PM — The Merge is here

Happy THURSDAY, friends. It’s a much calmer end to the week than we had expected, judging by the newsflow over the past couple of weeks.

THE BIG STORIES TODAY

State-owned hospitals up for private sector grabs? The government is offering up investments to at least three state-owned hospitals to private sector players through usufruct agreements, management rights, or development of the assets, Bloomberg Asharq quotes Health Ministry spokesperson Hossam Abdel Ghaffar as saying. The offering comes as the government is looking to double private sector participation in the economy over the next three years through its state ownership policy document. The document indicates that healthcare infrastructure is a sector the government sees as strategic, but would allow the private sector to increase its ownership in the sector.

B Investments is “not in a position” to decide whether it will preempt Adnoc’s bid for TotalEnergies Egypt and acquire the shares itself due to “unresolved legal issues relating to the validity” of the transfer notice from Total Energies Marketing Afrique (TEMA), B Investments said in a disclosure (pdf) today. B Investments is currently in discussions with TEMA, which holds a 34.6% stake in TotalEnergies Egypt, regarding these issues, according to the disclosure.

CLARIFICATION- This story was amended on 15 September, 2022 to clarify that B Investments is citing legal issues in the transfer notice from TEMA as part of Adnoc’s bid for TotalEnergies Egypt. The issue is not with the bid itself. 

THE BIG STORY ABROAD

It’s a mixed bag of nuts in the international business press this afternoon. A “tentative” agreement the US government has reached with freight rail companies and unions has staved off a workers’ strike, the New York Times and Reuters report. Meanwhile, a changing of the guard at Shell is getting ink from CNBC and the Financial Times: CEO Ben van Beurden is set to step down from his position at the end of the year, at which point the energy giant’s renewables director Wael Sawan will take over.

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** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

• Expedition Investments acquires 33% of Domty: Shareholders agreed to sell 93 mn shares — 97% of the 96.2 mn shares target — to a consortium of investors led by Expedition Investments in a mandatory tender offer that closed yesterday.
• Gulf acquisitions are rolling in: Abu Dhabi Ports (ADP) finalized its takeover of a major local shipping and logistics outfit and the Kuwaiti Investment Authority (KIA) purchased a 4.8% stake in EGX-listed Rameda Pharma.
• El Sisi’s trip to Qatar concludes with inked MoUs on investment, ports and “social affairs” as investment takes center stage during the landmark visit.

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Intellectual property strategy coming soon: Egypt will launch its intellectual property strategy next Wednesday, Prime Minister Moustafa Madbouly said yesterday, according to a cabinet statement. World Intellectual Property Organization (WIPO) Director-General Daren Tang will make an appearance at a ceremony being put on to launch the program, the PM said.

We’ve been expecting this for a while: Madbouly first flagged that changes to intellectual property rights were in the works in his big privatization speech back in May. The strategy was finalized by the Justice Ministry and sent to the Cabinet in June.

ADD Art is hosting its inaugural AlDau International Art Festival in Hurghada from 22 September until 7 October, according to a statement (pdf). The festival will begin with a weeklong workshop with nearly 40 artists from countries including the US, UK, France, Jordan, Tunisia, Uzbekistan, and Congo. The workshop will be followed by an exhibition from 2-7 October at the AlDau Art Promenade in Hurghada. ADD Art is a subsidiary of AlDau Developments.

PSA- Tech startups have two weeks to apply for DMZ Cairo’s second eight-month incubation program, which begins in November. Applications for the cycle are open until Thursday, 29 September, according to a statement (pdf). The incubator is based at the Universities of Canada in Egypt and is backed by the Academy of Scientific Research and Technology and the National Technological Incubators Program.

☀️ TOMORROW’S WEATHER- The weather is staying relatively consistent throughout the weekend, with a high of 32°C tomorrow and 33°C on Saturday and lows of 22-23°C, according to our favorite weather app.

The “Merge” is complete: Ethereum’s long-awaited upgrade, which cuts the crypto’s energy use by 99%, is here: The network just finished the biggest and most ambitious software upgrade in the crypto world to date, Vitalik Buterin, the co-founder of the blockchain network, announced today. An upheaval of this magnitude has never been attempted in the history of crypto, much less on Ethereum, which is home to around 3.5k active decentralized apps, ranging from exchanges to games and processing bns of USDs-worth of crypto, Bloomberg reported. The game-changing, greener technology, which has been in the works for years, doesn’t alter how Ethereum operates for end users, but is a crucial first step toward additional enhancements that will make the network faster and less expensive and should further boost its reputation and adoption.

Want to dig deeper into the Merge and what it means for the crypto world? We’ve got you covered.

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Open floor plans are dead. Say hello to “seated privacy.” One of the biggest trends in office layouts of the 2000s, open floor plans which gave the illusion of openness are finally being laid to rest, as employees that learned to value their privacy in work-from-home settings are making their way back to the office, The Wall Street Journal writes. While office designers aren’t bringing back 90s-era cubicles, they are using a combination of cubicles, some with glass tops, offices, and quiet zones to create more personal space and privacy at work. Office dwellers have been reporting difficulties with working in open-layout offices, including not wanting to disturb their colleagues while also wanting some level of visibility that lends itself to the collaborative work that office spaces are meant to allow for.

Your smart fridge could need to comply with cybersecurity rules in Europe: Concerns over a rise in cyber attacks prompted the EU to unveil draft cybersecurity regulations today that would apply to all internet-connected products, from computers to refrigerators to mobile apps. Companies could save as much as EUR 290 bn annually in cyber incidents, compared to the roughly EUR 29 bn needed to comply with regulations, Reuters quoted an EU executive as saying. Concerns about security flaws in operating systems, network equipment, and software have increased in recent years as a result of a string of high-profile instances involving hackers causing damage to businesses and demanding large ransoms. The proposed rules would make manufacturers responsible for assessing the cybersecurity risks associated with the product and implementing procedures to rectify concerns for the first five years after a product is released, or for the duration of the product’s estimated lifetime.

???? ON THE TUBE TONIGHT-
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Partner Track shows we can never have enough legal shows: The bubbly new comedy on Netflix is based on Helen Wan’s novel about lawyers who are battling it out to become partners at an elite NYC firm — if only they could stop getting sidetracked by each other. It centers on Ingrid, the firm’s tenacious golden girl who constantly agrees to put in extra hours and follow her boss’ orders, no matter how dubious they may be. In the witty opening scenes of the pilot, Ingrid explains that she went into mergers and acquisitions since that’s what the finest corporate lawyers do (hear, hear). However, the legal aspect serves as a backdrop for what is essentially a romance. The show is a little predictable but kept us reeled in throughout its ten episodes (watch trailer, runtime 2:10)

⚽ It’s Europa League day — here are the most notable games to keep an eye out on: Manchester United will face Sheriff Tiraspol at 6:45pm. Trabzonspor — where our very own Mahmoud Trezeguet plays — will face Red Star Belgrade at 6:45pm as well, and Azerbaijani Qarabag will face French Nantes — where Egyptian striker Mostafa Mohamed plays. Later at 9pm, Roma hosts Helsinki.

Friday: Gameweek 8 of the English Premier League kicks off at 9pm with two games: Aston Villa v Southampton, and Nottingham Forest v Fulham.

It’s a reduced gameweek, however, after three matches were postponed for different reasons: Chelsea v Liverpool, Manchester United v Leeds, and Brighton v Crystal Palace. This is bad news for the fantasy league players among us, who could resort to using a Wild Card or a FreeHit to save the week.

Over 100 of our readers have already joined the Enterprise Fantasy League. Are you one of them? If you aren’t, there’s still a chance to join us by clicking here, or entering this code: 8o4sut.

The sixth round of the Spanish La Liga also kicks off tomorrow, with a match between Real Valladolid and Cadiz at 9pm.

Saturday: Gameweek 8 of the EPL continues with Wolverhampton v Man City at 1:30pm, Newcastle v Bournemouth at 4pm, and Tottenham v Leicester City at 6:30pm.

La Liga: Real Mallorca v Almeria at 2pm, Barcelona v Elche at 4:15pm, Valencia v Celta Vigo at 6:30pm. Athletic Bilbao v Rayo Vallecano at 9 pm.

Bundesliga: Are you ready for the “mother of all derbies”? The Revierderby between Borussia Dortmund and Schalke kicks off at 3:30pm, and Augsburg will play against Bayern Munich at the same time. We also recommend you tune into the Borussia Monchengladbach and Leipzig match at 6:30pm.

CAF Confederation Cup: Future will play the return match in the preliminary round against Uganda’s Paul Jinja at 9pm. The first leg of Future’s first continental participation ended with a goalless draw, so the club needs to win at home to qualify.

???? EAT THIS TONIGHT-

Maadi residents, you’re in for a treat: Don Pollo is now delivering tasty Peruvian dishes. You can now order rotisserie chicken with one of their four flavorful sauces to choose from: Sweet Cilantro, Smokey Paprika, Velvet Cream or Harissa. They have plenty of side dishes to choose from; we recommend the roasted baby potatoes that are crispy on the outside and fluffy on the inside. If you’re looking for a lower carb alternative, try out the roasted vegetables. Their signature Pollo chicken sandwich with mashed avocado, pickled red onions, and sweet cilantro sauce is a great option if you want a faster bite. If you’re not into chicken, give their Lomo Soltado — stir fried beef in a soy based sauce, served with Jasmine rice — a try. You can now order their tasty meals on Talabat.

???? OUT AND ABOUT-
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Singer-songwriter Rania Shaalan is performing tonight at Room Art Space Garden City at 9pm.

It’s Michael Jackson tribute night at the Tap West tonight. VYBE and Funkenstein will be performing some of the late singer’s greatest hits at 10pm.

Rediscover some of Egyptian director Khairy Bishara’s neo-realist films from the 80s and 90s at Zawya tonight at 7pm. The event runs every night through the end of September.

Komedy Koshk takes the stage for Comedy Night at Room New Cairo Saturday night at 9pm.

???? EARS TO THE GROUND-

The EGX30 fell 1.1% at today’s close on turnover of EGP 1.29 bn (26.8% above the 90-day average). Foreign investors were net sellers. The index is down 15.7% YTD.

In the green: Alexandria Containers (+2.7%), Mopco (+2.7%) and Talaat Moustafa (+2.2%).

In the red: QNB Alahly (-8.9%), Egypt Kuwait Holding-EGP (-5.0%) and Elsewedy Electric (-4.8%).

How the post-financial crisis era led to the emergence of music as an asset class: In the wake of the 2008 financial crisis, record-low interest rates and dwindling avenues for revenue-generating investments led investor interest in the music industry to grow, the Financial Times writes. This growth came as the music streaming industry gave a new push to royalty payments — which turned into an attractive asset class for Wall Street.

Private equity groups have been piling in: With the expectation that global music revenue will double by 2030, according to Goldman Sachs estimates, heavyweights in the private equity world like Blackstone and KKR have poured bns of USD to acquire streaming rights and music copyrights as they grow their music asset portfolios.

What makes it such an appealing investment route? One of the key explanations is the fact that music presents a way to create recurring revenue from multiple sources. Artists distribute their music to several different “distributors” (think radio stations, public performances like concerts, bars, and restaurants, and visual media such as films and ads that use copyrighted music). That means that every time a song is played in a bar or at the mall, or every time an advertiser uses a song for an ad on television, copyright revenues are generated.

This appeal has also grown amid a recent trend in the music industry where artists are paying more attention to their intellectual property rights and royalty compensation as key sources of income as the advent of streaming technology and the resulting disappearance of sales revenues from tapes and CDs changed the monetary dynamics of the music industry. And with changing regulatory frameworks, songwriters and intellectual property owners are expected to lock down more income — and, in turn, create more returns for the asset class.

Music royalties have also been outperforming market returns — while also remaining decoupled from volatility swings: “If you think about investing in a lot of other asset classes right now, it’s pretty treacherous. There’s inflation, there’s supply chain risk, there’s geopolitical risk. Music is relatively immune to those things,” the Financial Times quotes a senior executive at an unnamed “major private equity group” as saying.

It’s also a relatively nascent asset class, which makes it ripe for entry right now: “We think this investment will generate supernormal returns … it’s less well known [than other asset classes] and we think we’re early to this,” a portfolio manager at Newton Investment Management tells the FT.

But the asset class is not immune to its own set of challenges and difficulties: The process of bringing in the royalty payments, which is the “lifeblood” of the asset class, is not always straightforward, the salmon-colored paper notes. “One music company chief executive says that often, one of the most difficult obstacles to buying an artist’s catalog is that the musician cannot find their physical master copy.” And the industry has largely been operating in an informal manner, with transactions “subject to the whims of big personalities and personal relationships,” the Financial Times writes.

There has also been somewhat of a lack of financial discipline and “irrational pricing,” industry players say. London Stock Exchange-listed investment trust Hipgnosis lured in big investments to buy up copyrights for north of 65k songs. The fund has been on a streak of acquisitions and its portfolio’s net asset value has appeared to boast “prophetically successful” growth — but the growth of the fund’s portfolio volume “masked the underlying performance of the catalogs,” the Financial Times suggests. “The pro forma royalty revenue these songs generate — a measure that strips out the boost from new purchases — has been falling for at least the past two years, ever since it was first disclosed.”