IPO WATCH- The government is still deciding which foreign stock exchange will land a piece of its planned IPO of petroleum services outfit Enppi, a source tells Al Borsa. The LSE, Nasdaq Dubai and Euronext Amsterdam are all in the running, it seems. NI Capital, the government’s investment bank and shot-caller on the transaction, says the three markets offer ample access to liquidity and are familiar with Egyptian listings. While Enppi will be primarily an EGX listing, NI Capital is said to be mulling either a dual listing on one of those exchanges or a GDR offering as part of the transaction. The ultimate transaction size and structure won’t be made until “a month or two before Enppi begins trading on the EGX,” the source adds. Enppi is set to be the first company to list on the EGX under the Egyptian government’s IPO program; the state is reportedly looking to raise USD 213-267 mn from the sale of a 24% stake. CI Capital, Jefferies and Emirates NBD Capital will be serving as lead managers and bookrunners, while Baker McKenzie are legal advisors (though it’s not yet clear whether they’re advising the issuer or the lead managers).

Kuwait Finance House is looking to expand into Egypt and China, according toThe National. KFH, the tenth largest lender in the Gulf, is considering an acquisition of an existing operation Egypt rather than chasing a new license. The bank is looking outside of its traditional territory, which it views as saturated, so a less mature banking market like Egypt looks attractive. Gulf banks have traditionally found their bread and butter in the form of government spending, which has taken a dip in the continuing period of lower oil prices.

The IMF World Economic Outlook update for July sees emerging markets GDP growing to 4.6% in 2017 (up from 4.3% in 2016) and then to 4.8% in 2018. Growth in the MENA region is expected to slow given the outlook on oil and other commodities — a factor which plays more to the GCC economy than ours. While 2017 and 2018 regional forecasts remain the same, 2016 came in stronger than expected on the back of growth in Iran. Global outlook remains unchanged at 3.5% for 2017 and 3.6% for 2018 after revisions to the downside in developed markets like the US balanced out with revisions to the upside in China and Japan.

President Abdel Fattah El Sisi discussed a slew of political, economic, and foreign affairs issues during the latest youth conference, which kicked off yesterday in Alexandria. The president named terrorism and the ballooning population as two of the country’s biggest hurdles. He said it will be crucial for Egypt to stick to his administration’s economic reform agenda if the country wants to overcome its “development challenges,” something Prime Minister Sherif Ismail also stressed at the conference. El Sisi stressed that the reform program has already translated into an improvement in FX reserves, which are fast approaching pre-2011 levels, Ahram Gate reports

Education as a national priority: One of the key takeaways from the conference is the signalling that education will be a bigger priority for the government moving forward. The president said Egypt’s education system needs funding to the tune of EGP 180 bn per annum if quality is to improve, making the current budget allocation of EGP 60 bn insufficient, Al Borsa reports.

On foreign policy, El Sisi stressed that Egypt is not backing down from the Qatar blockade. The President also called on the Israeli leadership and people to avoid taking measures which would provoke Muslim sentiments when it comes to the Al Aqsa mosque crisis. His plea (runtime: 2:38) comes as Egypt and other regional and international power look to calm the flare up resulting from closing the mosque to worshippers, which led to the death of at least eight Palestinians. Local political forces are looking to grandstand on the issue: A number of political parties looking to hold demonstrations in the Arab League, said Medhat El Zahid, acting head of the Popular Socialist Coalition.

Other takeaways from the conference:

• The Universal Healthcare Act is in its final stages, and will be presented to Prime Minister Sherif Ismail in two weeks’ time, according to Al Mal.
• The Education Ministry plans to build 100K classrooms within two years, of which 60,000 will be funded by the state, while the private sector will develop the remaining 40,000.
• Egypt’s agricultural exports to Europe, the Arab world, and Russia are on the rise, with exports of potatoes jumping around 33% to reach a total of 800K tonnes, Agriculture Minister Abdel Moneim El Banna said, according to Al Borsa.

You can watch the conference in full here (runtime 2:35:25).

President Abdel Fattah El Sisi approved yesterday the creation of the Golden Triangle Special Economic Zone, Al Masry Al Youm reports. The zone will grant special concessions and investment benefits akin to the Suez Canal Economic Zone to a 2.2 mn feddan area encompassing parts of Al Quseir, Safaga, and Qena. The Golden Triangle first got media attention in a 2015 presentation (pdf) by then-Oil Minister Sherif Ismail at the Egypt Economic Development Conference

El Sisi also signed off on amendments to the Personal Status Act that will see individuals missing for 30 days declared dead. Amendments to legislation regulating organ transplant procedures, which will see harsher penalties for those who violate the law, are also now in effect after having been published in the Official Gazette.

Nine banks will need to make capital adjustments to comply with CBE, Banking laws: There are nine banks in Egypt which must make adjustments to meet the minimum cap requirement of EGP 1.5 bn laid out in leaked draft amendments to the Central Bank and Banking acts, by Al Mal’s count. The list includes the Industrial Development and Workers Bank of Egypt (IDWB), Misr Iran Development Bank, Attijariwafa Bank Egypt, Crédit Agricole, ABC Bank, the Arab Investment Bank, and the Housing and Development Bank. IDWB would have the hardest time meeting these adjustments as its capital amounts to EGP 500 mn.

You’re set to pay more for your ADSL package now that service providers will themselves be required to pay the 14% value-added tax, according to a report from the Cabinet Information and Decision Support Center picked up by AMAY. Data packages across the board will cost more for the ISPs to provide starting in September when the VAT for telecom services will come into effect (the IDSC had initially said it would be applied in July). Internet service providers have failed to convince the ICT Ministry to give them another year without having to pay the VAT and have thus been pushing the National Telecommunications Regulatory Authority to give authorize a 15% increase in service prices to offset the impact of the VAT. The CIT ministry had previously said it believes ADSL providers could be allowed to raise prices by as much as 4% to offset the impact of the VAT.

Supply Ministry denies lowering subsidized bread allocations: The Supply Ministry has denied it will lower daily subsidized bread allocations, stressing that it is still studying the issue, Ahram Gate reports. The ministry had issued a report indicating that smart card holders consume an average of 2.5-3.8 loaves of bread out of their daily ration of five loaves. The ministry used that to suggest cutting the daily ration to four loaves in exchange for doubling the number of subsidy points card holders receive for every loaf of bread they do not buy from their rations to EGP 0.20, from EGP 0.10. The points on the card are then tallied and allow the cardholder to buy other commodities using the accumulated balance. Al Shorouk has more on the controversy, which has the head of the grocers’ union cheering the Supply Ministry’s trial balloon and the head of the bakers’ union booing it — a shocking breakdown of interests, we know.

MOVES- Hashem El Sayed and Khaled Abu Heif were elected yesterday to fill the two listed companies’ seats on the EGX’s board of directors, while Ahmed Bahaa was elected to fill the small and medium enterprises’ seat, Al Mal reports. El Sayed is the chairman and managing director of the Egyptians for Housing and Development Company, Abu Heif is the CEO and managing director of Arab Moltaqa Investments Company, and Bahaa is the managing director of MP Engineering.

EARNINGS WATCH-

• Orange Egypt reported an increase in net loss after tax to EGP 1.10 bn in 1H2017 from EGP 33.4 mn in the same period last year. Revenues rose 6.33% y-o-y to EGP 6.12 bn in 2Q2017. Orange Egypt blamed loss on the impact of the float on equipment imports, the CBE’s interest rate hikes and rising fuel and energy prices.
• Service revenues from Vodafone Group’s Egyptian operations increased by 24.6% y-o-y in 2Q2017, “with successful segmented campaigns and rising data penetration supporting average revenue per user growth, together with the increased value of international traffic post currency devaluation,” according to a company release. Vodafone Group as a whole reported a 3.3% y-o-y drop in overall revenues to EUR 11.5 bn in 2Q2017, compared to EUR 11.9 bn in 2Q2016.
• The National Company for Maize Products (NCMP) reported a more than 4x rise innet profit after tax in 1H2017 to 128.8 mn, according to a an EGX filing. Revenues rose nearly 79% to 738.8 mn. The company remains the subject of an intense bidding war.

Cairo has the second largest number of HNWIs in Africa, Alexandria ranks 13th: Wondering where the rich live in Africa? Cairo comes in second place on the list of African cities with the largest number of high net worth individuals (HNWIs), according to AfrAsia Bank’s Africa Wealth Report 2017. The report suggests that the number of HNWIs in Egypt decreased by 18% between 2006 to 2016 and expects their number to be stable until 2026. The report says Cairo is home to 8.900 HNWIs, of which 480 are multi-mn’aires, while Alexandria, coming in at 13th on the list, is home to 110 multi-mn’aires and 1,800 HNWIs. Johannesburg is home to the largest number of HNWIs with 18,200 individuals meeting the definition, including 970 multi-mn’aires. Egypt’s luxury market is ranked fifth continentally in terms of 2016 revenue with approximately USD 200 mn. The report also lists the top spending habits of the continent’s HNWIs from watches to private jets. AfrAsia Bank’s report is available in full here (in PDF).

Ryanair became the latest airline to bid for failing Alitalia on Monday, says a piece in the Financial Times. Ryanair’s CFO refused to give and details on the bid, but made clear how important the Italian market is to the airline. Other high profile contenders include Etihad, who already own a significant stake in Alitalia, and easyJet. The bidding is still early stage but the tender should be produced in the next few weeks. The three bids are non-binding, but expect the auction to heat up as it gets to the later stages toward October.