Tuesday, 8 September 2015

Corruption dragnet snares Agriculture Minister

TL;DR

El Sisi op-ed on fiscal and administrative reform
New automobile manufacturing law in the works?
Alabbar is out of the New Administrative Capital
Gov’t mulling ‘liberalization’ of education, healthcare sectors, says Salman
No amendments to Civil Service Act
Is the ‘contemporary art bubble’ about to burst?
** By the Numbers + Egypt’s clean-energy target **

The registration deadline for parliamentary candidates has been extended from Saturday, 12 September for three additional days to allow candidates to re-take their medical tests, following a court ruling on Monday. More on the rulings and other news in the run-up to elections may be found in our Politics section, below.

There was fairly muted coverage of the 20th anniversary Euromoney Egypt Conference as the two-day gathering began yesterday, with the imaginations of the mainstream and business press alike being taken over by the resignation and arrest of Agriculture Minister Salah Helal (more on that story below in Speed Round).

The surprise of day one: The government is mulling ‘liberalizing’ the education and healthcare sectors, possibly going so far as stepping back to become a ‘regulator’ of the school system while allowing the private sector to take the lead, says Investment Minister Ashraf Salman. The notion of the state abrogating its moral and constitutional responsibility to fund education and healthcare is one that even we, cold-hearted capitalists that we are, find stunning. We’ll be watching this story closely in the days ahead. Reaction in the domestic press has so far been muted, with the best coverage coming from Mada Masr.

The next-biggest news: “Egypt Mulls Pound Devaluation, Bond Sale as Reserves Drop,” Bloomberg notes, seizing on statements made by Salman (noting the CBE may be forced to allow the currency to weaken to defend reserves) and a senior Finance Ministry official (saying Egypt would look to raise as much as USD 1.5 bn on international markets by the end of the current fiscal year). Reuters also carries news that Egypt will be returning to the international bond market, quoting Finance Minister Hany Dimian. “The government conducted its first international bond sale in five years in June, selling USD 1.5 bn of 10-year bonds at a yield of 6% after receiving more than USD 4.5 bn in investor orders,” the newswire noted.

Other stories out of Euromoney making headlines:

The suggestion by the top Dar El-Handasah exec in Egypt that the Suez Canal Axis development program will demand investments of USD 30-35 bn over 15 years if it’s to be delivered according to plan.
Whatever they’re calling it, the Suez Canal Axis Development Authority will have its first full-time chief “by the end of this week,” according to Hani Sarie El-Din, the high-profile lawyer advising Dar El-Handasah on the project.
The biggest brake on economic development is a chronic shortage of energy for industry, Al Mal quotes CI Capital deputy CEO Hazem Badran as saying, noting that many energy-intensive producers operating at 40-50% capacity.
News that the environmental impact study for the Golden Triangle natural resources development plan should be complete by January 2016. (The story stops short of saying that the announcement was made at Euromoney, but it reads in the same vein.)

The Fifth Annual EFG Hermes London MENA Conference. The three-day gathering kicked-off yesterday in London at Emirates Stadium. Despite the headwinds facing EM in general and oil economies in particular, EFG head of Research Wael Ziada notes, “There is plenty to like in countries such as the United Arab Emirates and Egypt. Our take: Amid the current selloff, GEM investors will reward two kinds of markets over the next year: those that have strong balance sheets, and those that are making reforms or that are otherwise seeing growth. The UAE has a credible peg to the US dollar; it continues to make meaningful reforms, and both the reintegration of Iran into the global economy and Expo 2020 in Dubai support the growth outlook. Meanwhile, Egypt may be vulnerable on foreign exchange, but it is showing signs of reform and the growth outlook is becoming brighter, especially after Eni’s recent breakthrough offshore gas discovery.” Read the release here or view the conference video promo here (run time: 4:01).

WHAT WE’RE TRACKING THIS WEEK
The three-day Egypt Cyber Security Summit opens this morning at the Novotel Cairo Airport, while Qalaa Holdings will host on 9 September Rift Valley Railways: An Integrated Logistics Solution in East Africa.

Meanwhile: The fifteenth OECD International Economic Forum on Africa is due to take place in Berlin tomorrow.

This publication is proudly sponsored by

LAST NIGHT’S TALK SHOWS

‘Corruption’ was the word on the lips of every talking head last night.

Lamis El Hadidi kicked-off Monday night’s episode of Hona El Aseema in an understandably angry mood. The host devoted the opening hour of her program to coverage of the corruption scandal surrounding former agriculture minister Salah Helal. El Hadidi began the by providing viewers with a bullet point summary of the General Prosecutor’s statement on the matter. The always careful El Hadidi made sure to refrain from delving into too much detail, as a result of a gag order issued earlier in the day.

El Hadidi proceeded to provide viewers with general information on corruption and its detrimental impact on the Egyptian economy, making numerous references to Transparency International’s 2014 Corruption Perception Index, which categorizes Egypt as a highly corrupt country. “Public sector corruption cost the state approximately EGP 200 bn in FY 2012/13,” said El Hadidi emphatically. She then made a series of comments regarding the scandal’s implications for the future of the country. “The fact that the minister was arrested immediately after he was forced to resign indicates that President El Sisi is serious about fighting corruption … The government’s determination to pass the Civil Service Act is another examples of the state’s effort to fight corruption.”

Meanwhile Youssef El Housseiny, host of El Sada El Mohtaramoon, devoted the bulk of his program to coverage of another high-profile corruption scandal involving Hamdy Fakharany, a former parliamentarian and, ironically, the current head of the National Anti-corruption Organization (NACO). “Fakharany used his position as head of the NACO to conceal his illicit actions … Fakharany was filmed receiving a bribe from Mr. Samuel Thabet,” claimed El Housseiny. El Housseiny proceeded to explain to viewers how El Fakharany, who does not currently hold public office, could be investigated for corruption. “Legal experts have stated that El Fakharany has the same legal status as a government official by virtue of his leading position in NACO, an organization whose stated purpose is to fight corruption; it in his [Fakharany’s] capacity to file corruption cases,” said El Husseiny.

SPEED ROUND

Speed Round is presented in association with

Agriculture Minister Salah Helal was arrested in Tahrir Square yesterday on corruption charges. Helal was arrested minutes after he was asked to submit his resignation at the request of President Abdel Fattah El Sisi. Al Shorouk reports that a wide-ranging cabinet reshuffle, not just limited to the Agriculture Ministry, is expected imminently. The Prosecutor General’s Office alleges that former Helal and Mohy Saeed (until his recent dismissal the Director of the Office of the Minister of Agriculture) accepted bribes from a “businessman” named Ayman Al Gameel. Investigators claim a middleman, named as Mohamed Fouda, facilitated the bribes, in return for which they claim Helal and Saeed facilitated the takeover of 2,500 acres of land in Wadi Natrun, Al Masry Al Youm reports. Acting Prosecutor General Ali Omran alleges that improper gifts changed hands, including an EGP 8 mn residential unit in a Sixth October community, an EGP 140k membership at Al Ahly Club, and EGP 230k in clothing from high-end fashion stores. Irrigation and Water Resources Minister Hossam Moghazi was named as acting Minister of Agriculture, according to a late-night edition of the official gazette. Cabinet spokesperson Hossam El Qawish had said that Moghazi was a likely candidate for the post ahead of the gazette’s release, as reported by Youm7. Al Mal, meanwhile, has a run-down on six individuals it says could take the post, which may still be relevant as the government looks for someone to permanently fill the post.

Meanwhile: The Education Ministry has denied reports that minister Mohab El-Rifaei has been dismissed in connection with the corruption scandal engulfing the Ministry of Agriculture, reports AMAY. “Minister El Rifaei is on an official visit to France. He and his family members have no connection to the properties mentioned in the Agricultural Ministry corruption case,” reads an official ministerial statement.

Helal was charged barely a week acting Prosecutor General Ali Omran slapped a gag order on coverage of what was then a brewing corruption scandal at the ministry. The publication ban was imposed just after we reported that corruption investigators had “charged an Assistant Agriculture Minister and several General Authority for Reconstruction Projects and Agricultural Development (GARPAD) officials for allegedly accepting bribes from unidentified businessmen in the sale of state-owned land, according to a Ministry source. Agriculture Minister Salah Helal denied having any knowledge of the incident.”

Helal’s arrest is but the most visible manifestation of a little-reported — but seemingly widespread — crackdown on corruption that we noted back in late August.

Speaking of corruption stories: Yesterday we reported on the arrest of self-proclaimed anti-corruption activist, lawyer and former MP Hamdy El-Fakharany for allegedly demanding an EGP 3.5 mn bribe in return for dropping his lawsuit against an unnamed businessman. Fakharany is no stranger to controversy. In addition to his arrest in 2013 for inciting violence, (the charges were later dropped), he has previously sued Talaat Moustafa Group Holding, Palm Hills Development and gold miner Centamin, in addition to successfully suing for the re-nationalization of the Nile Cotton Ginning Company, according to Ahram Online. A publication ban has been placed on the current investigation. The FT notes that Centamin’s shares were up 4.7% on the back of Fakharany’s arrest, as he had sued for a revocation of the group’s mining license. Centamin has a Q&A on Fakharany’s lawsuit, which appears to still be in the appellate courts.

President Abdel Fattah El Sisi published an op-ed in Daily News Egypt on Monday, reviewing the major initiatives since his administration took office, with a focus on fiscal and administrative reform. “We have been ambitious in setting the preliminary stage of economic recovery and have achieved a good momentum so far, but we know that it is essential to deepen the reform effort. If we do not do so, we risk losing the credibility and confidence that we have earned to date – and we will cheat the Egyptians of the brighter future that they deserve. The crux of our reform effort will continue to be gradual fiscal consolidation in order to restore macroeconomic stability and crowd in a stronger and larger private sector … As we look to the immediate horizon, the main reform on the agenda concerns the proposed amendments to the General Sales Tax (GST) … The planned reform will move Egypt toward the implementation of a Value Added Tax (VAT) regime,” the op-ed reads. Not mentioned: The Civil Service Act, which El Sisi has pressured the Mahlab government to implement despite opposition from civil servants; the future of large-scale affordable- and middle-income housing programs such as Arabtec’s mn homes project; and the fate of the new administrative capital. Al Shorouk has an Arabic version of the text here.

New automobile manufacturing law in the works, Minister of Trade says. A new “strategic plan” for the national automotive industry sees the creation of a separate law regulating the sector, Minister Mounir Abdelnour said on Monday. The law will be issued complete with incentives for producers and investors, with the aim of growing domestic manufacturing and export rates. Abdelnour said the plan would be presented to cabinet’s economic group by the end of the month. The law could give comfort to domestic assemblers, who have warned that the industry could be wiped out by what it call “unfair advantages” afforded completely built-up imports from Turkey, Morocco and the European Union under freetrade agreements. Proposals from the industry have included tax drawbacks, cash incentives and other breaks for assemblers that move through the value chain to assembly by increasing local content as high as 55% or more over a multi-year period.

It’s over now: Investment Minister Ashraf Salman said the MoU signed with Mohamed Alabbar’s Capital City Partners has been scrapped. There is, however, room for Alabbar to re-enter the project in partnership with other developers who will be working under an Egyptian project manager, Al Masry Al Youm reported. Reuters noted the news that China State Construction Engineering Corporation signed an MoU to study building and financing the administrative part of the new capital, which we reported during President Abdel Fattah El Sisi’s trip to China — adding the most vivid description of the scale of the project that is “planned to be the size of Singapore, aims to include an airport larger than London’s Heathrow, a building taller than Paris’s Eiffel Tower, and more than 10,000 km (6,200 miles) of boulevards, avenues and streets.”

Naguib Sawiris has Invested “zero” since EEDC due to slow pace of reforms: Naguib Sawiris has yet to invest any of the USD 500 mn he pledged at the Egypt Economic Development Conference in March due to the slow pace of government reforms, according to his interview on Monday with Reuters. “Many of these ministers are really good guys but they have a second line that is blocking them and it is the same second line that has been there for 30 years.” Reuters Adds that the deputy ministers are the second line to which Sawiris is referring. He also confirmed that he has submitted formal requests to the governments of Greece and Italy with regard to his offer to purchase a Mediterranean island (which Sawiris has started to refer to as “Aylan Island” in commemoration of three-year old Aylan Kurdi) to serve as a refuge for the migrants and refugees seeking to enter Europe.

Yes, this is still going on: Singapore’s Temasek Holdings Pte has teamed up with Saudi Arabia’s Savola Group to bid for Americana (Kuwait Food Company). Savola had already bid on its own to acquire Americana, as did a group including KKR & Co. and CVC Capital Partners Ltd, according to Bloomberg.

When Hany Dimian decides he wants to talk, he wants to talk. The Finance Minister’s latest media appearance in his 2015 Value Added Tax Sales Junket is the Daily News.

If you’re an Egyptian expat in the UAE, the National Bank of Abu Dhabi (NBAD) is offering you mortgages for properties in Egypt, The National reports. NBAD is ticking many boxes with this offering: It’s boosting efforts to grow its consumer business and expand to other emerging markets; expanding in Egypt, where it has the largest branch network outside the UAE; accessing the 300k Egyptians estimated to be living in the UAE; tapping the unpenetrated mortgage market in Egypt (while, as we see it, also benefiting from legal coverage in the UAE); and riding the wave of economic growth expected in Egypt. Customers will be able to secure the loan in Egyptian pounds and pay it back in dirhams, the bank said.
Egypt will tender for a fourth FSRU by the end of 2016 and expects to have had already commissioned a third one by September 2016, Oil Minister Sherif Ismail announced. The third FSRU is set to be docked in Safaga and the fourth by the SUMED terminal. Natural gas demand is expected to increase with the commissioning of new power stations, the minister said. Ismail also said that IOCs are increasing their E&P activities and mentioned that BG Group is investing USD 1.6 bn to develop its 9B wells, which are expected to begin production by the end of next year. Gas pricing agreements will continue to move dynamically to ensure accelerated production, he added, noting that gas imports from Cyprus are also on the table and set to begin in 2017 with ENPPI having already completed the technical assessments for a pipeline connecting the Aphrodite field to Egypt.
Egypt is seen as a prime market for UAE companies in multiple industries, analysts say. Even though gains from the Suez Canal expansion will be seen over the longer-run, “the initial benefit is the increased speed that shipping can pass through the canal that should cut down shipping costs for products bound for the UAE,” NBAD’s head of Investment Strategy, Gary Dugan, told Gulf News. This presents extra opportunities for “future development of industrial parks alongside the canal offers the opportunity for UAE companies to develop manufacturing bases in Egypt with first-class infrastructure around them,” Dugan added.

Emaar Misr begins development study on Cairo Gate project, appoints IRO and CDO: The real estate developer had inked a EGP 5 bn joint venture agreement with Al-Futtaim Group to build the Cairo Gate project, a lifestyle and entertainment complex located on an Emaar Misr property on the Cairo-Alexandria Desert Road, back in 2012, Zawya reported. The company also appointed Khalid Othman as its Chief Development Officer, while veteran IRO Bassem El Shawy has returned to Egypt as director of investor relations. El Shawy leaves Asiacell in Iraq.

EGYPT IN THE NEWS

The resignation and arrest of Agriculture Minister Salah Helal is dominating international headlines on Egypt this morning, with wireservice pieces including entries from Reuters, AP and AFP getting the lion’s share of pickups.

“Is Egypt the next destination for emerging market investors?” Seeking Alpha asks. “To me, Egypt is a country worth investigating from an investing standpoint,” the piece notes, listing Eni’s discovery, the move to build a nuclear power plant, and the Suez Canal expansion as some of the main events in Egypt’s economic turnaround.

Jailed 23-year old Israa Al-Taweel will permanently lose her ability to walk if she is further denied physiotherapy during her pretrial detention, which has dragged on for the past three and a half months in what her family describes as her enforced disappearance, according to a statement from Amnesty International on Friday. Al-Taweel was shot in the back during a protest on 25 January 2014. On 1 June, she and two of her friends disappeared, sometime following their visit to a Chili’s restaurant. Authorities initially denied that she was being held, but Al-Taweel was spotted two weeks later in Qanater prison by another inmate. After being confined to a wheelchair following her shooting, she was reportedly making progress with physiotherapy, enabling her to walk with the aid of crutches. Amnesty has called for a letter-writing campaign in Arabic, English or any other language directed toward to the Minister of Interior, the Public Prosecutor’s office to call for the provision of treatment to Al-Taweel.

Buzzfeed has picked up the story of Mariam Malak, the nerdy high school student who was surprised to learn she had received a zero on all 7 of her final high school exams. A “Jose Morales” from Manassas, Virginia writes in the comments below the article “Egypt how are you gonna [redacted] over some girls future? Like seriously giving zeros that’s shady as [redacted].” (Read)

Peter Greste writes in the Guardian on the results of his retrial and appeals to President Abdel Fattah El Sisi to issue pardons to himself and his two Al Jazeera colleagues Mohamed Fahmy and Baher Mohamed. Greste argues that “stable, properly functioning democracies need .. [an] untrammelled press capable of interrogating extremist views in any form, with as much force and vigor as it does the governments who act in our names.” (Read)

WORTH READING

Ever wondered why anyone would pay close to USD 300 mn for this Gauguin? The market for contemporary art, which BlackRock’s CEO Larry Fink described as “one of the two most important stores of wealth internationally,” has been consistently used as a vehicle for capital flight — a leakage estimated to be around USD 300 bn annually from China alone. However, with the emerging market slowdown radiating from China, Harvard economist Kenneth Rogoff sees this a prelude for the bursting of the “contemporary art bubble.” So, what will that be like? Rogoff says “in the short run, the answer is ambiguous, because more money is leaking out of the country even as the economy slows. In the long run, the outcome is pretty clear … the end of the art bubble will not be a pretty picture.”

ENERGY

No dispute with BG, talks ongoing to amend agreements, Ismail says
Al Mal | 07 Sep 2015
Egypt is working on a long-term plan to reduce its dependency on oil product imports, Oil Minister Sherif Ismail said. “We don’t have any disputes with BG, in fact, they began executing their expansions of the 9B wells,” Ismail added “and we are currently in talks to amend the agreements regarding that project”. Apache are also continuing to expand in Egypt despite cutting expenditure worldwide and have an “ambitious plan” to drill 23 wells during the next six months at a cost of USD 150 mn, he added. The Ministry is also focused on encouraging investments in Egypt, with the Minister noting that old concession agreements have proven inadequate given the current realities and the Oil Ministry is showing great flexibility in amending them. (Read in Arabic)

BP to invest USD 700 mn in Gulf of Suez this fiscal year via GUPCO
Al Mal | 07 Sep 2015
BP is going to invest USD 700 mn in its Gulf of Suez operations in FY 2015-16 through its JV, GUPCO. Al Mal reports that GUPCO has achieved 102% of its EGPC production target and 104% of its BP production target with an average daily output of 75k bbl. The company had also finished a series of maintenance and repair operation in its well sites. (Read in Arabic)

EGP 9 bn to develop electricity transmission grid this fiscal year
Al Mal | 07 Sep 2015
The Electricity Ministry is planning an EGP 9 bn development plan to upgrade the electricity transmission grid in FY 2015-16, according to Electricity Minister Mohamed Shaker. The project includes building six transformer stations at a cost of EGP 1.9 bn, as well as an EGP 5.1 bn parallel transmission grid to connect power stations being built by Siemens to the national grid. (Read in Arabic)

Electricity Ministry tapping financial institutions to pay private contractors
Al Mal | 07 Sep 2015
The Electricity Ministry is in talks with the Finance Ministry and local banks to fund the repayment of receivables due to private contractors. There is already one overdue installment to a contractor participating in the ministry’s emergency plan, sources said. Also, there are pending installments to General Electric and Orascom Construction, the sources added. The Ministry is also expecting more outlays as it prepares to pay Siemens and El Sewedy Electric for their roles in executing the plan. The Ministry’s emergency plan aimed to add 3.6 GW to the national grid at an estimated cost of USD 2.6 bn. (Read in Arabic)

Oman, Iran to appoint gas pipeline consultant next week
Oman Observer | 06 Sep 2015
Iran and Oman are expected to sign an agreement on 14 September to appoint an Iranian consultant to study building a pipeline to transport gas from Iran to Oman. In March 2014, the two countries signed an MoU according to which Iran will supply Oman with 10 bcm of gas annually for 25 years. The agreement is valued at around USD 60 bn and a 260 km subsea pipeline is expected to come on stream within three years. (Read)

INFRASTRUCTURE

Six consortiums approved for national rural sewage project -Madbouly
Al Shorouk | 07 Sep 2015
Six foreign and local consortiums were approved to implement the national rural sewage project on Monday, housing minister Moustafa Madbouly said. The Ministry of International Cooperation will reportedly sign final agreements with the World Bank in 10 days, following negotiations for a USD 1 bn World Bank loan for the project. USD 550 mn were approved for implementation of the first phase of the project, which will begin in Al Sharqiyah, Al Daqliyah and Al Beheira governorates, project coordinator Randa Al Menshawi said. The national rural sewage project is set to cover a total of seven governorates. (Read in Arabic)

BASIC MATERIALS + COMMODITIES

Evidence of large gold reserves, EMRA head says
Al Masry Al Youm | 07 Sep 2015
There is evidence that Egypt has a large amount of gold reserves, Omar Teima, the head of the Egyptian Mineral Resources Authority (EMRA), said. Teima qualified his statement by noting that EMRA does not have an accurate and complete estimate of the reserves, but that he expects a large influx of investments following the issuance of the new mineral resources law. Teima said large quantities of gold have been extracted via 120 archaeological mines, an indication of the presence of untapped reserves. However, he added such exploration will likely take at least 10 years. The first tender, in accordance to the new law, is expected to be issued later this month and will include E&P for eight types of minerals in nine concession areas. Teima added that mined products will only be allowed to be exported after undergoing some value-added development. (Read in Arabic)

HEALTH + EDUCATION

Mahlab cancels unpopular move to exempt children of judges, army and police officers from university zoning laws
Ahram Online | 07 Sep 2015
Prime minister Ibrahim Mahlab ordered Education Minister El Sayed Abdel Khalek to overrule the Supreme Council of Universities’ decision to exempt children of judges, police officers and army officers from the geographic restrictions placed on all Egyptians as to which universities they may attend. The law governs which universities undergraduates may enroll based on a combination of high school exam scores and their place of residence. The exemption, announced last Wednesday, generated significant backlash among students and professors. (Read)

REAL ESTATE + HOUSING

Azmeel Group pumps EGP 500 mn into real estate market
Al Mal | 06 Sep 2015
Azmeel Group Real Estate are planning EGP 500 mn investments in housing projects in New Cairo throughout the 2015/16 fiscal year, said Managing Director Ahmed Shahin. The company, which made EGP 500 mn in sales in 2015, is studying expanding into touristic and entertainment projects in the North Coast and Ain Al Sokhna. The Egyptian-Saudi company is 50% owned by Egyptian stakeholders and owns over 30 housing projects in New Cairo, as well as SAR 7 bn, or EGP 14.63 bn, in investments in Saudi Arabia. (Read in Arabic)

TELECOMS + ICT

Vodafone Egypt invested EGP 400 mn last year to combat effects of power outages
Al Borsa | 07 Sep 2015
Vodafone Egypt revealed it invested EGP 400 mn last year to mitigate power outages and provide backup energy to avoid service disruptions, CEO Ahmed Essam said. The company is paying close attention to the needs of its younger clients, and has launched new youth-dedicated service packages called IN, Essam added. Vodafone Egypt is also currently investing heavily in building more mobile phone tower rurally to improve network reception as well as increasing the number of customer service stations nationwide. (Read in Arabic)

Link directing investments towards outsourcing, cloud computing
Al Mal | 07 Sep 2015
Internet service provider Link, a subsidiary of Mobinil, is directing its investments towards outsourcing services and cloud computing, according to its CEO Wassim Arsani. Through two 500-seat call centers, Mobinil will offer services to North African markets where Orange is a network provider. Link had previously invested EGP 200 mn in its two data centers in 6 October City and Alexandria, offering cloud computing services to seven companies, he added. (Read in Arabic)

BANKING + FINANCE

No layoffs to Piraeus Egypt staff following acquisition, Nayera Amin says
Al Mal | 07 Sep 2015
Current employees of Piraeus Egypt will retain their positions once the acquisition by Al Ahli Bank of Kuwait is finalised, Piraeus’ CEO and MD Nayera Amin told Al Mal. Executives representing Piraeus’ parent bank will be replaced with ABK’s, however. Amin added that the bank is going to prioritise SME funding and is also assessing participating in funding development projects by the Suez Canal development project. (Read in Arabic)

Beltone Private Equity begins due diligence to acquire El Rashidi El Mizan
Al Mal | 07 Sep 2015
Beltone Private Equity, an affiliate of Beltone Financial Holding, has begun due diligence to acquire El Rashidi El Mizan, a subsidiary of Qalaa Holdings, according to Beltone Private Equity’s Chief Investment Officer Abdel Monem Omran. Qalaa Holdings had previously chosen EFG Hermes as financial advisor on exiting both Dina Farms and El Rashidi El Mizan. Among the other contenders for El Rashidi El Mizan is Halwani Bros. (Read in Arabic)

Visa Egypt preparing study on future of ecommerce with government
Al Mal | 07 Sep 2015
Visa Egypt is preparing a strategic plan for Mobile Payment services, which it will roll out in the first quarter of next year, in accordance with Visa Inc’s plans to widen relations with the Egyptian government in the field of e-commerce. The company is preparing studies with the ministries of finance and communications over the future of e-commerce in the domestic market, as they near issuing new products and technological services in cooperation with Egypt Post. (Read in Arabic)

Public Funds Investigations Unit intensifies crackdown on ATMs
Al Borsa | 07 Sep 2015
The Public Funds Investigations Unit intensified its crackdown on ATM inspections on Sunday following expectations for a rise in demand of USD in the parallel market due to declines in the bourse and the expected further devaluation of the EGP. The devaluation of the EGP is no longer a choice given current national and international economic conditions, investment minister Ashraf Salman said during the first day of the Euromoney Egypt Conference on Sunday (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

OSN secures USD 400 mn syndicated loan
Gulf News | 07 Sep 2015
Pay-TV network OSN announced it has secured a USD 400 mn funding facility from an international as well as regional banks that was nearly two times oversubscribed. “The proceeds will be used primarily to strengthen OSN’s exclusive and premium content, particularly sport, as well as to develop innovative technology platforms that enhance viewer experience,” Gulf News said. The unsecured five-year facility includes a term loan of USD 255 mn and revolving credit facility of USD 145 mn. Barclays Bank, BNP Paribas, and Mashreq Bank served as lead arrangers and bookrunners. (Read)

LAW

Civil Service Law cannot be amended, planning minister says
Al Mal | 07 Sep 2015
In a statement on Monday, Ashraf El Araby, Minister of Planning and Administrative Reform, said that the Civil Service law “cannot be amended”, pointing out that government will welcome suggestions to implementing regulations of the law only. El Araby added that the positive impact of the law will emerge two to three years down the line, explaining that the law does not have “absolute exceptions.” (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Administrative court rulings force electoral committee to change plans
Ahram Online, CNN Arabic | 07 Sep 2015
The registration period for parliamentary candidates has been extended for 3 days from this Saturday to give potential candidates a chance to retake their medical exams following a court ruling on Monday, as noted in our What We’re Tracking section above. The ruling overturns a decision by the Higher Elections Committee to allow candidates to submit their medical tests taken in February, with the court ruling this to be in violation of the law governing the House of Representatives. A separate ruling on Monday accepted a lawsuit filed by an unnamed lawyer that called PM Ibrahim Mahlab’s decision to redistribute Qena Governorate electoral constituencies “null and void”, explaining that the president alone has the authority to carry out such legislative decisions, according to CNN Arabic. Ahram Online said the second ruling also applied to the districting in Cairo, although it is unclear as to how the government will follow the ruling. Constitutional expert Shawky Sayed told Ahram Online, however, that neither ruling would affect the legality of the upcoming elections. (Read in Ahram Online or CNN Arabic)

Non-Islamist electoral coalitions falter
Ahram Online | 05 Sep 2015
Non-Islamist political parties and coalitions are suffering from internal disputes and disorganization, according to political observers speaking to Ahram Online. On Friday, the coordinator for the Our Beloved Egypt coalition announced it had failed to merge with the Egyptian Front electoral bloc. The Egyptian Front is mainly made up of two groups with roots in the NDP and is led by former prime minister (turned exile in the UAE) Ahmed Shafiq. On Saturday, Shafiq said that “the coordination with Our Beloved Egypt has failed because they wanted to have the upper hand in preparing the lists of candidates.” However, he was still supportive of the idea of non-Islamist groups coming together ahead of the elections. Secular political parties such as Dostour, Egyptian Social Democrats, and Al Wafd have all recently witnessed internal divisions. (Read)

Social Democratic Party rejects Abul-Ghar’s resignation
Ahram Online | 06 Sep 2015
The liberal-ish Egyptian Social Democratic Party (ESDP) rejected the resignation of its head and co-founder Mohamed Abul-Ghar, with unnamed sources in the party telling Ahram Online that Abul-Ghar agreed to reconsider his decision to leave the party. The vote on the party leadership is set to begin on 2 October, according to a leading member of the party. (Read)

NATIONAL SECURITY

Five policemen injured in checkpoint attack in Beheira: Five police officers were injured in an attack on a security checkpoint in the Nile Delta governorate Beheira on Monday, according to the Interior Ministry. The officers are being treated for their injuries in Beheira and the ministry is investigating the attack. (Read)

ON YOUR WAY OUT

Foreign reserves at the CBE dropped slightly by the end of August to USD 18.1 bn from USD 18.5 bn a month earlier, according to the CBE and as reported by Reuters.

Telecom Egypt is not engaged in talks to purchase the rights for Egypt’s Radio and Television Union’s (Maspero) broadcast spectrum, according to a statement sent to the EGX.

BY THE NUMBERS
Powered by

QUICK FACT: Clean energy is expected to meet 20% of Egypt’s power needs by 2020. Egypt has the world’s choicest spots for wind turbines.

USD CBE auction (Monday, 07 September): 7.7301 (unchanged since Sunday, 05 July)
USD parallel market (Sunday, 06 September): 8.05 (+0.03 from Monday, 31 August, Reuters)

EGX30 (Monday): 7,166.62 (-1.48%)
Turnover: EGP 430.3 mn (8% below the 90-day average)
EGX 30 year-to-date: -19.71%

Foreigners: Net Long | +9.2 mn EGP
Regional: Net Short | -3.4 mn EGP

***

PHAROS VIEW

EFG-Hermes Holding – History Says EFG is Trading Near a Solid Floor

At its last closing price of EGP 8.50 per share, EFG’s current market cap is EGP 5.6 bn. Based on 1) EFG-Hermes’s historic price-to-earnings ratios, 2) the value of offers submitted to acquire selected assets or the whole firm in 2012, and 3) observed trading floors since 2006, the firm’s equity value has rarely broken below the EGP 5.0bn mark since 2006, which suggests that the probability of an extreme loss (>10%) from current levels is fairly low and if the loss occurs it should be taken as a buying opportunity. Tap here to walk through the three methods, step-by-step.
***

WTI: USD 45.18 (-1.89%)
Brent: USD 48.59 (-2.06%)
Gold: USD 1,118.6 / troy ounce (-0.25%)

TASI: 7,483.5 (+0.7%)
ADX: 4,386.9 (-0.5%)
DFM: 3,558.8 (+0.5%)
KSE Weighted Index: 385.4 (+1.3%)
QE: 11,320 (+0.4%)
MSM: 5,772.3 (+0.5%)