Egypt puts ‘final touches’ on government IPO plans

Egypt is preparing to announce a major public offering soon and is putting the finishing touches on delivering a comprehensive package of international standards to attract investment.

Authorities have delayed several initial public offerings (IPOs) over the past few months due to poor timing amid a broad economic downturn or disagreements between the Egyptian government and foreign investors over the offerings.

Currency values ​​are the biggest reason for the recent divergence. The huge gap between USD prices in the official market and the parallel market, sometimes reaching around 30%, is a big factor in the difference of opinion.

Official ministerial sources have revealed to Asharq Al-Awsat that a lot of work is being done to bridge the gaps that are hindering the understanding of the IPO plans.

The sources, speaking on condition of anonymity, said final details were being worked out on the comprehensive plan, which would be unveiled at a major conference under the auspices of top management.

Cairo needs to speed up government issuance plans ahead of some debt maturities and interest amid tight economic conditions amid falling foreign exchange reserves.

The phased proposal program in the coming months could include some 32 state-owned enterprises, including three banks, four government real estate companies, several government-managed hotels, as well as insurance, energy and transport companies, the data showed.

According to reports, these products may be led by the army’s Wataniya and Safi companies, and the time may be in July.

Meanwhile, the head of the Egyptian Stock Exchange (EGX), Rami el-Dokany, said in a televised statement that negotiations were ongoing with a number of private companies seeking to list on the stock exchange.

Focus on companies that have dollar resources, export products, or work in energy and tourism, Dokani noted.

Still, James Palmer, head of equity capital markets for Europe, the Middle East and Africa at Bank of America, said he believed foreign investors remained interested in Middle Eastern IPOs.

“While we don’t expect huge volatility in the second half, the pipeline picture is encouraging. Many are more focused on the early or middle of next year than the end of the year,” Palmer said.

Some Middle Eastern issuers “are very comfortable with the belief in a broad structural shift in the region; that is, the region’s commitment to developing and advancing capital markets and the commitment of local entities to provide financial support to them,” he added.