Chairperson of Banque du Caire Tarek Fayed said in televised statements that the bank is ready to complete its offering at any time the government deems appropriate. The statement raised a question about the appropriate timing for the offering, especially with the International Monetary Fund (IMF) announcing that the Egyptian government pledged to exit from assets and increase the role of the private sector in the Egyptian economy.
Investment banks, surveyed by Daily News Egypt, said that the current time is appropriate for the government to resume its IPO programme, in parallel with the economic reform plan.
Hany Genena, an economist and economics lecturer at the American University, pointed out that Banque du Caire’s offering was delayed for various reasons, and the current period is very suitable for the step, and there is no reason to delay it, given the conditions that financial markets are going through around the world.
He added that the implementation of the offering will be a sign of the government’s interest in implementing the terms of the IMF agreement, which would reassure local and foreign investors to pump more investments into the market, and it would also attract much-needed dollar liquidity.
Informed sources revealed earlier to Daily News Egypt that the work mechanism of the pre-IPO fund established by the Sovereign Fund of Egypt to implement the government IPO on the stock exchange includes opening a sub-fund for each offered company emanating from the main fund.
The sources pointed out that the aim is for each company to have a separate fund to facilitate the investment option for investors interested in a specific company, or to invest in a specific activity, in addition to the different nature of each activity from the other.
Banque du Caire was planning to offer between 20-30% of its shares on the stock exchange in April 2020, before the outbreak of the Covid-19 pandemic in Egypt, then the offering was postponed due to the repercussions of the pandemic globally and locally, and the impact of stock exchanges in Egypt and the world.
Sources told Daily News Egypt earlier that Banque du Caire had completed some procedures related to the structuring process before the offering, including the acquisition of all of its shares by Banque Misr in a deal valued at EGP 7bn, in cooperation with the offering manager, EFG-Hermes.
Informed sources revealed to Daily News Egypt that the Sovereign Fund of Egypt is studying to include Banque du Caire in the pre-IPO fund, and is working to complete the necessary procedures. Pointing out that the fund aims to present it to strategic investors from international funds.
Ahmed Haidar, CEO of Al-Ahly Pharos, said that Egypt’s access to the International Monetary Fund loan, success in eliminating the parallel market for foreign currencies, foreign investors’ appetite for the bond market, the increase in the number of dealers in the Egyptian Exchange, the growth of daily trading volumes, and the announcement of the state ownership document, in addition to the attractive valuations of some sectors with attractive returns, they are factors that help create a suitable environment for completing the government offering programme.
He explained that this would encourage companies from the private sector to complete their offerings this year as well as acquisition deals on existing entities, whether private or traded.
Sources related to government offerings had revealed to Daily News Egypt that the government offering program is waiting to reach more attractive multiples, especially since there is no need to sell assets at less than their real value, and borrowing can be done instead until the market improves.
The sources hinted that there are some opinions opposing the offering with an assessment far from the true value of the assets, noting that the decline in the stock market during the previous three years and up to the first quarter of 2022 is linked to unfavourable economic conditions globally, beginning with Coronavirus and passing through a logistics crisis and even the Russian-Ukrainian war and its inflationary effects globally and once the causes of those pains are gone, the markets will witness the return of flows and a true expression of the assets that are planned to be offered.
A source closely related to the offerings program expressed fears of weak liquidity from government institutions during the past year, which changed radically with the recent devaluation of the Egyptian pound, with the increase in trading values and the representation of local institutions from trades, but the number of individuals was much greater.
Mohamed Mostafa, managing director of the Arab African Asset Management Company, said that now is the right time to list any company on the Egyptian Exchange.
He explained that the current period is good for offering new companies on the stock exchange, which will lead to reviving the market with increased trading volumes, which have become encouraging volumes for some investors to enter the market, high liquidity, liberalization of the exchange rate and the development of new reform mechanisms from the Central Bank to attract foreign investments.
He pointed out that investors have begun to re-evaluate Egyptian assets to pump investments into the Egyptian market, directly or indirectly.
It is likely that the right time for IPOs is the first half of this year, and starting with Banque du Caire will draw the attention and attract investors because the Egyptian banking sector is one of the strongest banking sectors at the level of competitive markets and is still open to new propositions.
He explained that the results of Banque du Caire’s business in recent years were positive, and he attributed the postponement of Banque du Caire more than once to the fact that the time was not appropriate and the investment environment was weak, as it would not achieve its desired goal of attracting investments.
He expected the success of the offering strongly, which will open the door for the rest of the awaited government offerings to attract a larger number of foreign investors, and he mentioned that one of the most important reasons for attracting investors is that the evaluation is attractive, fair and not exaggerated.
He explained that the gains of offerings do not come only from stock prices, but also from drawing the attention of international financial institutions to the stock exchange and the entry of new liquidity, whether Arab or foreign, and put Egypt on the investment map again among the neighbouring markets, and give Egypt a competitive advantage among the markets.
Ali Al-Ghannam, Chairperson of Ostool for financial consultations, confirmed that the beginning of the second quarter would be an appropriate time to complete the offering of Banque du Caire, given the trading volumes and the number of deals that the market performs daily with the liberalization of the exchange rate, which made the shares of the Egyptian Exchange a very attractive centre for investments and acquisitions.
He pointed out that the offering of Banque du Caire would be attractive to international strategic investors due to the status of Banque du Caire, and that not only the gains of the offering are the benefits and the expectation that there are already strategic investors anticipating its offering.
He also explained that the banking sector, especially with the new pricing policy by the Central Bank, is a very attractive sector for investment, and that the new exchange rate flexibility will lead to strengthening the position of the Egyptian pound against the dollar.