30% of Egyptian Drilling Company included in TSFE’s Pre-IPO Fund

Fatma Salah
3 Min Read

Informed sources told Daily News Egypt (DNE) that the Egyptian General Petroleum Corporation (EGPC), which owns the Egyptian Drilling Company (EDC), signed swaps with the Sovereign Fund of Egypt (TSFE) to add a stake of up to 30% of the company’s shares to the portfolio of the pre-IPO fund.

The sources added that the aim of its inclusion is to sell a share of the company to a strategic investor, as part of the government’s plan to sell a share of 32 companies in the government’s offering program, whether to strategic investors or a public offering.

The sources indicated that the selling of the share is expected to be implemented in the fourth quarter of this year. Additionally, offering an additional stake in the company on the Egyptian Exchange (EGX) will be considered at a later stage.

The EDC is one of the companies listed in the offering programme that the government announced months ago.

The program includes companies in various sectors, including banking, petrochemicals, insurance, electricity, and energy.

The sources added that the mechanism of the Pre-IPO Fund requires transferring a share from the government entity that owns the company to a separate portfolio in the Pre-IPO Fund with an auditor and an independent observer. This would be done through swaps signed between the Fund and the entity that owns the stake.

The TSFE established the Pre-IPO Fund at the end of last year. It was established after negotiations with sovereign investment funds, which suggested this idea before offering companies on the stock exchange to maximize the value of the company. It aims to include government companies to sell shares to strategic investors before the public offering.

The fund allows the investor to spend their investment life in the company subject to acquisition, provided that they decide to exit or continue with the company at the time of offering it on the EGX in a public offering at a later stage.

Egypt seeks to enhance the participation of the private sector to accelerate the pace of economic growth by offering government companies on the stock exchange and through direct participation with major investors.

Egypt is seeking to collect $2bn from the government offering program before the end of this month, as part of its efforts to solve the currency crisis that it has been suffering from for about a year, but it has only collected less than $150m so far of this value, most of it in the local currency.

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