing market for AI chatbots, Reuters reported. Bard got off on the wrong foot last month, afterit made a factual error triggering a sell-off among investors.

It might be a hot minute before we can give it a go. Users across the UK and US can now join a waitlist to access Bard and it’s still unclear when the company will officially launch the program for everyone to use.

CIRCLE YOUR CALENDAR-

Fashion lovers, mark 12-15 May on your calendars: Egypt’s Fashion and DesignCouncil is hosting Egypt’s first fashion week this May, under the theme “The Past, Present, and Future.” The three-day event — postponed from November of last year — will feature the works of some of the biggest Egyptian designers.

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 government’s decision to loosen citizenship rules for foreign investors could give a lift to the real estate industry, which has had a rough year due to volatile economic conditions.

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Ramadan

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Privatization

Egypt’s sovereign wealth fund to start asset sales after Ramadan, Soliman says

SFE’s Soliman on the state privatization program, investor appetite, and market conditions: Sovereign Fund of Egypt (SFE) CEO Ayman Soliman talked about the fund’s approach to investments, the sectors it’s eyeing, how the fund fits into the government’s privatization plans, and how the depreciation of the EGP impacts potential investors in a wide-ranging interview with Al Arabiya.

Offerings to start after Ramadan:The SFE will wait until the end of Ramadan to start taking companies in its pre-IPO fund to market, Soliman told the news outlet. The eight companies included in the fund are being promoted to potential investors ahead of sales after the holy month, which ends in the final week of April.

Refresher:Launched last year, the pre-IPO fundaims to prepare state-owned enterprises for listing on the EGX by offering an alternative to public share sales while market conditions remain volatile. The state wants to raise as much as USD 6 bn through strategic stake sales via the fund. We expect the SFE to pursue a mix of direct share sales (to strategic and financial investors) as well as IPOs (subject to all the usual caveats about market depth, investor interest, and overall market conditions).

Elab up first? Egyptian Linear Alkyl Benzene (Elab) will be the first company to go to market via the pre-IPO fund, Soliman was quoted as saying by local media last week. The SFE has not disclosed which other firms have been added to the fund, though Banque du Caire, Misr Life Ins., and Misr Ins. Holding have all been rumored to be included. The two military-owned firms up for sale — Wataniya and Safi — are not part of the fund, Soliman said last week, refuting previous media reports.

Is Salhia Investment in?The SFE has added Salhia Investment and Development Company to the fund, Al Borsa reported yesterday, citing unnamed government sources. Salhia was one of four state-owned real estate companies to be mentioned among the 32 names included in the state’s revamped privatization program.

Easy exit route + FX availability are top priorities for investors eyeing the market: Potential investors considering making investments in Egypt are typically most concerned with “how easy it is for them to exit the market and cash out returns on their investments whenever they want to,” Al Arabiya quotes Soliman as saying. Addressing these concerns is linked to reeling in FX resources by pushing through with the state privatization program, delivering on the government’s commitments made to the IMF as part of our USD 3 bn facility, and achieving currency stability, Soliman said.

There’s a dichotomy in how GCC investors are approaching investments in Egypt: “The positive side: There’s currently a great number of investment managers and banks in Egypt through which Gulf investors are more willing to enter the market,” according to Soliman. “The negative side: Some of these investors are only willing to invest through a local partner they trust, which in many cases has resulted in poor outcomes owing to gaps in their knowledge of the market,” he added.

The SFE’s role is not limited to managing state-owned assets that have been transferred to it by the government and marketing them to regional and international investors, Soliman told the news outlet. Its role includes creating new value at the assets through a range of tools including sustainable partnerships, onboarding strategic investors, and pushing ahead public share offerings, among others, he added.

Where the SFE sees promise:Soliman namechecked export-oriented businesses and those that have proven resilient against the currency devaluations, including logistics, ports, fertilizers and petrochemicals.

Are we going to see the long-awaited green fund this year? The SFE is set to pull the trigger on the launch of its planned green fund this year, allowing investors to invest in green hydrogen and water desalination projects, among other assets, according to Soliman. The Madbouly government’s multi-bn USD water desalination program is expected to produce some 8.8 mn cubic meters per day of potable water once it is fully implemented within the next 10 years, and will rely on renewable energy sources, he added.

Green investments are attractive right now: “This type of investment is attractive and important to Arab and international investors, especially since the cost of producing renewable energy in Egypt is low compared to other markets,” Solsiman explained.

We have massive potential to become a green hydrogen powerhouse: Egypt’s capacity for producing green hydrogen — whether for water desalination projects or to decarbonize industries — stands at north of 700 GW. Egypt currently produces more than 50 GW of energy, with consumption standing at a little over 30 GW, he added. Arab investors are interested in green hydrogen investments in Egypt and maintaining the momentum from COP27, when Egypt signed framework agreements worth USD 85 bn with international firms, he said.

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Privatization

Egypt’s Eagle Chemicals submits improved bid for Pachin

Eagle Chemicals ups bid for Pachin: Eagle Chemicals yesterday increased its offer for Paint and Chemical Industries (Pachin) on the same day that National Paints Holding’s (NPH) rival mandatory tender offer (MTO) opened to shareholders. The Egyptian chemicals company offered to purchase at least 75% of the company for EGP 35.00 per share, EGP 1.00 higher than the bid submitted by NPH earlier this month, the Financial Regulatory Authority (FRA) said in a disclosure to the EGX (pdf) yesterday. Eagle Chemical’s revised offer values the EGX-listed company at some EGP 840 mn, according to our math.

This is a significant increase on its initial bid: Eagle Chemicals’ new bid is almost 20% higher than its initial EGP 29.5 per-share bid in December.

What’s next? The FRA is currently studying Eagle Chemicals’ new offer. NPH’s 10-day MTO opened yesterday, giving shareholders until Tuesday, 3 April to respond.

Your move, Compass: Compass Capital has also submitted a bid for the company but is yet to respond to NPH and Eagle Chemicals’ improved offers.

Market reax: Pachin’s shares rose 1.4% to EGP 33.66 during trading yesterday.

REMEMBER- The play for Pachin comes amid the government’s privatization push, which should see it reduce its involvement in or exit certain industries to make way for the private sector. Pachin is currently approximately 54% owned by state-owned companies and banks.

Advisors: Al Ahly Pharos is providing financial advice to Pachin while Shalakany Law Office is counsel.

Tags:

Eagle Chemicals M&A Watch National Paints Holding Pachin privatization watch

DEBT WATCH

Egyptian consumer finance player valU closes fourth securitized bond issuance

valU closes fourth securitized bond issuance:EFG Hermes Holding’sconsumer finance arm valU has issued EGP 856.5 mn worth of securitized bonds, according to a statement (pdf). The issuance consists of a single tranche of 12-month bonds backed by a receivables portfolio. The bonds earned a “prime-1” rating.

valU now has a bigger securitization program: The consumer finance player has doubled the size of the program to EGP 4 bn. The latest issuance means valU has completed around two-thirds of the program, which kicked off in September 2021.

There’s more in the pipeline: valU is studying a second securitization program worth EGP 5 bn which it hopes to start later this year, CEO Walid Hassouna told us in January. It is looking to raise EGP 4.5 bn from issuances this year — including EGP 1.1 bn worth of bonds during 1Q 2023 and three more issuances of around EGP 1.1 bn before the end of the year.

Advisors: EFG Hermes acted as the sole financial advisor, transaction manager, and book-runner on the issuance, according to the statement. It was also arranger and underwriter. Arab African International Bank (AAIB) acted as an underwriter and custodian, while Arab Banking Corporation (ABC) and aiBank also subscribed to the issuance. KPMG was the auditor, and ALC Alieldean Weshahi & Partners was legal advisor.

2023 so far: The latest issuance takes the total value of asset-backed securities issued this year to EGP 10.4 bn. This is 5% higher than the same period in 2022.

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Arab African International Bank consumer finance debt watch EFG Hermes non-banking financial services securitization ValU

LAST NIGHT’S TALK SHOWS

Last Night’s Talk Shows: Egypt’s talk show hosts celebrate Mother’s Day and Ramadan

It was a lighter night on the airwaves celebrating Egyptian mothers and the approaching first day of Ramadan.

Happy Mother’s Day from last night’s talk shows. The country’s talking heads ditched their professional personas for a few minutes yesterday as they wished their mothers, and all Egyptian mothers, a happy Mother’s Day. Al Hayah Al Youm’s Mohamed Sherdy (watch, runtime: 1:13) and Kelma Akhira’s Lamees El Hadidi (watch, runtime: 5:15) dedicated a few minutes of their shows to their mothers, who they knew would be tuning in to watch them and Yahduth Fi Masr’s Sherif Amer remembered his late mother in a heartfelt tribute (watch, runtime: 6:27).

… and Ramadan Kareem. The nation’s talking heads all wished their viewers a Ramadan Kareem, with each having their own coverage of the month. Kelma Akhira (watch, runtime: 5:44) highlighted the postal offices Ramadan working hours, from 9 am to 2 pm, with 60 offices across the nation scheduled to work the night shift 8 pm to 11 pm to give people the chance to run their mailing errands post iftar. Culture Minister Nevine El Kilany joined Yahduth Fi Masr (watch, runtime: 5:39) to walk us through the many events the government is hosting in celebration of the holy month, including a book fair in Faisal, live shows for kids, and musical performances.

Checking in on food prices before we welcome Ramadan: The state has made food commodities — rice, sugar, and poultry — widely available ahead of the food-centered holy month, Abdel Moneim Khalil, head of internal trade at the Supply Ministry told El Hadidi (watch, runtime: 4:55), adding that the Supply Ministry will continue to increase its supplies of rice in efforts to bring down prices. The ministry will release some 50k tons of rice into the market in the “coming few days” to help curb prices, he said.

On a less optimistic note: There are still commodities stuck in our ports, Magdy El Waily, member of the grain chamber at the Federation of Egyptian Industries, told Kelma Akhira (watch, runtime: 4:03 | 1:35). “There is no quick solution,” he said, adding that we need regulations to ensure commodities don't end up stuck in ports. Tharwat El Zeiny, deputy chairman of the Egyptian Poultry Association agreed (watch, runtime: 3:15), saying that suppliers stopped buying chicks because they are no longer sure if they will be able to secure supplies of feed.

UBS’ takeover of Credit Suisse isn’t expected to impact banks in the region, though it might hurt investment funds who have deposits at the lender, Nasser Zouheir, head of international relations and political economy at the Geneva Center for Studies, told Kelma Akhira (watch, runtime: 1:37 | 4:03). “We can’t say that the banking crisis is over yet, as any minor shock can trigger it again,” he cautioned. Zouhir predicted a 25-bps rate hike from the Federal Reserve when it meets later today, adding that it is unlikely to keep rates unchanged because it risks undermining the work the bank has done to curb inflation over the past year.

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economy inflation LAST NIGHT’S TALK SHOWS Ramadan

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EGYPT IN THE NEWS

The economy leads the conversation on Egypt in the global press as WSJ, BBC look at the state of play

The economy is once again in the spotlight in the foreign press: The Wall Street Journal is questioning whether the government will be able to meet its commitments to the IMF to roll back state and military involvement in the economy, while the BBC looks at how ordinary people are coping amid soaring inflation.

Also making headlines:

Bayt Yakan in the spotlight: The restoration of the historic Darb Al Ahmar villa into a cultural center by architectural conservationist couple Alaa El Habashi and Ola Said gets a glossy write-up in the New York Times. (NYT)
Turning plastic into tiles: Egyptian recycling startup TileGreen aims to recycle 5 bn plastic bags by 2025 by turning them into a cement-like material for use in paving. (Reuters)
Local table tennis champs going for gold: Teenager Hana Goda is Africa’s top table tennis player and one of four Egyptian women in the world top 60 rankings, boosting the sport’s popularity at home. (The Straits Times)
Human rights: Deutsche Welle reports that the sister of imprisoned activist Alaa AbdelFattah has restarted her campaign to secure her brother's release, while the New York Times of a 27-year-old MFA student, now in the US, who was imprisoned for participating in the 2013 protests.

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economy Green Economy human rights recycling TileGreen

Also on our Radar

Plans to bring back daylight saving in Egypt get House committee approval. PLUS: New hotels, Shalateen gold production, Dina Farms investment plans

LEGISLATION-

House committee approves daylight saving comeback: The House Local Administration Committee yesterday approved a draft bill on the return of daylight saving. The bill received the greenlight from the cabinet earlier this month. If passed, it would see Cairo Local Time (CLT) pushed forward by one hour from the last Friday of April through the last Thursday of October.

The rationale: “Reducing power consumption through restoring daylight saving time will help reduce demand on foreign exchange and also boost the country’s natural gas exports,” the government said in an explanatory note.

The bill won’t be put up for a General Assembly vote until April at the earliest: The House yesterday adjourned sessions until 2 April.

Does daylight saving time really save energy? It’s long been controversial, and one of the most well-respected papers on the subject suggests it actually increased energy use slightly in one US state, where households used more energy to cool their houses in summer.

HOSPITALITY-

IHG Hotels + Arabella to open three new hotels in Egypt: IHG Hotels & Resorts and Arabella for Tourist & Urban Development will establish three new hotels in Cairo and the North Coast after signing contracts with the government this week, the Tourism Ministry said Monday. Together the new hotels will have more than 500 rooms, and are expected to open between this year and 2026.

Remember:The government wants to see the private sector build at least 290k new hotelrooms as part of its aim of attracting as many as 30 mn tourists a year by 2028.

INVESTMENT-

#1- Dina Farms could invest some EGP 380 mn this year: Qalaa Holdings’ dairy company Dina Farms plans to invest around EGP 380 mn this year to increase its production capacity, Qalaa Chairman Ahmed Heikal reportedly told Al Borsa. The company is also looking to add to its land portfolio and is holding discussions with the government and a private-sector firm to purchase two plots.

#2- Fresh + Cotherm to inaugurate EUR 8 mn factory: Egyptian home appliances maker Fresh and French firm Cotherm will inaugurate their EUR 8 mn heater component factory in Tenth of Ramadan today, Al Borsa reported. The factory will have three production lines to manufacture thermostats for water heaters.

MINING-

Gold production begins at large Iqat deposit: The state-owned Shalateen Mining Company has begun operations to extract gold from the Iqat gold mine in the Eastern Desert, the Oil Ministry said yesterday. The company has begun to drill, transport rocks to the extraction site, and grind them in preparation for the extraction of gold and the production of ingots — a process that was expected to commence in 4Q 2022. The deposit is estimated to hold around 1.3 mn ounces of gold.

WASTE MANAGEMENT-

Greek firm partners with Suez Canal Authority on new waste management company:Antipollution, a member of the Greek environmental firm V Group, has signed a shareholders agreement with two subsidiaries of the Suez Canal Authority to set up a local waste management company, according to a cabinet statement. Antipollution Egypt will provide solid and liquid waste management services to ships using the Suez Canal. Zaki Hashem & Partners served as the legal advisors to V Group and Antipollution, the law firm said in a statement (pdf).

STARTUPS-

Egyptian chatbot building platform WideBot launched an AI-powered product to help SMEs with tasks including marketing, to sales, to customer service, and to payments, according to a company press release (pdf). The platform’s new service — dubbed “Heloul” (Solutions) — is integrated with several social media platforms such as Facebook, Whatsapp, Instagram and Twitter, and its AI chatbot is capable of answering customers’ questions in several Arabic dialects, the statement reads. The AI startup is looking to expand its client portfolio to reach 100k clients in Egypt and Saudi Arabia by the end of 2024.

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AI ALSO ON OUR RADAR hospitality House of Representatives Legislation Watch Manufacturing mining Qalaa Holdings Suez Canal Suez Canal Authority tourism waste management

PLANET FINANCE

Oman infrastructure fund raises USD 1 bn

Omani infrastructure fund raises USD 1 bn: Rakiza — an infrastructure fund based out of Oman and backed by the Saudi sovereign wealth fund — raised more than USD 1 bn for its first close, it said in a statement (pdf) yesterday. The fund has already invested 25% of its capital in three projects in Oman and is close to completing several others. Rakiza last year received USD 300 mn from Saudi Arabia’s Public Investment Fund (PIF) and USD 50 mn from the Asian Infrastructure Investment Bank.

EGX30	15,326	+2.7% (YTD: +5.0%)
USD (CBE)	Buy 30.84	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	16.25% deposit	17.25% lending
Tadawul	10,360	+1.4% (YTD: -1.1%)
ADX	9,545	0.0% (YTD: -6.5%)
DFM	3,381	+1.1% (YTD: +1.4%)
S&P 500	4,003	+1.3% (YTD: +4.3%)
FTSE 100	7,536	+1.8% (YTD: +1.1%)
Euro Stoxx 50	4,182	+1.5% (YTD: +10.2%)
Brent crude	USD 75.07	+1.7%
Natural gas (Nymex)	USD 2.35	+5.6%
Gold	USD 1,958.30	-2.1%
BTC	USD 28,106	+0.1% (YTD: +69.8%)

THE CLOSING BELL-

The EGX30 rose 2.7% at yesterday’s close on turnover of EGP 1.62 bn (22.1% below the 90-day average). Foreign investors were net sellers. The index is up 5.0% YTD.

In the green: Sidi Kerir Petrochemicals (+9.5%), Ezz Steel (+8.4%) and Elsewedy Electric (+7.3%).

In the red: CIRA Education (-0.3%).

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Planet Finance Rakiza Saudi Arabia

Diplomacy

“Window is closing” to meet 1.5°C climate target, warns COP27 president. PLUS: The latest from Israel + Palestine.

Fresh calls for climate action from FM Shoukry: COP27 President Sameh Shoukry called on governments to accelerate efforts to limit global warming, warning that the “window is closing” at the Copenhagen Climate Ministerial yesterday. “We are clearly off track. The 1.5°C target might slip away,” Shoukry said during his closing speech alongside COP28 President-Designate Sultan Al Jaber (watch, runtime: 30:04).

From day 2 of the meeting: Shoukry met his Danish counterpart Lars Rasmussen on the sidelines of the meeting. The two agreed to work to deepen ties and discussed a number of regional issues.

One step forward, two steps back: Egypt, Jordan and Saudi Arabia have condemned “racist” remarks made by Israel’s far-right finance minister, just a day after Israel agreed to refrain from making inflammatory statements during talks with the Palestinians in Sharm El Sheikh. In a speech in Paris following the agreement, Bezalel Smotrich said “there is no such thing” as the Palestinian people. The comments drew condemnation from Arab capitals and a rebuke from Washington, which described the speech as “extremely unhelpful.”

Israel drew further condemnation yesterday after lawmakers voted to allow settlers to return to four Jewish settlements in the West Bank which were dismantled in 2005. State Department spokesperson Vedant Patel called the move “provocative and counterproductive” to easing tensions between the two sides.

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Bezalel Smotrich Climate DIPLOMACY Israel-Palestine conflict politics Sameh Shoukry

AROUND THE WORLD

IMF signs off on loan agreements for Sri Lanka, Ukraine

#1- Sri Lanka to get first tranche of IMF loan this week: Cash-strapped Sri Lanka will get the first USD 330 mn tranche of its USD 3 bn IMF loan by tomorrow after the Fund’s executive board approved the arrangement on Monday. The program is expected to unlock up to USD 7 bn for the country, which defaulted on its debts last year amid a severe financial crisis. (Reuters)

#2- IMF hands Ukraine a lifeline: The IMF will lend war-stricken Ukraine USD 15.6 bn to help it support its economy. (Statement)

#3- Macron survives attempts to halt his pension revamp: A no-confidence motion against French President Emmanuel Macron fell short of a majority on Monday amid growing protests against the government’s planned pension reforms. (Wall Street Journal)

Tags:

Around the World IMF

HARDHAT

New rules on acquiring Egyptian citizenship could be a shot in the arm for the real estate industry

Are we about to see a boom in foreigners purchasing real estate in Egypt? Earlier this month, the Madbouly Cabinet signed off on legislative amendments that will allow foreigners to acquire Egyptian citizenship if they purchase state-owned or privately owned assets. The legislative changes are expected to spur a boom in real estate “exports” — i.e. foreigners purchasing real estate and land assets in Egypt, after years of lobbying for the government to push this portfolio forward. Real estate developers and other stakeholders Enterprise spoke with see these developments as a clear chance for the sector to begin recouping some of the losses it has suffered over the past several months amid volatile economic conditions.

REMEMBER- Construction and infrastructure players, which rely heavily on building materials that have seen dramatic price increases, have been under pressure over the past several months as they cope with shortages, the devaluation of the EGP, and expensive financing.

What are these legislative amendments? The new rules allow non-Egyptians to acquire citizenship if they purchase assets worth no less than USD 300k using USD from abroad. They can also establish a solo or joint investment project with an USD 350k investment in addition to depositing USD 100k into the state treasury. Foreigners can also get in line for citizenship by depositing USD 500k into a zero-interest account at an Egyptian bank. This would be refunded after three years in EGP based on the exchange rate at the time. Alternatively, they still have the option of making a USD 250k non-refundable deposit into the state treasury.

These new rules could breathe new life into real estate developers, which have been facing multiple headwinds in the past period that have threatened to push many companies out of the market altogether, head of the real estate division of the Federation of Egyptian Chambers of Commerce Tarek Shoukry told Enterprise. Pushing forward these amendments to reel in foreign investments has been a key demand from real estate developers, said Shoukry, who lauded the government for enacting the changes.

This push is particularly likely as the new rules are addressing key problems that existed previously, including reducing the capital requirements, which House Housing Committee Undersecretary Amin Massoud told us were “too high” previously. Under previous rules, foreigners were required to purchase property worth at least USD 500k while the minimum three-year refundable deposit was set at USD 1 mn.

What now? Real estate developers are waiting on the government to begin implementing the new rules and expediting the necessary licenses and documents, Shoukry told us. Foreigners have a 12-month period to transfer the capital for the asset purchase, and will only be eligible for citizenship after that period. Although this time period is typically shorter in other countries that offer similar schemes — usually 4-6 months — it is more important that the procedures be clear and straightforward than it is to shorten the process, Shoukry said. The government should also capitalize on cases in which foreigners have completed the process and use them to further promote the scheme, he suggested.

Industry players want to start seeing expos to market the real estate assets Egypt has to offer, particularly by hosting these expos abroad to attract more foreign investors and reel in FX income, Daker Abdellah, a member of the Contractors Union, told Enterprise. Similar expos have proven effective and successful for several other countries, with the sale of real estate assets to foreigners acting as a lifeline for economies during volatile conditions, said Massoud.

So, how much money could we see flowing in from these real estate sales to foreigners? Shoukry expects that the new rules could unlock somewhere between USD 3-5 bn in inflows within the next year, provided the procedures for licensing and documentation are facilitated. Besides providing the country with much-needed FX, these inflows would also be critical in helping the industry offset some of the losses it has incurred as a result of the EGP devaluation and rising input costs, Shoukry noted.

But there are also some steps that need to be taken to ensure the scheme’s success: The government should issue certain regulatory decisions, including setting quality standards for assets that are eligible for the scheme and granting quality assurance certificates to select companies and developers that meet these standards, suggests Beta Egypt Chairman and member of the Federation of Chambers of Commerce’s real estate division Alaa Fikry.

Your top infrastructure stories for the week:

Hutchison Ports has entered consortiums with three other international firms to build two new container terminals at Ain Sokhna and Dekheila ports after signing two agreements worth a combined USD 1.6 bn.
Abu Dhabi Ports will develop and operate a container terminal at Safaga Port under a USD 200 mn, 30-year concession agreement signed with the government.
New logistics zones, factories in the SCZone: Mercedes-Benz, local shipping firm Kadmar and two Chinese companies inaugurated new logistics zones and factories in the Suez Canal Economic Zone.

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Hardhat real estate regulation

CALENDAR

MARCH

March: 4Q2022 earnings season.

March: IMF to review USD 3 bn program.

March: Gov’t to launch the National Governance Index.

Beginning of March: Rice to be added to the EMX.

21-22 March (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 March (Wednesday): Ramadan trading hours in effect.

23 March (Thursday): First day of Ramadan (TBC). Maghreb will be at 6:08pm CLT.

26 March (Sunday): Senate reconvenes.

27-29 March (Monday-Wednesday): The first meeting of the COP transitional committee, focusing on adaptation, and loss and damage.

30 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

31 March (Friday): Finance Ministry to present draft budget to House of Representative by this date.

APRIL

April: GAFIto launch the country’s first integrated electronic platform to facilitate setting up a business.

April: SCZone roadshow in China.

1 April: President Abdel Fattah El Sisi's social support measures program to be implemented.

1 April (Saturday): Deadline for banks to establish sustainability units.

2 April (Sunday): House to reconvene.

3 April (Monday): National Paints Holding’s MTO for Pachin ends.

10-16 April (Monday-Sunday): IMF / World Bank Spring Meetings, Marrakesh, Morocco.

11 April (Tuesday): Deadline for NGOs to legalize their status.

15 April: Lamees El Hadidi’s startup competition show, El Forsa, closes applications.

16 April (Sunday): Coptic Easter

17 April (Monday): Sham El Nessim.

21 April (Friday): Eid El Fitr (TBC).

25 April (Tuesday): Sinai Liberation Day.

27 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

30 April (Sunday): Tenth of Ramadan dry port tender deadline.

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.

MAY

1 May (Monday): Labor Day.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

4 May (Thursday): National holiday in observance of Labor Day (TBC).

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

9-11 May (Tuesday-Thursday): First edition of the Arab Actuarial Conference, Cairo.

12 May (Friday): Expat car import scheme ends.

12-15 May (Friday-Monday): Egypt Fashion Week.

15 May (Monday): Enterprise Exports & FDI Forum, Four Seasons Hotel Cairo at Nile Plaza.

16-18 May (Tuesday-Thursday): Egypt will host its first conferenceon cybersecurity and defense intelligence systems (CDIS-Egypt).

18 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

JUNE

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June - 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 June (Thursday): Deadline for bids in EGPC’s mature oil fields tender.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

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

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

18 July (Tuesday): Islamic New Year.

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

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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

Late July-14 August: 2Q2023 earnings season.

AUGUST

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

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

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

SEPTEMBER

September: IMF to review USD 3 bn program.

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

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

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

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

OCTOBER

6 October (Friday): Armed Forces Day.

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

Late October-14 November: 3Q2023 earnings season.

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

NOVEMBER

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

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

DECEMBER

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

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.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

1Q 2023: Egypt + Qatar to launch joint business forum.

1Q 2023: FRA to introduce new rules for short selling.

1Q 2023: Internal trade database to launch.

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.

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

2Q 2025: Safaga Terminal 2 to initiate operations.

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