UAE’s National Paints Holding acquires 81% of Pachin for EGP 770.5 mn

Wednesday, 3 May 2023

UAE’s National Paints Holding acquires 81% of Pachin for EGP 770.5 mn

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Today at a glance

Privatization

Pachin has new Emirati owners.

Automotive

Toyota Tsusho could set up a car factory here.

WAR WATCH

Sudanese Army, RSF agree to a 7-day ceasefire + Egypt steps up diplomatic efforts.

Tourism

Tourist arrivals jump 33% y-o-y in first four months of 2023.

LEGISLATION WATCH

New rules making it easier for foreigners to acquire citizenship get approval from MPs.

Also on our Radar

Al Kharafi + Samcrete awarded EUR 60 mn in contracts for Fayoum water projects.

What We're Tracking Today

NUCA could set a new securitization record with a EGP 30 bn issuance.

HARDHAT

Domestic headwinds have real estate + construction firms looking for business abroad.

What We're Tracking Today

Egypt’s National Dialogue gets underway today

Good morning, wonderful people, and a very happy end-of-week to you all. Tomorrow is off for all of our readers in Egypt as we observe Labor Day.

We have a totally stacked issue for you this morning and we’ll be back with our customary EnterprisePM check-in this afternoon. Look for the Enterprise Weekend Edition tomorrow morning. EnterpriseAM will return at our customary time on Sunday.

WATCH THIS SPACE-

#1- NUCA could again break its own securitization record: The New Urban Communities Authority (NUCA) could move forward with a huge two-tranche, EGP 30 bn securitized bond issuance, Asharq Business reports, citing two sources it says are in the know. The authority has received a guarantee from the Finance Ministry for bond, Asharq says. The sources didn’t disclose when the sale could go ahead or who is advising on the transaction.

Big on bonds: NUCA has twice set the record for the market’s biggest securitization, closing a EGP 20 bn transactionin 2022 and a EGP 10 bn salein 2020.

#2- Don’t expect ODH to make fresh investments in Egypt: Orascom Development Holding (ODH) will not be making any new investments in Egypt while uncertainty about the EGP-USD exchange rate continues, Samih Sawiris told Al Arabiya in an interview. The company will push ahead with ongoing and planned investments, but won’t be allocating further capital here for the time being. ODH is, meanwhile, looking at Saudi Arabia, he said

#3- Gold prices, live: The EGX will “within days” start sharing gold prices on its trading screens, EGX boss Ramy El Dokany is quoted as saying by Al Borsa. The move coincides with the upcoming launch of a gold-backed investment fund, which got the greenlight from the Financial Regulatory Authority earlier this week.

Gold prices have surged this year on economic uncertainty: The price of 21-karat gold has soared 60% to record highs this year, and has more than tripled since the beginning of 2022 following several large devaluations and a severe bout of inflation.

HAPPENING TODAY-

It’s day 1 of the National Dialogue: The National Dialogue will kick off today with an inaugural ceremony that will feature 20 speakers from a range of backgrounds, the dialogue’s general coordinator, Diaa Rashwan, told Kelma Akhira (watch, runtime: 7:32). The dialogue will hold three meetings a week for an unspecified duration to discuss more than 100 political, economic, and social issues Some 800 individuals have been invited to participate, Rashwan said.

Look for two discussions today: The first on the reasoning behind the 113 issues selected by the dialogue, and the second on political parties and their role in the proceedings, dialogue technical secretary Mahmoud Fawzy, told Masa’a DMC (watch, runtime: 16:47).

US counterterror chief is in Cairo: Acting Coordinator for Counterterrorism Christopher Landberg is in Cairo for three days of Global Counterterrorism Forum meetings, which Egypt is co-chairing with the EU, according to a US statement. Landberg will also hold security and counterterrorism talks with local officials. He is in town through Friday.

The African Private Equity and Venture Capital Association’s annual summit:AVCA’s annual get-together and VC summit continues at the Four Seasons Nile Plaza today. Billing itself as the world’s largest Africa-focused private capital gathering, the five-day summit is bringing together investors with more than USD 1.5 tn in assets under management. Multilateral lenders and policymakers are also attending.

HAPPENING NEXT WEEK-

It’s budget week: Finance Minister Mohamed Maait will deliver his statement for the draft FY 2023-2024 budget when the House reconvenes on Tuesday, 9 May, according to Al Mal.

What we know so far: The government plans to up spending on subsidies and socialprotection programs to offset the impact of soaring inflation on households, and has released its fiscal targets for the coming year. The draft budget was approved by the Madbouly government last month and it is currently with the House pending approval.

THE BIG STORY ABROAD -

The banking crisis is back as the Fed prepares to announce rate decision: JPMorgan’s emergency takeover of most of First Republic Bank failed to soothe market nerves over the state of the US banking system yesterday, with shares in regional banks plunging as investors looked to the next weak link. PacWest fell 28% to a new record low while Western Alliance was down 15%, dragging down benchmark US indexes by more than 1%. (Reuters |Bloomberg | Financial Times | Wall Street Journal)

The sell-off is continuing in Asia this morning with most equity benchmarks in the red this morning. US and European stock markets will open flat ahead of the Fed’s decision, according to stock futures.

What does all this mean for the Fed? The central bank is still expected to announce a 25-bps rate hike at the end of its two-day policy meeting today. The latest turmoil in the banking system will serve as another reminder of the growing financial instability caused by higher interest rates and will likely harden expectations that the Fed will call an end to its tightening cycle at its next meeting in June.

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May at the Four Seasons Cairo Nile Plaza The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help Egypt build an export-led economy that makes us a magnet for foreign direct investment (FDI).

Expect the gathering to be heavy on lessons learned in Egypt and other global growth markets — and to feature lots of success stories.You can learn more on our conference website here.

Some of the biggest names in business and finance are on board — are you? The Enterprise Exports and FDI Forum is taking place with the generous support of our friends, including:

Banking partners: Banque Misr | Al Baraka Bank | Emirates NBD | HSBC

WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

HAVEN’T REQUESTED AN INVITE YET?We have a limited number of seats available. If you’re a C-suite exec, business owner, DFI staff, export executive, investor or banker, please fill out the form here to signal your interest, letting us know your name, title and where you work.

*** 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.

Tags:

Federal Reserve national dialogue New Urban Communities Authority securitization What We're Tracking Today

The World Aquatics Festival at Somabay: Three remarkable aquatic tournaments will be held together for the first time in Egypt, presented by the World Aquatics Federation and the Egyptian Swimming Federation in partnership with Somabay. Prepare yourself for the action. 8-9 May: Open-Water Swimming World Cup. 13-15 May: Artistic Swimming World Cup. 12-15 May: World Beach Water Polo Qualifiers.

Privatization

UAE’s National Paints Holding has acquired 81% of Egyptian paintmaker Pachin for EGP 770.5 mn

That’s a wrap on the play for Pachin: Dubai-based National Paints Holding (NPH) has acquired over 80% of EGX-listed Paint and Chemical Industries (Pachin) for around EGP 770.5 mn in its mandatory tender offer that wrapped yesterday, Pachin said in an EGX filing (pdf). Shareholders sold 19.36 mn shares to the Emirati company, which had offered to purchase up to 100% of the firm at EGP 39.80 apiece.

Who sold? Government agencies offloaded their entire stakes in the company, a source with knowledge of the matter told Enterprise. State-owned Chemical Industries Holding (CIHC, 44.63%), Banque Misr (10.52%), and Misr Ins. (1.25%) sold down their full stakes, together representing 56.40% of the company’s share capital. All three were long-term shareholders; no figures are available on the composition of other sellers.

The end of heated bidding war: The end of the MTO concludes what was a protracted bidding process between NPH and Eagle Chemicals. The back-and-forth of bids and counter-bids saw Pachin’s value more than double to EGP 955.2 mn. The first offer, lodged by Saybad Industrial Investment last July, valued the company at EGP 384-396 mn

Market reax: Pachn’s shares fell 1.4% to EGP 38.50 at yesterday’s close.

Part of a bigger plan: Pachin welcoming new owners comes as part of the government’s privatization plan, which should see it reduce its involvement in or exit certain industries to make way for the private sector.

ADVISORS- Al Ahly Pharos was financial advisor to Pachin, while Shalakany Law Office was counsel. Matouk Bassiouny & Hennawy acted as NPH’s legal counsel. Al Ahly Pharos also brokered the transaction.

This story was corrected on 3 May, 2023 to reflect that Al Ahly Pharos, not HC Securities, brokered the transaction.

Tags:

M&A Watch Pachin privatization watch

Automotive

Toyota Tsusho could set up a car factory in Egypt

Toyota Tsusho, the Africa-focused trading arm of Japanese carmaker Toyota, is looking to build two car factories in Africa and is considering setting up one of them here, according to a General Authority for Investment and Free Zones (GAFI) statement yesterday. The company wants each factory to produce some 100k vehicles annually, Toyota Tsusho’s Jun Karube is quoted as telling GAFI CEO Hossam Heiba, without giving more details. Representatives from Toyota Egypt declined to comment on the plans when we reached out yesterday.

We have what it takes: Toyota is in part considering putting one of the factories here because we have industries that feed into the automotive industry — including Japanese firm Sumitomo’s Tenth of Ramadan parts factory, set to be the largest of its kind in the world.

Toyota Tsusho’s mobility arm (as it now calls its automobile division) is an assembler in some 50 countries, producing passenger cars as well as commercial and industrial vehicles, its website notes. Toyota Tsusho advertises deep ties to Africa and also has a focus on infrastructure, including contracts in Egypt. Go deeper: Its website goes fairly deep into its plans for mobility and Africa.

Localizing the automotive industry is a priority for policymakers, who have finally produced a range of industry incentives through its soon-to-launch Automotive Industry Development Program (AIDP). Incentives under AIDP aim to boost local assembly and component manufacturing, up the sector’s competitiveness to become a regional manufacturing hub, and bolster export volumes. The strategy still needs to be shipped to the House of Representatives for approval and is expected to begin being implemented in 2H 2023, Trade and Industry Ministry sources told usin March.

Other auto projects in play: Stellantis, Nissan and Al Mansour Automotive could invest a total of USD 145 mn in local auto assembly over the next three years. Abou Ghaly, GM, and El Nasr Auto are also among those looking to produce electric vehicles locally.

Tags:

automotive GAFI Manufacturing Toyota Tsusho

WAR WATCH

Sudan’s conflicting forces agree to weeklong truce

Warring Sudan factions to enter a weeklong truce + peace talks are on the table: The Sudanese army and the Rapid Support Forces (RSF) have agreed to a seven-day ceasefire starting tomorrow through to Thursday, 11 May, the South Sudanese government said in a statementyesterday.

Previous ceasefires failed to hold: Ceasefires have ostensibly been in place since 25 April,but the fighting hasn’t stopped for a single day since the conflict started almost three weeks ago.

Could peace talks actually be happening? The two sides have agreed to name representatives to take part in peace talks “to be held at an agreed venue of their choice,” the statement said.

Military reiterates that things are stable: The “operational situation is stable throughout the country apart from sporadic clashes with rebel militia,” the armed forces said in a statement.

But the RSF claims to have taken control of most of Khartoum: The paramilitary group saidyesterday that it was in control of 90% of Khartoum state, a claim that has not been independently verified.

The extended ceasefire came on the same day as talks in Cairo: Foreign Minister Sameh Shoukry yesterday held talks in Cairo with an envoy of Sudan’s de facto leader, Gen. Abdel Fattah Al Burhan, the Foreign Ministry said in a statement. Shoukry called for both sides to commit to a ceasefire and the start of negotiations, the ministry said.

Calls with US + EU chief diplomats: Shoukry yesterday discussed bringing an end to the fighting with US Secretary of State Antony Blinken and the EU’s foreign policy chief, Josep Borrell. Blinken told Shoukry that the US is ready to provide support to help Egypt handle the influx of refugees. Meanwhile, El Sisi discussed bringing about a ceasefire with his Kenyan counterpart William Ruto, Ittihadiya said.

Death toll rises: The civil war has killed at least 550 people and injured around 5k others as of 1 May, the Sudanese Health Ministry said. It has become more difficult for those suffering injuries to seek the necessary medical aid, with airstrikes hitting the country’s hospitals, the Guardian reported.

The war has so far made refugees out of some 100k Sudanese people who have fled to Chad, South Sudan, Ethiopia, and the Central African Republic, according to the latest figures from the UN. Egypt has taken in around 20% of Sudan’s refugees, with latest unofficial reports putting the number between 20kand 25k. Some 330k people have been internally displaced since the fighting erupted, the UN said.

EL SISI ON SUDAN-

President Abdel Fattah El Sisi gave a rare interview to a foreign journalist coinciding with the visit of Japan’s prime minister, Fumio Kishida, earlier this week. In his conversation with Ashahi Shimbun, the president discussed his government’s response to the conflict in Sudan and the ongoing diplomatic realignment in the region.

Egypt is struggling with refugees: “Many Sudanese are fleeing to Egypt and we are facing challenges,” the president said, noting that Egypt has received 8-9 mn people from Libya, Syria and Yemen in recent years. “If we were to accept even more Sudanese, Egypt will definitely feel the effects.”

A non-interference policy: “We will not interfere in the domestic politics of other nations because we do not want to further complicate the situation,” he said, adding that Egypt will provide support for dialogue between the warring parties, establish a temporary civilian government, and hold elections.

An Egyptian-Japanese mediated ceasefire? El Sisi said he was open to working with Japan to mediate a ceasefire in Sudan.

SUDAN = THE CONVERSATION ON EGYPT

The conversation on Egypt in the international press is dominated by the situation in Sudan as refugees continue to flee to Egypt and other neighboring countries. Reuters and the Associated Press have more coverage of the struggles faced by those crossing the border — including limited access to food and water, as well as high transportation costs.

Tags:

Abdel Fattah El Sisi DIPLOMACY Sameh Shoukry

Tourism

Egyptian tourism sector continues to rebound with a 33% jump in tourist arrivals in 2023 so far

Tourist arrivals to Egypt in the first four months of the year jumped 33% from the same period in 2022, the head of the Egyptian Tourism Promotion Board, Amr El Kady, told CNBC Arabia (watch, runtime: 6:54). El Kady didn’t disclose how many tourists visited the country between January and April.

REMEMBER- The ministry is currently expecting to receive a record 15 mn tourists this year, up 28% from 2022. El Kady says the ministry will review the target in June, but thinks we’re on track to hit the 15 mn figure. The industry had a strong 2022, quickly shaking off the impact of the Russia-Ukraine war as operators replaced low-margin Ukrainian and Russian package tours with higher value travelers from Europe and the US.

No GEM opening date? The state is yet to decide on an opening date for the long-awaited opening of the Grand Egyptian Museum (GEM), he said. Asharq Business reported earlier this week that the museum could open its doors in November, citing an unnamed government official.

What’s the holdup? “A number of world leaders and officials have expressed their interest in attending the museum’s inauguration ceremony; consultations on that international level take a long time,” El Kady said, adding that we can expect a date announcement “very soon.”

Tags:

tourism

Capital markets

Avanz to launch Africa-focused low-carbon investment fund in 2024. PLUS: CIB share trade under review, Exits gets IB license

Avanz’s low-carbon fund is coming next year: An Africa-focused low-carboninvestment fund planned by private equity outfit Avanz Capital Management and MGM Financial & Banking Consultants will launch at the beginning of 2024, Al Mal reports, citing Avanz co-founder and chief portfolio risk officer Hany Assaad. The fund will have an initial capital of USD 200 mn and will start by targeting low-carbon projects in Ghana, Nigeria, and Morocco.

Avanz is no stranger to low-carbon funds: It is managing the Planning Ministry’s EGP 1 bn EgyCOP fund, that will invest in low-carbon projects that issue carbon credits.

CIB TRADE INVESTIGATED-

The Financial Regulatory Authority (FRA) is looking into irregularities relating to the trading of CIB shares during a session three weeks ago, EGX boss Ramy El Dokany reportedly said yesterday, according to AlBorsa. At the end of the trading session on Thursday, 13 April the bank’s share price surged 14.5% to EGP 58.50 on the strength of a single, 2-mn-share block trade at the closing bell, sending the benchmark EGX30 index up 5.5%. Shares opened sharply lower at EGP 53.70 the following session.The EGX doesn’t think this is a case of market manipulation and saw no irregularities in the session, but it is possible the FRA “may have a different opinion,” El Dokany said.

Our take: This is simply the case of a trader having botched an execution order, as we noted at the time last month.

ALSO- EGX tests update: The EGX on Monday put to the test its updated trading platform, which includes changes to the way stock’s daily closing price is calculated and approved, it said in a statement (pdf).

A NEW ADVISOR ON THE BLOCK-

Regional fintech investment platform Exits will advise clients looking to list on the EGX after it obtained a securities promotion and underwriting license from the Financial Regulatory Authority (FRA), it said in a press release (pdf). The license will allow the company to help startups meet listing procedures to IPO on the bourse, adding to its existing investment banking and M&A services for startups and SMEs across MENA.

Tags:

Avanz Capital Management capital markets CIB EGX Exits Financial Regulatory Authority private equity

LEGISLATION WATCH

Egyptian lawmakers approve new rules making it easier for foreigners to acquire citizenship

Yesterday in the House: MPs had a busy day yesterday granting five pending bills their final approval and forwarding them to Ittihadiya to be signed into law.

#1- Citizenship Act: Amendments to the Citizenship Act will make it easier for some foreignersto become Egyptian citizens and help the state to secure some much-needed hard currency. The changes will allow foreigners to acquire citizenship by purchasing real estate, investing directly in local projects, or depositing money with the central bank.

Final approval came despite opposition: Some MPs voiced opposition to the bill, saying foreigners who invest in the country should only be granted permanent residency; a number of them expressed skepticism that the bill would attract substantial inflows.

#2- Dog ownership: New, stricter rules on dog ownership will require dog owners to purchase licenses costing EGP 1k-50k. Unlicensed owners or owners whose animals attack other people could be fined and / or sent to jail. The amendments also introduce new regulations on the possession of dangerous animals.

#3- Tax-free Dabaa nuclear plant: The bill would hand tax exemptions to local andinternational companies working on the Dabaa nuclear plant.

#4- Manuscript protection: The bill aims to protect historic, hand-written Egyptian manuscripts through forming a specialized committee.

#5- Police academy: The approved amendments tighten rules on who is eligible to enroll in the police academy. It forbids people with dual nationality and those with relatives on the terror list from enrolling at the academy.

What’s next? The amendments will be handed to President Abdel Fattah El Sisi to be signed into law. They will then take effect when the executive regulations for each of them are published in the Official Gazette, a process that can take up to six months.

Tags:

Dangerous Dogs Act economy foreign exchange House of Representatives Legislation Watch

EARNINGS WATCH

SODIC posts higher revenues in 1Q 2023 while inflation impacts sales

SODIC reports lower income, higher revenues in 1Q 2023: Our friends at upmarket real estate developer SODIC saw their bottom line fall 17% y-o-y in 1Q 2023 to EGP 187 mn, according to the company’s latest earnings release (pdf). Revenues for the quarter rose 26% y-o-y to EGP 1.5 bn.

Economic headwinds hit sales: Gross contracted sales fell 25% y-o-y during the quarter after rising construction costs prompted the company to temporarily halt sales in early 2023 as it revisited its pricing strategy amid rising construction costs, it said in the release. SODIC sold 274 units during the quarter, amounting to EGP 2.78 bn in gross contracted sales. This is down from EGP 3.74 bn in 1Q 2022.

More price changes to come? “Going forward SODIC will periodically review its selling prices as it seeks to balance maximizing sales with managing cost inflation risk in the current inflationary environment,” the company said.

REMEMBER- It has been a challenging few months for real estate players, who are faced with the devaluation of the EGP and import difficulties on the back of an FX crunch that sent raw materials prices soaring. The Madbouly government has given developers a 20% deadline extension on their projects following pleas for state support.

Demand was “healthy”: “We have witnessed very healthy demand for the limited launches that we have released during the quarter. We will continue bringing forward releases across our projects during the year,” SODIC General Manager Ayman Amer said.

Tags:

earnings watch real estate SODIC

Capital markets

EFG Hermes tops Egyptian Exchange brokerage league table again in April

EFG Hermes once again led the EGX’s monthly brokerage league table in April with a market share of 15.9%, according toEGX figures (pdf). Al Ahly Pharos Securities Brokerage came in second (10.7%), followed by CI Capital (7.2%). Mubasher Securities and Pioneers Securities tied for fourth place with 3.9% market share.

Tags:

Al Ahly Pharos brokerage league capital markets CI Capital EFG Hermes Mubasher Capital Holding Pioneers Securities

LAST NIGHT’S TALK SHOWS

Egyptian talk shows cover the latest on the state’s privatization program, latest in Sudan

Privatization and politics top last night’s talk shows: The nation’s talking heads covered the Madbouly government’s privatization plans, the latest in Sudan, and what we can expect from the first day of the National Dialogue.

First, Pachin is no longer state-owned: Yesterday, Dubai-based National Paints Holding (NPH) acquired over 80% of EGX-listed Paint and Chemical Industries (Pachin) for around EGP 770.5 mn (c. USD 25 mn).

USD 25 mn is not much, but it’s something: “The USD 25 mn transaction makes up a mere 1% of the Madbouly’s government’s goal to raise USD 2 bn for its privatization program by June … what’s important is that the money is coming from a foreign investor, bringing USDs into the country,” Amr Elalfy, head of research at Prime Securities, told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 7:02). He explained that the transaction is a message of reassurance that despite our exchange rate, Egypt still has strong assets that attract investors. We have the full story in the news well, above.

The situation in Sudan could have dangerous consequences for the region: “Sudan has a very important strategic location, sharing borders with seven countries … the prolonging of the war in Sudan could end up spilling over and enticing violence in its neighbors which would be very dangerous for the Horn of Africa,” International Affairs Professor and African affairs expert Hamed Faris told Al Hayah Al Youm (watch, runtime: 5:59).

There’s a big question mark over the future of the country: “There is no knowing how things will be once the situation calms down,” former foreign minister Mohamed El Orabi told Masa’a DMC (watch, runtime: 9:33).

Tags:

economy LAST NIGHT’S TALK SHOWS National Paints Holding Pachin

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Also on our Radar

Al Kharafi + Samcrete awarded EUR 60 mn in contracts for new water infrastructure in Fayoum. PLUS: Cheaper wheat, better mobile networks, O West deliveries

INFRASTRUCTURE-

Al Kharafi + Samcrete to build new water infrastructure in Fayoum: Al Kharafi & Sons and Samcrete have been awarded several contracts under the European Bank for Reconstruction and Development-backed (EBRD) Fayoum wastewater treatment project, according to the lender’s website.

Al Kharafi has been chosen to design and build a new wastewater treatment plantwith a 35k cbm/d capacity under a EUR 23.9 mn contract. The project is expected to finish by the end of April 2025.

Samcrete was awarded two contracts worth a combined EUR 36.6 mn to build new sewage networks and pump stations in the governorate. One contract will finish in October 2024 and the other in December 2024.

COMMODITIES-

Cheaper wheat: GASC could pay as little as USD 250 a ton for its upcoming wheat purchase, traders said yesterday. In its latest international wheat tender launched yesterday, two Russian grain traders offered to ship 235k tons of wheat for USD 250 on a FOB basis. Several Romanian suppliers bid USD 260-263, higher than GASC’s USD 250 asking price. If accepted, this would be almost 10% cheaper than the state grains buyer’s last tender less than a month ago.

A year is a long time in the commodity markets: Wheat prices have almost halved from a year ago, helping to ease the pressure on Egypt’s import bill. As the world’s largest wheat importer, Egypt was among the most vulnerable countries to the fallout from the war in Ukraine, which temporarily cut off wheat exports from Russia and Ukraine, its two biggest suppliers.

REAL ESTATE-

ODE starts deliveries at new O West phases: Orascom Development Egypt (ODE) has begun delivering residential units at the Whyt and Tulwa phases of its O West project in Sixth of October, the company said in a statement (pdf)yesterday. The company expects to deliver more than 350 villas in Whyt and 1,650 apartments in Tulwa this year, it said.

O West has become a key money-maker for the company: The development became ODE’s largest contributor to new sales in 2022, rising 44% to EGP 5.7 bn, according to its 4Q earnings release (pdf). Revenues from O West rose by two-thirds to EGP 2.9 bn, accounting for more than a quarter of the company’s total revenue.

TELECOMS-

Mobile network quality improves in 1Q 2023: The number of areas across Egypt affected by mobile voice quality issues dropped 7% y-o-y in 1Q 2023, while the number experiencing mobile data quality issues was down 31% y-o-y, according to the quarterly complaints report (pdf) from the National Telecommunications Regulatory Authority (NTRA).

More fines handed out: During the quarter the NTRA ordered the country’s four telecom providers — Telecom Egypt, Orange Egypt, Etisalat Egypt, and Vodafone Egypt — to pay a combined EGP 32 mn in fines for failing to meet standards, up 64% from the EGP 19 mn handed out during the same period last year.

FINTECH-

Mastercard to roll out card tokenization in Egypt: Mastercard is working to provide all issuing banks across the country with the payment infrastructure needed to offer card tokenization services, the firm said in a statement. The joint project between Mastercard, the Central Bank of Egypt (CBE), and the Egyptian Banks Company (EBC) will see every payment card get a unique identifier or ‘token’ that can be used to make in-person and online transactions, eliminating the need to share sensitive customer data like account numbers.

LOGISTICS-

#1- Bahri + Suez Canal Authority to pour USD 50 mn into new joint-stock maritime transport firm: Saudi Arabia’s state-owned National Shipping Company (Bahri) and the Suez Canal Authority (SCA) are investing USD 50 mn to establish an Egyptian joint-stock company for maritime transport, Al Mal reports, citing a source familiar with the matter. The two companies plan to finalize procedures for the new company by the end of August.

#2- Khazenly wants to make it easier for merchants to do business overseas: B2B logistics startup Khazenly has launched a new cross-border service designed to make it easier for Egyptian merchants to sell their products overseas, it said in a statement (pdf) yesterday. ‘Cross borders’ is an integrated service that helps companies with local fulfillment, foreign-exchange transactions, permits and licenses, and product returns, it said.

Tags:

Al Kharafi & Sons ALSO ON OUR RADAR Central Bank of Egypt CIT commodities EBRD Fintech GASC infrastructure Khazenly logistics Mastercard O West Orascom Development Egypt real estate Samcrete

PLANET FINANCE

Dubai tightens crypto stance

Dubai’s regulators are adopting a more stringent stance towards crypto: Dubai’s crypto regulator has issued a written reprimand to the foundersof the collapsed Singapore-based hedge fund, Three Arrows Capital, for setting up a new crypto exchange without a license. (Statement | Bloomberg)

Need-to-knows:

Crypto hub aspirations: Dubai has become known for its light-touch approach towards crypto regulations, which it has used to attract the world’s crypto bros to its shores.
But it also wants to clean up its act on money laundering: The UAE is trying to getits name off the Financial Action Task Force’s “gray list” of countries with weak rules on money laundering.

Sinopec + TotalEnergies want in on Aramco’s USD 100+ bn gas project: China’s Sinopec and France’s TotalEnergies are among the companies in talks with Saudi oil giant Aramco to invest in its USD 100 bn Jafurah project, one of the world’s largest unconventional gas fields, people familiar with the matter told Bloomberg yesterday. Aramco is looking to raise USD 10 bn to develop the field, which could include the construction of LNG facilities, some of the people said. Investment bank Evercore is providing advice.

EGX30	17,301	-0.1% (YTD: +18.5%)
USD (CBE)	Buy 30.84	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	18.25% deposit	19.25% lending
Tadawul	11,219	-0.6% (YTD: +7.1%)
ADX	9,669	-0.4% (YTD: -5.3%)
DFM	3,576	+1.1% (YTD: +7.2%)
S&P 500	4,120	-1.2% (YTD: +7.3%)
FTSE 100	7,773	-1.2% (YTD: +4.3%)
Euro Stoxx 50	4,295	-1.5% (YTD: +13.2%)
Brent crude	USD 75.27	-5.1%
Natural gas (Nymex)	USD 2.22	-4.2%
Gold	USD 2,026.80	+1.7%
BTC	USD 28,679	+2.8% (YTD: 73.8%)

THE CLOSING BELL-

The EGX30 fell 0.1% at yesterday’s close on turnover of EGP 1.51 bn (14% below the trailing 90-day average). Regional investors were net buyers. The index is up 18.5% YTD.

In the green: Ibnsina Pharma (+4.7%), Abu Qir Fertilizers (+2.2%) and Egypt Kuwait Holding - EGP (+2.1%).

In the red: Oriental Weavers (-4.2%), Palm Hills Development (-2.5%) and Taleem (-2.2%).

Tags:

Aramco cryptocurrency Financial Markets oil and gas Planet Finance

HARDHAT

Domestic headwinds have real estate + construction firms looking for business abroad

With headwinds in the local market, real estate + construction players are looking for business beyond our borders: Egypt’s real estate developers and contractors have been struggling for the past several months amid a tough macro environment, leading to a slowdown in the delivery of projects in the sector. In a bid to bring in more business — particularly in foreign currency — several players have begun to seek out contracts in regional markets, where our sources tell us there is plenty of demand for Egyptian companies’ work. This push beyond our borders also coincides with a pickup in Egypt’s infrastructure diplomacy drive, particularly in Iraq.

Iraq is starting to tap Egyptian companies for infrastructure projects: The Contractors Union has received offers from Iraq for Egyptian companies to work on 12 different projects under an infrastructure diplomacy mechanism the two countries set up in 2020, union member Shams Eldin Youssef told Enterprise. The offers include infrastructure and roadwork projects, Youssef said, noting that

REFRESHER- Back in November 2020, Egypt and Iraq agreed to set up a mechanism that would see Egyptian companies work on development projects in Iraq in return for importing Iraqi oil. Under the “oil-for-reconstruction” agreement, Egyptian companies will be contracted by our government to both advise and execute some key projects for Iraq, with the agreements set to cover everything from oil and water resources to construction, housing, and transportation. Iraqi officials had also said they want Egyptian firms to work on rebuilding Iraq’s electricity grid, as well as rebuilding the country’s road network.

Despite being a relatively well-thought out mechanism, we haven’t seen much come out of the infrastructure diplomacy agreement with Iraq. Last we heard, officials were still working out the specifics of the mechanism, including how companies will be paid and which of the two countries would be responsible for payment. However, we haven’t seen much development on that front, nor have there been any contracts offered to Egyptian firms to start working on infrastructure projects in Iraq. Orascom Construction, Arab Contractors, Petrojet, and local contractor Samco Egypt already operate in the country. Arab Contractors has for years worked on water infrastructure projects in Iraq, while Orascom Construction helped to rebuild a 1.6 GW power plant there in 2019 alongside Siemens.

Industry players are looking at several other markets in the region beyond Iraq: Elsewedy Electricity subsidiary Rowad Modern Engineering, for one, is eyeing expansion in Gulf markets, after successfully expanding its operations to Africa, CEO Mohamed Mahlab told Enterprise. The company plans to expand in Saudi, where it is looking to lock down a portfolio worth somewhere between SAR 500 mn and SAR 1 bn this year, Mahlab said. Several Egyptian contracting firms have also signed contracts for projects in Libya but have yet to begin work, head of the Egyptian Federation of Construction and Building Contractors Mohamed Sami Saad told Enterprise.

There’s also significant potential in Africa, Youssef said, with a large number of Egyptian firms landing contracts to work on infrastructure projects in different countries across the continent. Our friends at Elsewedy Electric, for example, built the Julius Nyerere Dam in Tanzania under a USD 2.9 bn contract with Arab Contractors, with Tanzanian officials kicking off the first filling for the dam late last year.

But there are risks that come with these expansions — and some regulatory tweaks that need to be made to truly create momentum: Some markets where there is real potential for Egyptian firms to land business and generate foreign currency income also come with sizeable risk, making it crucial for there to be a risk mitigation framework in place, Sami Saad tells us. This includes hedging against security risks in countries where there is political turbulence, such as Libya and Iraq, as well as risks related to payments and arrears, he said. In Iraq specifically, the two countries must agree on and announce a clear mechanism for how participating Egyptian firms would be paid under the oil-for-reconstruction agreements, which Sami Saad said could be the key for contractors here at home entering the promising Iraqi market.

The upside remains significant: With plenty of potential business for our companies in regional markets, these players can secure liquidity that would help them finance further expansions, as well as their existing operations here in Egypt, Sami Saad noted. Securing income in FX would also help these companies hedge against future currency fluctuations.

Your top infrastructure stories for the week:

47 firms will be able to bid in upcoming PPP desalination tenders: The Sovereign Fund of Egypt has prequalified 17 consortiums to bid in its upcoming tenders for renewables-powered desalination projects.
Egypt + JICA sign funding agreement for Metro Line 4: The Japanese International Corporation Agency (JICA) will lend JPY 100 bn (c. USD 733 mn) to Egypt to finance the construction of Cairo Metro Line 4.
AWID is looking at Egypt’s desalination program: The water infrastructure investment platform established by Metito and British International Investment earlier this year could be interested in building two desalination plants.

Tags:

construction Hardhat Iraq reconstruction real estate

CALENDAR

APRIL

26 April - 5 May (Wednesday-Friday): African Basketball Championship.

Late April – 15 May: 1Q2023 earnings season.

MAY

1-5 May (Monday-Friday): African Private Equity and Venture Capital Association annual summit, Four Seasons Nile Plaza, Cairo.

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

3 May (Wednesday): National Dialogue begins.

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

7 May (Sunday): Senate back in session.

7-11 May (Sunday-Thursday): First round of applications for sixth phase of export subsidy program.

9 May (Tuesday): House back in session.

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

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

14 May (Sunday): Expat car import scheme ends.

14 May (Sunday): EgyptAir to launch a new route to Dhaka, Bangladesh.

14 May (Sunday) Egytrans’ shareholders to vote on NOSCO acquisition.

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).

17-31 May (Wednesday - Wednesday): Second round of applications for sixth phase of export subsidy program.

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

19 May (Friday): Arab League summit, Riyadh.

19-21 May (Friday-Sunday): G7 summit, Hiroshima, Japan.

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.

29 May (Monday): IEF-IGU Ministerial Gas Forum, Cairo.

30 May (Tuesday): Listed companies have until this date to report and publish their 1Q results.

JUNE

June: Indian representatives to discuss prospect investments in the Suez Canal.

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.

19-20 June (Monday-Tuesday): The forum for insolvency reforms and corporate restructuring in the Middle East and North Africa.

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

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

1 July: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

5 - 6 July (Monday - Tuesday): Gov’t to pay out subsidies to first wave of applicants under its sixth export subsidy program.

18 July (Tuesday): Islamic New Year.

19 - 20 July (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

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.

2 - 3 August (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

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

10 August (Thursday): Shalateen Mineral Resources gold mining tender closes.

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

SEPTEMBER

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

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

15 September (Friday): 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.

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

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.

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

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

OCTOBER

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

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

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.

26 October (Thursday): Daylight saving time ends.

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

NOVEMBER

November: Cairo to hostIntra-African Trade Fair.

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.

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.

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

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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