Cleopatra Hospital Company shares trade today

*** BEFORE WE GET UNDERWAY THIS MORNING, we have a handful of “programming notes” for you, as our friends in television would say

– We have rolled out new search and archive functionality. You can now peruse our archives by month. And search actually returns reasonably meaningful information — plus you can re-cut search results by day / week / month, year. We’ll be rolling some other tweaks to search and to the look and feel of Enterprise in the days to come.

– Tomorrow’s Weekend Edition is the last Weekend Edition until after El Eid. It will return on 15 July.
***

HEAT WAVE: Temperatures will be in the low-to-mid 40s through Monday.

The last Thursday before Ramadan is looking packed, ladies and gentlemen:

Egypt is set to receive its first Mistral-class helicopter carrier from France today according to Ahram Online. Defense Minister Sedky Sobhi and his French counterpart will attend the handover ceremony in Toulouse. The ship is expected to be named after Gamal Abdel Nasser.

The first annual EBRD Research Symposium on the Economics of the Middle East and North Africa is set to take place 2-3 June (Thursday-Friday) at EBRD headquarters in London.

OPEC meets. Only one of 27 analysts polled by Bloomberg expects an agreement to limit oil output. That hasn’t prevented the WSJ from reporting that members are “reviving talk of a production ceiling” in closed-door talks ahead of today’s official sit-down.

SODIC will hold its 1Q2016 results call at 16:00 CLT, hosted by Deutsche Bank. SODIC MD Magued Sherif will be leading off the call.

“Capital in the Twenty-First Century” author Thomas Pikettywill speak at 11:00am CLT at the Faculty of Economics and Political Science at Cairo University and at 6:00pm CLT at the American University in Cairo’s downtown Ewart Hall.

Expect nuclear power to be in the news next week: Electricity Minister Mohamed Shaker left for Moscow yesterday evening to sign the final agreements for the Daba’a nuclear power plant, a senior ministry official tells Al Shorouk. His six-day trip was preceded by the conclusion of talks for the plant in Moscow between Russian officials, representatives of Rosatom and an Egyptian delegation which included the Deputy Electricity Minister and the head of the Egyptian Atomic Energy Authority.

Markit / Emirates NBD PMIs for Egypt, KSA and the UAE are due out on Sunday.

The House Economic Committee will discuss amending the Investment Act sometime next week. No details as yet.

The EGX will move to its customary shorter trading day during the Holy Month, with trading running 10:00am to 1:30pm CLT and the discovery session running for 30 minutes starting at 9:30am.

The jury is still out on when Ramadan actually starts. We’re still certain it is on Tuesday, 7 June; our moms are certain it’s Monday, 6 June.

The French naval search vessel Laplace detected signals originating from one of the black boxes of EgyptAir flight MS804, Egyptian and French investigators said, according to Reuters. “The search for the black boxes was intensifying ahead of the expected arrival within a week of another vessel, the John Lethbridge, from Mauritius-based company Deep Ocean Search to help retrieve the devices,” the committee reportedly said. “Laplace identified the signals that ‘might belong to one of the data recorders’ from the EgyptAir flight, said France’s BEA, who are responsible for investigating air incidents,” BBC reported.

Shares of Abraaj’s Cleopatra Hospital Company will open at EGP 9.00 as the company makes its debut on the EGX this morning, trading under the stock symbol CLHO.CA. The offering of 34 mn shares to international institutions was 6.7x oversubscribed, and the Egyptian retail offering of 6 mn shares more than 28x oversubscribed. The transaction, Egypt’s second IPO this year, met heavy appetite from international funds, says EFG Hermes Deputy Head of Investment Banking Mohamed Abou Samra. “Strong international appetite for the transaction is simultaneously an endorsement of Cleopatra’s strong growth prospects as well as of Egypt’s healthcare sector and the wider economy,” he said.

Selling shareholder Care Healthcare Limited will reinject the proceeds of the transaction to drive new growth at Cleopatra, which owns Nile Badrawi Hospital, Cairo Specialised Hospital and Al-Shorouk Hospital as well as namesake Cleopatra Hospital. Care is owned by subsidiaries of Abraaj NAH Limited (a fund of Dubai-based Abraaj Group), the European Bank for Reconstruction and Development, Germany’s DEG and France’s Proparco.

EFG Hermes Investment Banking was Sole Global Coordinator and Bookrunner for the offering. Freshfields Bruckhaus Deringer LLP was international counsel to the Issuer, while Zulficar & Partners were local counsel. Shearman & Sterling (London) LLP served as international counsel to the sole global coordinator and bookrunner, while Matouk Bassiouny was local counsel.

Beltone Financial has entered into an agreement to acquire 51% of New York-based Auerbach Grayson, a brokerage house serving U.S. institutional investors in some more than 120 global markets, Beltone said in an emailed statement last night. Beltone Chairman Sameh El-Torgoman said in the statement the firm will work with Auerbach Grayson to “expand our global reach and product offerings to the U.S. market, in addition to boosting our expansion plans in frontier markets.” Auerbach Grayson has partnerships with regional brokers and banks in emerging, frontier and developed markets “with analysts in every region.” The transaction will also allow Auerbach Grayson to “expand into asset management and investment banking.” AG founder and CEO David Grayson said the transaction, “with Egyptian businessman Naguib Sawiris backing the investment, [places] Auerbach Grayson at the core of Beltone Financial’s growth strategy.”

Beltone Financial was advised by Beltone Investment Banking, Covington & Burling LLP in Washington DC, and Zaki Hashem & Partners in Cairo. Auerbach Grayson was advised by Berkshire Capital in New York and Sullivan & Worcester LLP in Boston. The acquisition, subject to regulatory approvals, is expected to close “in the coming weeks.”

The EBRD’s board has approved financing for three undisclosed projects under the public-private partnership framework that Egypt is expected to announce soon, said Deputy Finance Minister Ahmed Kouchouk following a meeting between EBRD President Sir Suma Chakrabarti and Finance Minister Amr El Garhy. The meeting, which was meant to highlight Egypt’s economic reforms, also explored the possibility of the EBRD funding the development of the Cairo Metro Line 3 and the development of a cargo railway line with the Egyptian Railways Authority. Fully 63% of the USD 1.7 bn the EBRD has invested in Egypt has flowed into the private sector, said Sir Suma, according to an emailed statement from the Finance Ministry.

MOVES- Wael El-Hatow was appointed CEO of Egyptian Resorts Company (ERC) yesterday. El-Hatow is a private equity veteran and was the chief investment officer / executive director of Al Ahly Capital for seven years, according to a company statement. He succeeds Mohamed Kamel, who will step down effective 30 June 2016 to to return to his family business, KATO Investment, a diversified privately held holding company. Kamel will become KATO’s vice-chairman and CEO, having previously been the company’s vice president for strategy before joining ERC. He will also continue to serve as vice chairman of ERC, a role to which he was appointed by the company’s board yesterday.

The Administrative Control Authority (ACA) has raised objections to some of the terms in a proposed USD 750 mn agreement with China Harbour to build a multipurpose platform in the port of Alexandria. Sources tell Al Mal that the state anti-corruption watchdog had objected to what they feel are “exaggerated” financial terms and questionable technical specifications of the project. The Faculty of Engineering at Alexandria University is said to be backing the ACA on the latter. As we noted earlier this month, the Ismail cabinet resurrected the project after months of stalled talks over the project’s financing. The cabinet had stated that the it would loan China Harbour 85% of the funds for the project, but a China Harbour representative tells Al Mal that it would finance the full cost of construction.

The Finance Ministry has finished drafting a new Customs Act and is opening consultations with industry associations including the Egyptian Businessmen’s Association and the Federation of Egyptian Industries, Al Mal reports. The legislation, which was seven years in the making, aims to bring Egypt’s customs policies in line with international trade agreements, said Magdy El Bandarawy, the head of the Shipping Committee at the Alexandria Chambers of Commerce.

Meanwhile, the Suez Canal Special Economic Zone (SCZone) and the Customs Authority have laid out special customs regulations for the SCZone, which will exempt cargo transiting, warehoused, or used in the zone from customs, Al Mal report. Tariffs will only be collected on goods destined for Egypt. Regulations will also establish a customs directorate at the SCZone, Al Mal reports.

Suez Canal Authority head Mohab Mamish signed an MoU with the Kuwait Petroleum Corporation that could see the oil producer move its petroleum tankers through the Suez Canal, Al Shorouk reported.`

A lack of flooding last year has forced Egypt to tap into its strategic water reserves, Irrigation Ministry spokesperson Waleed Hakiki told Al Shorouk — and the ministry if facing a budget shortfall after being allocated just EGP 2.6 bn of the EGP 5 bn it asked for in the 2016-17 budget, he added. The EGP 2.4 bn deficit will impact the ministry’s ability to manage water resources, he said. Rep. Mohamed El Sadat, head of the House Committee on Human Rights, has filed a report with Prime Minister Sherif Ismail on damage to thousands of feddans of agricultural land due to drought and a shortage of irrigation water, Al-Ahram reports.

What’s happening with the USD 2.5 bn Saudi financial assistance package pledged during the King’s visit? It’s unclear, Al Masry Al Youm says. International Cooperation Minister Sahar Nasr said Egypt has received the first tranche — a USD 500 mn grant. Central Bank of Egypt Tarek Amer has said Egypt is still negotiating the terms of a deposit, prompting a member of parliament to chime-in and say Amer clarify that it’s a grant we’re all discussing, and that Amer has no authority over accepting grants — that’s the remit of the executive branch of government. The acceptance of a grant doesn’t even require parliamentary approval, he says, and the CBE has only the authority to negotiate the terms of deposits and loans.

Can Egypt meet its summer demand for natural gas? Egypt’s consumption of natural gas this summer is expected to reach 5.3 bcf/d, an official from EGAS tells Al Shorouk. Consumption by power plants is expected to reach 3.9 bcf/d, while industry and homes will need to be supplied with 1.4 bcf/d of gas, the source added. Egypt currently imports around 1.1 bcf/d and produces 3.9 bcf/d for a total of 5.0 bcf/d. The Electricity Ministry had apparently undersold its estimates, originally informing the Petroleum Ministry that power plants will need 3.4 bcf/d — a 7% increase over last year — and that its consumption would not reach 3.9 bcf/d until the 2017-18 fiscal year. EGAS is expected to issue a tender for a third FSRU in 2Q17, according to the source.

Net international reserves reported by the Central Bank of Egypt rise for the third straight month: Foreign reserves at the Central Bank of Egypt rose to USD 17.5 bn in May, according to a notice from the CBE, up from USD 17.0 bn at the end of April and USD 16.6 bn at the end of March. Reserves grew USD 509 mn during the month, up from USD 17 bn in April, AMAY reports.

**EARNINGS WATCH: Maridive & Oil Services’ 1Q2016 consolidated net income grew c.30% y-o-y to USD 3.5 mn, according to an EGX statement. Egyptian Resorts Company’s consolidated net losses for 1Q2016 shrank 70% y-o-y to EGP 1.42 mn from EGP 4.79 mn in the previous year, according to a bourse filing.

Contrary to reports yesterday, eight companies have applied for the 14 new cement licenses that were on offer, said the head of the Industrial Development Authority Ismail Gaber, Al Mal reports. The deadline to submit bids was 31 May. Gaber adds that the authority will process the technical and financial offers of these companies over the coming 60 days, and will then organize an auction for the licenses for companies that meet the terms and conditions.

Apache is suing its former Egypt boss in a Texas court, alleging that Thomas Maher left the company with “trade secrets” to set up rival firm Apex, according to Energy Voice. Apache claims Maher downloaded over 230k documents to nine USB storage devices before he left the firm on May 9. “The alleged downloaded information is thought to include 3-D seismic surveys, documents related to Apache’s developed and undeveloped wells on Egyptian lands, and strategies for obtaining key concessions and contracts with the Egyptian government.” A judge has approved a temporary restraining order in the case, barring Apex and Maher from using any Apache-owned information. A hearing in the case is scheduled for 20 June.

King Farouk’s “Magician Box” could fetch USD 2.5 mn at auction next week. Sotheby’s runs a photo and description of a piece of “clockwork automata,” calling it the “star of the sale” scheduled for Sotheby’s on 8 June. The piece going under the hammer “contains an automaton scene made from four colours of gold depicting a sorcerer casting spells.” Read in the Financial Times (photo and a long paragraph text about halfway down the page under “A mind of their own”.)

The global economy is tumbling into a self-fulfilling “low-growth trap” that could see loose monetary policy do more harm than good, according to the Organisation for Economic Cooperation and Development (OECD). The economic recovery will not pick up this year, said OECD chief Angel Gurria, with the organization pointing a finger at rich governments that have failed to resuscitate demand after the 2008 financial crisis. The organization also said countries need to be worrying less about the wage gap and more about jobs in general — and policies to boost jobs and productivity in specific, according to the Financial Times (paywall).

Cheap gas is reportedly fueling emerging markets, according to Reuters. The low-price is “tempting out new importers in Africa and South America, helping stave off a deeper price rout hurting producers’ bottom lines.” LNG suits emerging economies as they race to “bridge electricity shortfalls and support growth on tight budgets,” according to the wire service, which says “market debuts by buyers Egypt, Jordan and Pakistan last year were bright spots in an otherwise depressed trading environment.” Meanwhile, independent consultant Andy Flower estimates: "There is an increase of up to 17 [mn] tonnes in LNG supply in 2016 and terminals commissioned in 2015 and 2016 could account for 50 percent of that."

While we’re on energy, OPEC members are happy with the direction the oil market is currently taking. Letting low oil prices weed out surplus production is working, according to ministers from the UAE and Nigeria during a gathering in Vienna. It’s been widely anticipated that no new oil production caps will come out of talks scheduled for today. Meanwhile, Liam Denning writes of the organization’s waning power in OPEC Dying of Self-Inflicted Wounds.

Foreign coverage on Egypt was still centered on Environmental Affairs Minister Khaled Fahmy allegedly referring to Sub-Saharan Africans as “dogs and slaves”: Egypt’s Foreign Ministry said the country is demanding an apology for the allegations, according to DNE. Meanwhile, the BBC is pointing out the glaring fact that nobody’s even sure who was representing Egypt during last weekend’s United Nations Environment Assembly in Nairobi. Newsweek does a roundup of Egyptian social media response to news with the hashtag #WeAreSorryAfrica. Egypt continues to demand that Kenya hand over audio footage that would substantiate the allegations.

Also in the news is the black box signal detected from the EgyptAir crash. The Wall Street Journal writes that French naval search vessel Laplace, which was equipped with three hydrophones to detect black-box signals, arrived Tuesday in the search area. Meanwhile, the FT reports that the BEA said there was as yet no indication whether it would be asked to help analyse the flight recorders. “The investigation is being led by the Egyptian authorities and it is up to them to decide,” the agency added.

Pre-production censorship is one of the biggest challenges for filmmakers in Egypt, film producer Taghrid Abouelhassan told The Korea Times. "We have censorship where you have to get scripts permitted by the government before filming … Even after filming, they have to see it again to be permitted just to remove things they don’t like. You need to get scripts authorized through censorship and convince few filmmaking companies to produce a film which is not a comedy or action film,” Abouelhassan says.

Egypt’s human rights record is coming under fire once again in a Reuters investigative piece focused on students. “Rights groups and students say that under Sisi, Egypt’s universities have hounded students as a matter of routine, stationing dozens of security forces on campuses, expelling hundreds of students suspected of Islamist leanings, and abusing or torturing many of those they arrest.” The current era is apparently "the worst for students. It never used to happen that hundreds of students used to get expelled from universities. Dealing with students was never that brutal," said Mohamed Nagy, a researcher with the Association for Freedom of Thought and Expression.

Egypt, Hungary in EUR 900 mn rail agreement: Egypt and Hungary signed a letter of intent under which Hungary will finance its sale of 700 train carriages to Egypt, which we reported on yesterday, in an agreement worth EUR 900 mn, according to a statement posted on the International Cooperation Ministry’s website on Wednesday. The financing is set to be repaid over 12 years at an annual interest rate of 1.26% and carries a five-year grace period. The letter of intent, which was signed between the Egyptian ministers of international cooperation, finance and transport and the CEO of the Hungarian Export-Import Bank, also includes a “gift” of 80 train carriages extended to the Egyptian National Railways worth an EUR 100 mn grant from Hungary.

Other Egypt-Hungary agreements on agriculture, military cooperation: The two countries signed five MoUs in fields including water resources and agriculture and the Egyptian minister of defence signed an MOU with his Hungarian counterpart to boost military cooperation, according to DNE. The rail agreement was signed in the presence of President Abdel Fattah El Sisi and Hungarian Prime Minister Viktor Orban, who arrived in Cairo on Tuesday, along with the Hungarian ministers of foreign affairs and commerce as well as top business executives, according to Ahram Online.

Egyptian Ambassador to Canada Moataz Zahran gets some love from the Canadian Broadcasting Corporation after his visit to Cape Breton Island, where he was drumming up business for for the Suez Canal and visiting Cape Breton University, which has an associate campus in Egypt.

Egypt opened the Rafah border crossing with Gaza for four days starting yesterday. “The Egyptian border authorities will let people who need medical treatment or are returning from it, students and those who need to leave or enter Gaza for humanitarian reasons cross,” Sputnik says. It’s the second time Egypt has opened the crossing in a month.

It might take until 2019 for Dana Gas to collect all of its overdue receivables from Egypt, CEO Patrick Allman-Ward told Bloomberg. The drop in oil prices internationally might force “Dana Gas … to wait longer than planned for overdue payments owed by the Egyptian government for past gas sales,” but it could still meet its target to get paid back by the end of 2018 if prices rise. In Egypt, Dana Gas completed a pipeline from the Balsam field in the Nile River delta to a processing plant in Egypt allowed the company to beat its own year-end target of 70,000 bbl of oil equivalent. Allman-Ward says the oil market could be heading for a “bumpy road” as prices hover close to levels that are profitable for shale producers.

After announcing a new solar push, Egypt will consider wind and natural gas projects to further diversify its energy mix, Christopher Coats writes for Forbes. Coats highlights the agreement reached with Vestas Wind Systems to install 2.2 GW of wind capacity. Coats says “the project will be financed by HSBC, EFK Denmark, Euler Hermes, IFU Denmark, Danida, and CDP Banco Standard.”

The China Development Bank expressed interest in financing petroleum activity in Egypt during their meeting with Oil Minister Tarek El Molla, Ahram reported. The bank also expressed interest in drawing Chinese petroleum companies to Egypt.

Egypt has withdrawn exploration licences from five companies searching for gold in the Eastern Desert, sources told Al Mal. The licences were awarded for concessions between 2007 and 2009 to companies including SMW Gold and Northern Vertex Mining Corporation. The head of the Egyptian Mineral Resources Authority (EMRA) has only four companies active in Egypt: Centamin is already producing from its Sukari mine and Al Thani Investments, Matz Holdings, and Alexander Nubia International are still in their exploration phases.

Henkel has raised the prices of its adhesives and detergents to keep pace with inflation, Henkel Egypt President Ahmed Fahmy told Al Shorouk. The company has not been sharply impacted by the FX shortage because 70% of its production inputs are domestically sourced and revenue is reinvested domestically in expansion, he added. Fahmy recently told the domestic press that Henkel plans to invest the equivalent of EUR 50 mn in expansions over the coming five years.

The Supply Ministry has signed a poultry import agreement with Russian companies with preferential tariff terms after three Russian poultry slaughterhouses were given a halal-grade stamp by the veterinary services authority, a source tells AMAY. As we noted yesterday, Russia is looking to sell its poultry in Egypt and the UAE to overcome a surplus that’s cutting domestic prices. Meanwhile in Egypt which imports 10%, prices of chicken had been skyrocketing over the past month, growing as much as 50% over the past week to around EGP 28 per kilo.

FMCG player Dabur Egypt, the local arm of of top-five Indian outfit Dabur India, is looking to invest EGP 90 mn to buy industrial land in Egypt, company CEO Anoop Sharma told Al Shorouk. The land will be used to build a new factory and warehouses for storage, he added. The company had previously invested EGP 40 mn in 2015 to construct an administrative building, said Sharma. Egypt is Dabur’s second-largest market outside India after Saudi Arabia.

The Healthy Ministry has shut down the private hospital in Suez at which an FGM procedure left a 17-year-old dead, announced Health Minister Ahmed Emad, Al Shorouk reported. The doctor who performed the operation has been referred to public prosecution, he added. The Suez governorate’s health inspector has confirmed the girl died from the procedure. We had background on the case yesterday.

Russia will not consider a gradual resumption of flights to Egypt until security checks at all Egyptian airports are complete, Russian Transport Minister Maxim Sokolov said. "This issue will in any case be considered only when we check the readiness of each airport from the viewpoint of air safety for the passengers," Sokolov told TASS. According to the minister, the Russian Transport Ministry has no new information on this matter yet.

The Transport Ministry is set to relaunch the ferry service connecting Sharm El Sheikh and Hurghada, Egypt Independent reports. “The governors of the Red Sea and South Sinai governorate and the head of the Red Sea Ports Authority will attend the inauguration of the service on June 9.” Awad Abdel Samee, a captain of a ferry that will operate on the line said a round-trip ticket is expected to cost EGP 630, with one-way tickets costing EGP 370 a piece. Abdel Samee’s ferry is called “Labesbes” — no one knows why.

Hyundai Verna topped sales of 1500-1600 cc passenger cars during the first four months of 2016, holding a 20% market share with around 17,500 cars sold, Al Mal reports. The Mitsubishi Lancer came in second with a 10% market share, followed by Nissan Sentra (7.3%), Opel Astra NB (6%), and Chevrolet Optra (5.2%).

Naguib Sawiris is consolidating his online media holdings into the ONA Group, Al Masry Al Youm reports. This has lumped Veto, Masrawy and Yalla Kora (the last two being indirectly owned by OTMT) under ONA. Sawiris has brought in veteran journalist Magdy Al Gallad to head the new outfit. Gallad is reportedly planning on publishing a newspaper called Masrawy and building new websites for the ONA Group by year’s end. Meanwhile, Ahmed Abou Hashima’s Egyptian Media Company, which bought ONTV from Sawiris, has acquired 51% of Presentation Sports, which holds the rights to broadcast Egyptian Premier League games, Al Borsa reports.

Meanwhile, this has been going on, Al-Hayah TV Network is negotiating with potential investors rising costs and fierce competition for advertising spending, network president Mohamed Samir tells Al Borsa. The network recently faced a two-day strike by staff demanding back pay from December 2015, the dismissal of channel vice president Mahmoud El Touny, and the termination of the broadcasters’ contract with Promomedia.

The House Healthcare Committee plans to press the government plans to press government on raising the healthcare budget to EGP 81 bn from its present EGP 47.4 bn to meet the constitutional required minimum of 3% of GDP, said the committee’s head Magdy Morshid. The committee also hopes to increase the allocation for public health insurance spending to EGP 10 bn from EGP 8 bn, Morshid added. On Tuesday we noted that the Planning and Budget Committee had already sent a notice to the Finance Ministry that the constitutional mandatory minimum spending on healthcare and education was not met. Finance Minister Amr El Garhy had stated that the ministry was reviewing these.

Former Zamalek manager Alex McLeish apparently did not enjoy his time in Egypt. McLeish was sacked 65 days into his job and blames club president Mortada Mansour for it, according to The Daily Record. He says “[Mansour] reneged on paying my coaches money… He was fine in the beginning, insisting he wouldn’t interfere in the team. But he couldn’t help himself. In the weeks that followed I kept picking the same team because we were winning matches and had built momentum… But the president started saying we were losing value on players I wasn’t picking… He didn’t actually have the balls to tell me to my face I had to change the team but he got his cronies to do it.”

Some guy in Egypt named his newborn kid “Putin,” Al Mal says. No need to panic, the guy says we don’t have to make his son president just yet, “he just needs to know he is named after a powerful leader.” The father hopes his gesture will help strengthen Russian-Egyptian relations. At least he wasn’t as cruel as the parents of the distinguished general and former head of the Administrative Control Authority, Hitler Tantawy.

Apparently a dagger buried with Tutankhamun has been found to contain meteoritic iron, according to researchers from Milan Polytechnic, Pisa University, and the Egyptian Museum in Cairo. “Only one [meteorite], named Kharga, turned out to have nickel and cobalt contents which are possibly consistent with the composition of the blade,” said researcher Daniela Comelli.