Minister of Planning and Economic Development Hala El-Said revealed on Tuesday that a sub-fund has been established within the Sovereign Fund of Egypt, through which the shares that are scheduled to be presented to the IPOs committee will be prepared.
The minister added that the subsidiary fund was established to prepare shares that will be offered in the IPOs committee, and that the first shares that will be managed are the shares of an investment bank in a number of affiliated companies for the public sector.
Sources closely related to the file told Daily News Egypt (DNE) that the Sovereign Fund of Egypt is working on developing a work plan for the IPO Fund and a list of the companies to be offered is currently being drawn up, as well as the shares in question, and the timetable for seizing the favourable opportunities in the market to complete the offerings with the best evaluation. The sources confirmed that the fund has already completed a list of some assets that will be included in the fund to be presented to strategic investors.
The sub-fund aims to prepare government-owned companies for offering on the Egyptian Exchange (EGX), as the government previously announced that it aims to offer shares in government-owned companies.
The IPO programme aims to foster foreign direct investments in the stock market and accelerate the implementation of the government’s plan to exit certain sectors as per the State Ownership Policy Document.
CEO of Egypt’s Sovereign Fund Ayman Soliman said in previous statements that the pre-IPO fund will provide investment opportunities worth hundreds of millions of dollars for these major funds, which will reflect on Egypt’s benefit from entering foreign investments quickly, coinciding with the presence of shareholders who maximise the value of the fund.
Soliman added that the fund aims mainly to accelerate some investments to enter into targeted partnerships through the IPO programme to expand the ownership base, and the fund will allow these investments to enter even in the absence of favourable market conditions for the completion of public offerings.
He also pointed out that the conditions of the capital market and the extent to which it accommodates the offerings is a matter beyond everyone’s control, which prompted a solution represented in offering quotas from government companies to strategic investors with minority stakes through the IPO Fund through direct negotiation with investors.
Furthermore, he affirmed that the Sovereign Fund of Egypt carefully selects strategic investors by setting several conditions to be invited to subscribe to the pre-proposal fund, the first of which is for the strategic investor to create an added value for the company under investment, maximise its value, and enhance the value of completing the public offering.
In a related context, Ahmed Hesham — Head of the Strategic Research Sector at Beltone Securities Brokerage — said that the capital market needs more reform measures to become more attractive to investments and to be ready to receive proposals in general.
He also explained that it is necessary to work to increase the competitiveness of the Egyptian market, especially in light of the strong competition from the surrounding Gulf markets to attract foreign capital.
He added that Egypt has reached an agreement on a positive IMF loan for the money market, but the market needs more extensive measures.