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Wednesday, 10 August 2016

State-owned companies to IPO in December and January -Investment minister

State-owned banking and oil companies will list in December and January, said Investment Minister Dalia Khorshid, who noted that the agreement between the EGX and Nasdaq Dubai would allow dual listing of shares of state-owned companies that enter the IPO program Al Borsa reports. Shares could be offered on other foreign bourses, with stakes as high as 45% potentially up for grabs, the minister said. Power companies will listed in the second phase of the 3-5 year program which should net the state USD 10 bn in revenues. As we noted earlier this month, up to eight oil companies and possibly three banks including Banque du Caire will list. NI Capital is spearheading the IPO program for the state, Khorshid said.

That said, we’re not holding our breath. We have difficulty imagining a scenario in which anything more than a literal listing (as opposed to an offering of equity) takes place by December or January given there have been no public reports of advisors being hired — and given the uncertainty in the market about when the Ismail government might embrace devaluation. And that’s without consideration to the key question: Whether there’s appetite and liquidity to support multiple simultaneous offerings. The IPO of state-owned enterprises has previously been billed as a measure to “revitalize domestic capital markets,” making it politically challenging for the administration to make the first listings anywhere other than EGX.

Khorshid also outlined her ministry’s agenda in the coming period: Khorshid is also in talks with the Finance Ministry to bring back legislation on free zones and investment incentives. The Investment Ministry also plans to introduce legislation governing sovereign wealth funds, she said. The ministry plans to form a JV with the UAE government soon to run the UAE-Egyptian Investment Fund, in addition to amending the framework agreement for the SAR 60 bn Saudi-Egyptian Investment Fund. Khorshid also said that she is in talks with China’s industrial city operator, China Fortune Land Development (CFLD), which she claims is interested in investing up to USD 20 bn in Egypt over the next 10 years. Khorshid said the measures should net the state USD 10 bn in direct foreign investment this year alone.

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