Sources at Naeem Holding for Investments said that the due diligence examination of the two companies RECAP Financial Investments— the real estate arm of Naeem Holding—and Wadi Degla Development—the real estate arm of Wadi Degla Group— will be completed before the end of September as a prelude to the establishment of a strategic alliance between the two companies.
The sources explained that this alliance aspires to place the available assets, cash, and expertise of the two companies in the expansion into real estate projects in the domestic market.
The sources emphasised that the due diligence examination will determine the appropriate form of this strategic alliance. The examination evaluates the assets, the expected cash flows, and tax positions, and then determines the fair value of the two companies. Therefore, the studies will determine the best formation for the alliance and whether it suits both companies.
Wadi Degla Holding company is specialised in developing real estate projects, as well as owning land portfolios in Cairo, Ain Sokhna, Hurghada, and the North Coast.
RECAP Investments owns, through its companies, 505,000 sqm in Marsa Alam and about 25,000 sqm in Smart Village. The development process is divided into two phases: the first phase includes the construction of five administrative buildings on eight targeted stages on an area of 15,000 sqm.
The company has signed an agreement with Palm Hills for developing 10,000 sqm, while the upcoming administrative project aims to register revenues estimated at EGP 700-800m annually.
RECAP registered net profit of EGP 14.3m in the first quarter of 2016 against a loss of EGP 7.6m during the same period in 2014. The company operates in the real estate field, forming and managing security portfolios. The company’s capital reaches EGP 545.9m.
Naeem Holding directly and indirectly owns 56.2% of RECAP Investments.
The financial statements of Naeem Holding disclosed that the company’s losses during the first half of this year registered $2.5m compared to $4.8m year-on-year (y-o-y).
The sources pointed out that the improvement in Naeem’s business results is due to the company increasing the commissions and consulting service fees it provides during the first half of this year. This was a result of the relative saleability of the capital markets in the Arab region, as well as for the implementation of some of the deals, and an expense reduction policy.
The value of the fees, commissions, and consultations during the first six months of 2016 is roughly $7.5m, compared to $2.1m y-o-y. The total expenses declined to $7.7m compared to $10.7m.