IPO Buzz Grows in Egypt as Two More Companies Ready Share Sales

CAIRO (Capital Markets in Africa) – The buzz around initial public offerings in Egypt is growing louder, with two more companies announcing plans for share sales.

Investment bank CI Capital Holding said Thursday it intends to offer more than 40 percent of its capital on the Cairo stock market. BPE Partners is preparing to sell shares in its private equity investment company later this month, the firm’s founding partner said Wednesday.

They join a growing line-up in what could prove the busiest year for new listings in Cairo since the 2011 uprising that ousted President Hosni Mubarak. The benchmark EGX 30 Index this week rallied beyond its November 2016 pre-currency float level in dollar terms, recovering all the losses since Egypt removed the pound peg. The gauge was the best performer in the Middle East and Africa in 2017 and is again so far this year.

“We see the market is right, and the company is in the right stage, so we decided: ‘Let’s go,’” Aladdin Saba from BPE, formerly known as Beltone Private Equity, said in an interview in Cairo late Wednesday. “The market is doing very well right now, and Egypt is in a good spot for public offerings.”

CI Capital said in a statement it plans to offer as many as 246.9 million ordinary shares — a stake of up to 44 percent, including an allocation for international institutional investors. There could be as many as seven IPOs this year, Mohamed Farid, chairman of the local exchange, said on March 5.

Growing confidence in economic policies introduced since the currency float has boosted the Egyptian stock market and is prompting companies to consider share sales. Property developers Rooya Group and Landmark Sabbour have announced IPO plans, while Carbon Holdings has hired investment bank EFG-Hermes to manage its market debut, al-Borsa reported March 13.

The government is joining the rush to market and is looking to sell stakes in some public-sector companies, with an initial focus on the banking and oil industries. Banque Du Caire and Enppi are among anticipated listings of state-owned entities.

Awaiting Rate Cuts
While the potential to increase participation by Egyptians in stock-market investment is large, some of the biggest companies may wait with IPO plans until the central bank fulfils economists’ forecasts of interest-rate cuts, said Allen Sandeep, head of research at Naeem Brokerage in Cairo.

With annual inflation dropping from more than 33 percent in the wake of the currency float, the central bank has started to unwind 700 basis points of rate increases since November 2016, and reduced its benchmark rate last month by 100 basis points. A further 1 percentage point cut is possible when policy makers meet March 29, adding to positive conditions for share sales later in 2018, Sandeep said.

“I would sense that some of the bigger ones will come in the second half” of the year, he said.