TL;DR

Dubai’s Arqaam Capital eyes Akanar Partners; Rasmala bid for CI Capital not yet in; Sigma is sitting this one out, Marwan says (What We’re Tracking Today)

Gulf-based DFIs promise USD 1.5 bn annually to spur development in Sinai (Speed Round)

Israeli gas envoy to arrive in Egypt this week to restart talks on gas sale after arbitration case goes in Israel’s favor (Energy)

The Education Ministry eyes EGP 15 bn PPP school program (Speed Round)

Hani Sarie El Din turns up heat on government in Hona Al Assema appearance (Last Night’s Talk Shows)

KSA foreign ministry distances itself from columnists criticizing Egypt (Diplomacy + Foreign Trade)

By the Numbers + Why we’re maintaining our EGP : USD target at 8.50 by mid-2016

WHAT WE’RE TRACKING TODAY

The shakeup in the finance industry isn’t over: Dubai-based Arqaam Capital is gearing up to acquire Akanar Partners, one of the nation’s top M&A and corporate finance shops, sources told Al Mal. Neither party had a comment for the newspaper. And Rasmala’s counter-offer to acquire CIB’s CI Capital, expected yesterday, appears not to have come through as yet.

Meanwhile: CIB is more inclined to sell subsidiary CI Capital to Naguib Sawiris’ OTMT, Al Mal claims, paving the way for a CI-Beltone merger. The acquisition will probably be in the EGP 900-950 mn range and will likely be financed through bank borrowing. Al Mal notes that Sigma Capital chief Ahmed Marwan denied his firm is in talks with either Sawiris or EFG Hermes, the region’s largest investment bank, saying the company is squarely focused on its plan to grow in Egypt, where it is focusing on new segments, particularly the SME market and non-bank financial services. Sigma had also earlier suggested it was eyeing private equity opportunities.

Finally: Word on the street is that Pharos research chief Hany Genena is leaving to become head of equities at Beltone, not head of research as Al-Borsa reported on Thursday. Radwa El-Swaify continues to be head of research at the investment bank.

WHAT WE’RE TRACKING THIS WEEK

Egypt will release tomorrow the name of the company appointed to review security at airports nationwide

Wednesday is a national holiday in Egypt in observance of the Prophet Muhammad’s Birthday. Western Christmas is on Friday, so you can expect your European and North American to be off from mid-day on Thursday at the latest.

The CBE’s Monetary Policy Committee reconvenes on Thursday to discuss interest rates after having not reached a decision on interest rates last week.

ON THE HORIZON

Parliament is expected to convene for the first time in three years by the end of December or early January, and Ahram Online’s Gamal Essam El-Din has an exhaustive take on the three decrees President Abdel Fattah El Sisi must pass before the House of Representatives sits. It starts with the appointment of 28 MPs to make parliament more representative, including women, workers, farmers, youth, Copts and the physically challenged.

Saudi Arabia’s King Salman is expected to visit Egypt “soon,” Saudi Ambassador Ahmad Kattan said at a press conference.

LAST NIGHT’S TALK SHOWS

Lamis El Hadidy kicked off CBC’s Hona Al Assema suggesting a list of candidates — half of them women — that President Abdel Fattah El Sisi could appoint to the House of Representatives. The anchor said that Egypt is full of qualified candidates, suggesting the president call on Beltone’s Maged Shawky, corporate lawyer SODIC board chair Dr. Hani Sarie El Din, and veteran minister and business leader Mounir Fakhry Abdel Nour, among other names.

El Hadidy then had Transportation Ministry spokesman Ahmed Ibrahim call in to confirm the decision to move the proposed Zamalek metro station to Aboul Feda on the periphery of the district. “We will have a Maspero Station just before the Zamalek Island, so we will move the station to the periphery of the Island,” Ibrahim added.

El Hadidy then hosted Hani Sarie El Din, wearing his hat as legal counsel to the Suez Canal Development Axis project, for a very fast rundown on the economic issues of the day. Sarie El Din’s primary observation was that the government is trying to solve investors’ problems by tackling each one as a separate and unique case instead of making systematic effort to address the root cause of problems. “We don’t have clear policies in place. Many government decisions are random,” he said.

Sarie El Din suggested the government establish a higher council for investment, tasked with solving each sector’s problems in a systematic way. The high-profile corporate lawyer also said few international investors will consider Egypt as a destination for their capital for so long as the EGP : USD exchange rate remains unclear going forward.

The former head of the Capital Markets Authority challenged El Hadidy with example after example of how the government failed to act on promises, extending to its pledge to cut fuel subsidies: “Why didn’t we go forward with the fuel smart cards experiment? At least we would have solid statistics on who consumes the most.”

Ibrahim Eissa on Al Kahera Wel Nas devoted the majority of his show to talk about two things: the fall of “Tahalof Da’am Misr” (a coalition of loyalist parties in the House of Representatives led by “For The Love of Egypt” list) and to attack Al-Azhar curriculum for high school students. The coalition fell apart after Al-Wafd and other smaller parties pulled out, saying it wasn’t behaving in a democratic manner. Eissa criticized the coalition, describing it as a toy of certain state interests. Eissa then moved to read excerpts from Azhar high school curriculum, citing sectarian comments that “grow Daesh recruits and definitely not a balanced Muslim.”

On Orbit’s Al Qahera Al Youm, Amr Adeeb discussed the ongoing conflicts between the numerous coalitions in parliament, particularly with the Al Wafd Party’s announcement that it refuses to join any parliamentary coalition. “Two coalitions once ruled this country: The National Democratic Party and the Ikhwan,” Adeeb said. “Who’s going to inherit this [power vacuum]?” Adeeb described these conflicts as a “power struggle,” maintaining that this “game” is neglecting the marginalized citizen: “What about the man without running water? Where is he in this game?” Adeeb asked.

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SPEED ROUND

The decision on interest rates was ostensibly postponed last Thursday because Prime Minister Sherif Ismail was busy inaugurating a new fertilizer plant in Fayoum, a source told Al Mal. Ismail could not attend the Coordinating Council meeting, and the CBE’s Monetary Policy Committee did not see it fit to make a decision without having his input and without reviewing the government’s economic plans first. As scuttlebutt in the capital city suggests, it’s entirely likely that this was a bid to gain clarity on Egypt’s aid and investment picture, with International Cooperation Minister Sahar Nasr out to pull in more assistance on Friday and into the weekend. That drive culminated with the inking of at least USD 9 bn in World Bank assistance on top of the Saudi oil cargoes and investment Egypt netted earlier in the week. Al Mal also dropped another surprise (to us, at least) by announcing that former CBE Governor and current Coordinating Council member, Farouk El Okda, has joined the CBE’s Monetary Policy Committee.

The CBE kept the exchange rate unchanged at EGP 7.73 per USD for the tenth consecutive auction on Sunday. The sale saw the CBE sell FX worth the equivalent of USD 40 mn, according to Al Borsa.

EGPC is expecting to be allocated part of the USD 3 bn financing agreement secured from the World Bank Group to pay IOCs’ overdue receivables, EGPC Chairman Mohamed El Masry told Al Mal. A source said EGPC is targeting paying USD 500 mn to IOCs and that there is an “agreement within the cabinet” to allocate the funds for that. In total, the IOCs are owed USD 2.9 bn, 80% of which is due to BG, BP, Shell, and Eni, the source noted. However, Oil Minister Tarek El Molla stated that as of yet, none of the AfDB and World Bank loans have been earmarked for these payments, saying he hops that the cabinet would make doing so a priority, Al Masry Al Youm reports. El Molla added that the IOC’s investments in Egypt this fiscal year reached USD 8 bn, and they are looking for new incentives to invest further, Al Ahram reports.

The vehicle through which Saudi Arabia will deliver  fuel aid to Egypt will be decided in January, Oil Minister Tarek El Molla said. A Saudi-Egyptian coordination committee will convene in Saudi Arabia to discuss the terms of the agreements, he added. (Read in Arabic)

Gulf-based development finance industries have promised Egypt a combined USD 1.5 bn in annual funding to spur development in Sinai. The pledge from DFIs came during the first leg of Internal Cooperation Minister Sahar Nasr’s tour of the GCC, which included visits to Kuwait and the UAE, AMAY reports. The assistance will be earmarked for housing, infrastructure, agriculture, and education programs, Nasr said. DFIs pledging annual earmarks for Egypt included the Arab Fund for Economic & Social Development, the Saudi Fund for Development, the Kuwait Fund, the Islamic Development Bank, the Abu Dhabi Fund for Development and OPEC Fund for International Development. The story does not give a sense of how many years the pledges will run.

Petroleum subsidies cost the state EGP 14 bn during the first quarter of the current state fiscal year, said El Molla. He added that the Petroleum, Finance and Planning Ministries are putting their heads together to devise a plan to cut subsidies by 30% of their mid-2014 level in five years, as per an announcement by the Prime Minister effectively reneging on earlier promises to eliminate them by 2020. On the import side of the coin, there are no plans to expand LNG imports from Algeria or any other state, El Molla said a ministerial-level meeting of Organization of Arab Petroleum Exporting Countries (OAPEC) members, which was held in Cairo yesterday. The government will hold fast on issuing import tenders for the foreseeable future.

A delegation from the Trade and Industry Ministry will visit the US on 4-5 January to review the terms of the QIZ agreement, Amwal Al Ghad reported. The delegation will request reducing the percentage of the minimum Israeli component to 8%, from 10.5% currently, and request expanding the agreement to six new zones.

Let’s welcome the Education Ministry to the EGP bn tender club: The Education Ministry is planning to issue a EGP 15 bn tender under the public-private partnership system to build schools with a combined capacity of up to 60K classrooms by 2018. The schools will target medium-income families and will charge EGP 1K-2K in annual tuition fees, said Education Minister El Helal El Sherbiny. Under the partnership, the ministry will provide land, while the private sector will build and operates the schools, Al Borsa reports. The Ministry will grant incentives to investors including the speedy issuance of permits, El Sherbiny added. This is the first high profile tender announcement by the Education Ministry since it was given cabinet authorization to issue tenders earlier this month. El-Sherbiny then went on to discuss a much grander, more-long term EGP 40 bn plan to expand the building of schools and upgrade services.

The Electricity Ministry signed an EGP 10 bn loan agreement to finance the local component of the power plants being built by Siemens, Al Mal reported. National Bank of Egypt is the lead arranger of the facility, which will be used to finance 85% of the cost of the local portion of the project.

Ah, yes, tolerance: Al Azhar organizes student essay-writing contest on how to stop the spread of Shiism in Egypt. A statement in Arabic on Al Azhar University’s website (which since seems to have been taken down) reportedly called on its students to submit research papers on how to stop the spread of Shiism in Egypt, the Cairo Post reports. The paper also has a requisite creative arts component, including poetry, plays and speeches. Whether or not students will be permitted to express their anti-Shia proposals through interpretative dance is not yet clear at this time.

INTERNATIONAL HEADLINES- There’s painfully little in the way of interesting international business news heading into this holiday week in the West, with the lead story in most European outlets this morning being the Rajoy government’s loss of its parliamentary majority in Spain following general elections. The BBC reports that while the ruling party won the most seats in parliament, it will now have to form a coalition government.

Other international news this morning that either carry implications for Egypt or that are simply worth noting in brief:

• The Financial Times is reporting this morning that “the World Trade Organisation is facing the biggest shake-up of its agenda in a generation after its members in effect abandoned the long-stalled Doha round” after talks in Nairobi this past weekend. Also on the FT: Cry at the prospect of being a 40-plus-year-old intern.
• Star Wars set a new opening-weekend record with USD 238 mn in North American ticket sales, the Associated Press reports.

• From our Eastern Neighbors: Supermodel Bar Refaeli has been released on bail and is under a travel ban after being arrested on charges of tax evasion, NBC News and Fortune report. Also from Israel: the country’s vice premier resigned amid allegations he had [redacted] harassed women.

• “Goldman Sachs: 21 of the World’s Most Interesting Charts“ is Bloomberg channeling its inner Business Insider. Snark aside, it’s definitely worth checking out if you have 5 minutes this morning.
• While you’re on Bloomberg, check out “Where Chefs Eat in London: The Best of 2015“ for dining tips the next time you’re in Old Blighty.

EGYPT IN THE NEWS

There’s nothing like a little bit of [redacted] at the end of the year to get the press riled up: Wire services have gone bonkers for the story that King Tut’s wet nurse Maya may also have been his sister, with pickups or one version of the story or another dominating the international press’ coverage of Egypt this morning. See specimens including AFP and Germany’s DW. The Associated Press plays it straight and skips the sibling angle. The story  made headlines as Maya’s tomb in Saqqara was opened to the public for the first time.

Tut and Maya eclipsed news that photographer Esraa El Taweel has been released to house arrest, but her story still made international headlines. With “Egypt releases student in a rare bow to public pressure,” the New York Times explains that El Tawil was released on compassionate grounds but still faces trial on a range of national security charges. The Los Angeles Times also has coverage, and the story has made headlines in the Gulf.

Former US Secretary of State Hillary Clinton from the most recent Democratic debate on Saturday: “We saw what happened in Egypt. I cautioned about a quick overthrow of Mubarak, and we now are back with basically an army dictatorship.” (Read the full transcript of the 3rd democratic debate)

Egypt now looks a lot like it did in 2010, Michele Dunne and Nik Nevin wrote for the WSJ. “The membership and mission of the recently elected 598-seat House of Representatives bear similarities to the parliament chosen a few months before the January 2011 uprising, but each is more exaggerated … The composition of the new parliament does not represent all Egyptians—few of whom voted, whether by choice or various forms of exclusion,” they note. Dunne and Nevin warn that “beyond the political shenanigans, inflation driven by food prices is rising, labor protests are building against low wages, and public outrage is surfacing over deaths from police brutality.”

IMAGE OF THE DAY

Birthday cake mishap from Zamalek pastry shop a strong contender for entry into the internet Hall of Fame, (2013). (View image)

WORTH WATCHING

Watch two segments from The Mother of All Demos: Douglas Engelbart (1925-2013), whose work at the Augmentation Research Center Lab at the nonprofit SRI International in California, with funding from DARPA, NASA and the Air Force, led to the invention of the computer mouse, hypertext, one of the four nodes of the internet’s predecessor ARPANET, and real-time collaboration in a word processor document via networked computer s between two users at different locations. All of these technologies were unveiled at Engelbart’s Mother of All Demos projected on a 22-foot high screen. In 1968.  ”I don’t know why we called it a mouse. Sometimes I apologize. It started that way and we never did change it.”

• Watch the world’s introduction to the mouse (running time: 1:41)
• Watch the predecessor to Google Docs, “The Journal” (running time: 2:58)

DIPLOMACY + FOREIGN TRADE

KSA Foreign Ministry hangs three commentators out to dry: In a surprising move, an unnamed source from the Saudi Foreign Ministry told news outlets that three of the most renowned Saudi columnists don’t represent the official views of the kingdom, according to Al-Hayat. As we’ve previously noted, the three columnists — Gamal Khashgoggi, Anwar Eshky and Nawaf Ebeid — have been extremely critical to Egypt since the death of King Abdullah. All three have at one time or another worked for government-funded publications. The move could signal change in coverage of Egypt in Saudi-funded news outlets.

The Uruguayan parliament ratified the free trade agreement signed between Egypt and Mercosur, Egypt’s Foreign Affairs Ministry said. The Ministry added that “with such step the number of countries that completed the ratification procedures of the Agreement has reached three, namely Egypt, Brazil, and Uruguay, with only Argentina and Paraguay left to finalize the same procedures in order for the Agreement to enter officially into force.”

ENERGY

Netanyahu’s gas envoy to Egypt to arrive this week
Israel’s Prime Minister Benjamin Netanyahu’s special natural gas envoy to Egypt will arrive for talks this week, sources said. The envoy is tasked with restored economic ties and restarting the natural gas talks between the two countries. Al Masry Al Youm says EGAS and EGPC have not made any comments regarding the anticipated visit. (Read in Arabic)

EGAS cuts imports to 700 mcf in response to decreased consumption
EGAS has deceased its natural gas imports to 700 mcf from 1 bcf per day in response to decreased consumption. Domestic consumption of gas has fallen to 2.6 bcf per day from 2.85 bcf per day in November, an official at EGAS told Daily News Egypt. The official added gas provisions have been restored to all factories. (Read)

EGAS postpones gas price negotiations with industrial clients
EGAS is postponing negotiations on natural gas price changes to industrial clients, an unnamed source told Al Shorouk. EGAS is waiting until the national plan assessing domestic gas demand and the expected supply is completed. The source says negotiations will be resumed once the plans to commission a third FSRU are in place. (Read in Arabic)

OAPEC Ministers certain of oil rebound
The OAPEC meeting held in Cairo concluded today with regional oil ministers expressing their confidence that petroleum prices will see a rebound, Bloomberg reports. Iraq’s Oil Minister predicts that strong market fundamentals will play a leading role in this rebound. Qatar’s Energy Minister—who chaired the meeting—appealed to member countries to boost coordination among them to raise productivity during exploration and extraction, according to Qatari daily The Peninsula.

Electricity Ministry extends LG deadline for feed-in tariff companies
The Electricity Ministry extended the deadline for feed-in tariff companies to pay their end of the cost-sharing agreement with the Ministry to 31 January, following requests to do so by many of these companies. These 39 companies operating solar projects in Benban had until this coming Wednesday to obtain letters of guarantees from banks to cover 70% of their share, after having already paid 30% of their obligations worth a combined EGP 350 mn, as we noted earlier this month. Only 15 of them managed to obtain LGs from banks, including Abdul Latif Jameel which received a USD 150K LG from CIB. (Read in Arabic)

Egyptian participation in Daba’a and after-use ownership of fuel rods up for discussion with Rosatom
The Electricity Ministry wants at least 25% of work on the first nuclear reactor of the Daba’a plant to be done by Egyptian companies and will push for this when it resumes talks with Rosatom next week. The Ministry will push for Egyptian companies to participate in at least 35% of the work on the second reactor. Rosatom is seeking to reduce these numbers. Other sticky points on the table include the fuel for the plant. Rosatom would like to keep the fuel rods after being used, while Egypt is negotiating to hold on to them. 50 companies are expected to participate in building the Daba’a plant including Petrojet, Hassan Allam, and Arab Contractors. (Read in Arabic)

INFRASTRUCTURE

EHCAAN to issue 3 mn m2 land tenders for Airport City project in January
The Egyptian Holding Company for Airports and Air Navigation (EHCAAN) plans to issue tenders for 3 mn m2 of land for the EGP 80 bn Airport City project in January, Al Borsa reports. This issuance is only part of the total 10 mn m2 land available for the project, said EHCAAN’s head Mahmoud Esmat. The project will be under a cost-sharing agreement with the private sector, having been moved from the EPC + Finance system after the eight bidding contractors — including Arab Contractors, the Bin Laden Group, Petrojet, Orascom, Samcrete and Hassan Allam — expressed reservations on arranging their own financing. (Read in Arabic)

HEALTH + EDUCATION

Health Ministry begins distributing hep-C treatment Daklinza
The Health Ministry began distributing Bristol-Myers Squibb’s hepatitis-C treatment, Daklinza, yesterday. The treatment is complementary to sofosbuvir-based drugs, including Gilead’s Sovaldi and its Egyptian-made generics. The Ministry said it allocated the new treatment based on the number of patients in each governorate. (Read in Arabic)

REAL ESTATE + HOUSING

Housing Ministry to finalise Arabtec agreement within days
The Housing Ministry will reach an agreement with Arabtec to build 13,000 homes “within days,” a Ministry source told Al Shorouk. The source added that the project will be implemented in Obour City, without any houses build in Badr City as previously planned. A pending issue was Arabtec’s request to guarantee its ability to repatriate profits, to which the Ministry noted it was a matter that only the cabinet could decide. Arabtec also reportedly expressed a willingness to transfer USD 180 mn to a local subsidiary within the first six months of the project. (Read in Arabic)

Housing Ministry waiting on PHD to confirm shopping centre contract
The Housing Ministry sent Palm Hills Developments (PHD) a letter to ask about the status of the shopping centres it was contracted to build in new cities, Al Shorouk reported. The Ministry had signed an MoU with PHD to build the centres in 20 new settlements that are part of the Dar Misr project, and a source notes that the MoUs have not been cancelled. The source adds that PHD is yet to confirm whether it is going through with the project or not. (Read in Arabic)

TOURISM

Saudi businessman reportedly in talks over a USD 4 bn Sharm project
An unnamed Saudi businessman is reportedly in talks over a USD 4 bn tourism project in Sharm El Sheikh, Tourism Minister Hisham Zaazou said. Zaazou declined to name the investor and did not elaborate on what stage these talks were at. However, he did say that the project would be Sharm El Sheikh’s largest. (Read)

BANKING + FINANCE

EFSA eases corporate governance regulations for non-listed brokerages
The Egyptian Financial Supervisory Authority (EFSA) reduced the requirements for audit and risk committees for non-listed brokerage firms in its amendments to corporate governance regulations. Only firms with over EGP 50 mn in capital or those whose annual trades reach EGP 500 mn are required to form risk committees, said EFSA head Sherif Samy. Non-listed brokerages and their subsidiaries are now only obligated to have one audit committee and one internal audit committee. Risk committees in this case are optional. Audit and risk committees for parent companies must now conduct separate reports for each of their subsidiaries. (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

Government to make land available to retailers — and retailers are considering lodging a suit against state intervention to curb inflation
The low-to-mid-end retail segment continues to grapple with state intervention to curb prices. Some members of the Cairo Chamber of Commerce considering taking legal action against the Ministry of Supply and Domestic Trade, saying they are investigating whether MoS outlets possess all of the permits and tax licenses they require, Al-Borsa. Meanwhile, Prime Minister Sherif Ismail has instructed a cabinet-level committee to fast-track an inventory of land that could be made available to retail outlets as part of its bid to drive the opening of stores serving low and middle income consumers. President Abdel Fattah El Sisi directed the formation of the committee last Wednesday after a meeting with retailers and Supply Minister Khaled Hanafi. The Internal Trade Development Authority (ITDA) was tasked with managing the process, Al Mal notes.

EGYPT POLITICS + ECONOMICS

“Egypt’s monetary policies are scaring away investors,” says EPEA head.
Egypt’s monetary and financial policies are scaring away investors, said the head of the Egyptian Private Equity Association (EPEA) Hany Tawfik, faulting the state for not making monetary policy clear. He also criticized the country’s reluctance to devalue the EGP, pointing to the dip in other emerging markets currencies, and said the newly formed Investor Liaison Committee should have included new blood. (Read in Arabic)

SPORTS

Zamalek pulled out of the Egyptian Football League Championship after going down to a  2-3 loss, according to Al-Ahram. The club’s chairman Mortada Mansour, outraged that the referee showed the red card to Zamalek’s Ali Gabr and awarded two penalty shots to Talaea Al Geish, said there are reasons behind the team withdrawal from the league, “We asked to change the stadium, where fans were killed last year, and which causes trauma to my players but nobody wants to take action.” The Zamalek head also said his team won’t participate in the league as long as referee Mahmoud El Banna (who officiated at yesterday’s game) and Wagih Ahmed (the football federation’s top referee) remain in their jobs.

Barcelona became the first football club in history to win the FIFA Club World Cup for the third time after beating River Plate 3-0. Barcelona’s star Messi started scoring in the South American team 10 minutes before the end of the first half, and Luis Suarez added the second goal just after the second half. Suarez, who scored five goals in this championship came back to score the third goal and seal the win for FC Barcelona, adding a fifth title for the Spaniard team in one year.

ON YOUR WAY OUT

An Air France flight headed to Paris made an emergency landing in Kenya yesterday after a “suspicious device” was found on board. The plane departed from Mauritius and had 473 people on board, according to CNN. Reuters later reported that the entire incident was due to a hoax bomb constructed out of cardboard and placed on the flight.

In other hoax news: The BBC, having fallen for a hoax on walking trees, takes the story and runs with it. Live Science debunks.

“Key” Hezbollah militant Samir Qantar was killed in a rocket strike near Damascus, BBC reported. Hezbollah are blaming Israel for the strike. Qantar spent 29 years in an Israeli prison for charges of killing four in a home invasion, including allegedly bashing in the skull of a four-year old girl. Qantar denied the charge.