Egypt has placed a number of fuel companies, including the “Wataniya” fuel company affiliated with the military, at the forefront of the companies whose stakes are to be sold in the coming months.
In this context, the Sovereign Fund of Egypt included 5 companies in the Pre-IPO Fund, in preparation for selling stakes ranging between 20 and 30% to strategic investors.
The list of companies included in the fund included the Egyptian Linear Alkyl Benzene Production Company (ELAP), the National Company for the Sale of Petroleum Products (Watania), the National Productive Projects (Safi), Misr Life Insurance, and Banque du Caire, according to Bloomberg Agency.
Paying the Egyptian debt
Egypt’s plans to sell stakes in a number of government-owned companies, led by fuel companies, come as part of a program aimed at securing sources of income for the country’s general budget, and fulfilling financial commitments and pledges with international institutions, led by the International Monetary Fund.
The IMF recently expressed confidence in Egypt’s ability to pay its debts, expecting them to drop to 7% of foreign reserves by the end of the 46-month reform program, after they increased to 60.7% in 2021/22.
It is also likely that net foreign exchange reserves will rise to $41.5 billion by the end of the reform program that supports it, according to data seen by the specialized energy platform.
Cairo targets about $2.5 billion in proceeds from the sale of stakes in companies that are to be transferred to the pre-sale fund, which was launched by Egypt’s sovereign fund, by next June.
promotional tour
The Sovereign Fund of Egypt intends to conduct a promotional tour during the month of January, to present investment opportunities in these companies.
The Pre-IPO Fund prepares government companies for initial public offerings with values ranging from $5.5 to $6 billion.
The Pre-IPO Fund is a sub-fund affiliated with the Sovereign Fund of Egypt, whose mission is to prepare the shares to be offered in the Governmental Offering Committee, as it has the right of the agency to manage its offering.
And Minister of Planning Hala Al-Saeed had confirmed – in previous statements – the announcement of the first tranche of proposals, with a value ranging between 2.5 and 3 billion dollars, within a short period.
The offering of companies also comes within the framework of the Egyptian government’s commitment to strengthening the participation of the private sector, within the conditions of the International Monetary Fund.
It also aims to accelerate the pace of economic growth by offering government companies on the stock exchange and through direct participation with major investors.
The trend to sell part of the assets comes at a time when Egypt is suffering from a severe shortage of foreign currency since the outbreak of the Russian-Ukrainian crisis in February, and the US interest rate hike over the past year (2022), which led to the exit of more than $20 billion in investment funds. foreign affairs, which put the Egyptian government in a difficult situation.
Gulf competition
A number of experts expected that offering shares of Egyptian companies, especially fuel companies, would witness Gulf competition, especially after the Saudi and Emirati investment funds pumped large investments in a number of Egyptian companies during the past period.
Last August, the Saudi Investment Fund announced its acquisition of stakes in a number of Egyptian companies, including 3 giant fertilizer and shipping companies, at a value of $1.3 billion.
The companies – in which minority percentages were acquired and listed on the Egyptian Stock Exchange – included Abu Qir Fertilizers and Chemical Industries, Misr for Fertilizer Production, Alexandria for Container and Commodity Handling, and e-Finance for Financial and Digital Investments.
Several months before the Saudi acquisition, the Abu Dhabi Investment Holding Company (Abu Dhabi Sovereign Fund) had acquired stakes in a number of state-owned Egyptian fertilizer and shipping companies, as part of a plan to pump about $2 billion into the Egyptian market.
And the Egyptian Stock Exchange announced, in April (2022), the completion of the deal through the mechanism known to it as “large-scale deals”, with a total of $1.8 billion for the five companies, while the three shipping and fertilizer companies came with less than one billion dollars, specifically $817.4 million. American.
The companies in which the UAE fund acquired shares included: Alexandria Container Handling, Mopco Fertilizers, Abu Qir Fertilizers, Fawry Communications Services, and the Commercial International Bank.
national gas stations
For about two years, there has been talk of offering shares in a national oil company affiliated with the National Service, among 10 companies owned by the Egyptian Ministry of Defense.
A number of local and international energy companies had expressed their interest in competing to buy shares of the company, in partnership with the Sovereign Fund of Egypt.
The list of companies wishing to enter and compete to acquire the shares of the company that operates more than 200 gas stations in Egypt included Taqa Arabia (one of the leading Citadel Group companies in the oil services distribution sector in Egypt) and Emirates National Oil Company (ENOC) (wholly owned). The government of Dubai), along with the Saudi Petromin Company, and the alliance of the Abu Dhabi Development Holding Company (ADQ) with the Abu Dhabi National Oil Company (ADNOC).
The Executive Director of the Sovereign Fund of Egypt, Ayman Suleiman, confirmed – in previous statements – that the sovereign fund aims to sell between 80 and 90% of a national oil company, provided that it keeps for itself a share ranging between 10 and 20%.
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