The Egyptian money market awaits the government IPO programme after the Cabinet announced the 32 companies to be offered through either public offering or to a strategic investor.
Prime Minister Mostafa Madbouly said in a statement on Saturday that the government aims to collect $2bn from the government offering programme before the end of next June.
He pointed out that a unit will be formed to manage the government propositions programme to speed up the pace, provided that an advisor to the Prime Minister is appointed to manage the government propositions programme with an agreement with an international consultant to assist the government in the programme.
Madbouly explained that the sovereign fund is negotiating with investment agencies to implement the offering programme, while CBE is preparing the banks to be offered.
He pointed out that the fund is preparing more than 10 companies affiliated with the armed forces to include them in the offering programme, in addition to Wataniya and Safi.
Yasser El-Masry, managing director of the Arab African International Securities (AAIS), said that the market is ready to start implementing the government offering programme. He pointed out that offerings for a strategic investor will not benefit from the Egyptian Stock Exchange, and only public offerings will be in the interest of the capital market.
He stressed that the step of launching a unit for public offerings is good, but there must be an executive official not a consultant, calling for the return of the Ministry of Investment and the inclusion of the financial sector in it.
The list of companies to be offered includes three banks, four state-owned real estate companies, and a number of hotels owned by the Ministry of Public Enterprises Sector.
The offered companies operate in 18 different economic sectors and activities, including the insurance sector, the electricity and energy sector, and the petroleum sector, in addition to companies in the transportation and container handling sectors.
DNE learned that former Public Enterprises Sector Hisham Tawfik is among the nominees for the position of advisor to the Prime Minister for the offerings.
The sources told Daily News Egypt that the companies that to be listed in the next two months are the Egyptian Linear Alkyl Benzene Production Company (ELAB), the Chemical Industries Company Pachin, Misr Aluminum, Port Said Container and Cargo Handling company, and Damietta Container Handling, in addition to the United Bank.
The sources indicated that most of these companies will be owned by a strategic investor with the aim of providing dollar liquidity, in addition to working on selecting eight additional companies from the National Service Projects Authority to include them in the offering programme, bringing the number of programme companies from 32 to 40.
Mohamed Maher, Chairman of the Egyptian Securities Association (ECMA), said that what the Prime Minister announced was very positive, stressing that the government offering programme currently needs attractive pricing in light of the risks of currency depreciation.
He explained in a statement to Daily News Egypt that proof of seriousness by the government will attract investors of various categories, topped by locals and foreigners, especially in light of a large liquidity in the market looking for investment alternatives, which is reflected in the volume of demand for gold bullion recently.
He added that Egypt needs an investment climate similar to what existed in the 1990s, with a government company being offered on a weekly basis, large domestic and foreign demand, and a strong promotion of investment opportunities in Egyptian stocks.
For his part, Mohamed Farouk, Chairman of Global Invest, said that the most important thing is the actual start of implementation to reassure investors about the seriousness of the offering programme.
He added that a clear and announced timetable must be set. It should include the timing of each offering of the programme companies, especially that the talk about the offering programme started in 2016 until now.
He pointed out that the part related to the exchange rate of the Egyptian pound against the dollar must be clarified to strategic investors, stressing that the exit scenario is the first idea that a foreign investor gets before entering the market, which makes it crucial to provide dollar liquidity.