Egypt government to start IPO programme with oil companies

The share sales are part of a broader government plan to help fund one of Middle East’s widest budget gaps deficits and encourage foreign investment

Bloomberg / Reuters
16:24 September 19, 2016

Cairo: Egypt is set to launch its initial public offerings in government-owned companies with oil sector businesses, aiming to collect up to $10 billion dollars within three to five years, the minister of investment said.

The government is studying which companies will participate in the programme, Minister of Investment Dalia Khorshid said in an emailed response to questions. The government will pick local and international investment banks to advise on the offerings.

“Many companies will be restructured in the coming period, beginning with electricity companies, to prepare them for share sales on the bourse,” Khorshid said. Proceeds will be used, in part, to narrow the budget deficit, he said.

The share sales are part of a broader government plan to help fund one of the Middle East’s widest budget gaps deficits and encourage foreign investment in an economy battered by almost six years of unrest. The most populous Arab country has also reached an initial agreement for a $12 billion loan with the International Monetary Fund.

The ministry is surveying investors on whether to issue a new investment law or modify the current one, Khorshid said. It also plans to present a new bankruptcy law to the cabinet within weeks, she said. The law is meant to help investors exit failed projects and restructure debts.

2-3 IPOs in first year:

Egypt expects to privatise two or three state-owned companies via listings on the stock exchange in the first year of a privatisation programme, the chief executive of government-owned NI Capital said on Monday.

The programme will last for three to five years and will start with state-owned oil companies but will also include state-owned banks, said Ashraf Al Ghazaly.

NI Capital is a government-owned, privately managed financial institution that is part the National Investment Bank. It acts as a consulting authority for the government and manages governmental investment funds.

The state owns vast swathes of the economy, including three of its largest banks along with much of its oil industry and huge parts of its real estate.

The last time state-owned companies were listed on the exchange was in 2005 when shares were floated in Telecom Egypt, the state’s landline monopoly, and oil companies Sidi Kerir Petrochemicals and AMOC.

BOX — Egypt in talks to obtain $2b in financing from China

CAIRO: Egypt is in talks with China to obtain $2 billion in financing, Deputy Finance Minister Ahmad Kojak said, without giving further details. “All the details are with the central bank,” he said. Egypt has reached a staff level agreement for a $12 billion loan programme from the International Monetary Fund and must secure around $6 billion in bilateral financing to obtain approval for the programme.