Abu Auf’s parent company to make EGX debut in 2022, hires EFG Hermes to quarterback the sale

We hope you’re all ready to slide into the back half of the week now that hump day is behind us. It’s a quiet afternoon for news here at home and abroad, but the winds blowing in global markets are a little bit … stiff? Unpredictable? We’re not joining the bears in salivating over the prospect of a correction, but you could be forgiven for thinking that others are.

THE BIG STORIES TODAY so far:

#1- Healthy food provider Abu Auf’s parent company, AUF, will be making its EGX debut in 2Q2022 with EFG Hermes quarterbacking the transaction, the company said in a statement (pdf). AUF could offer up to 49% of its capital, with the proceeds funding the company’s regional expansion plans. In the market now: State-owned fintech platform and digital payments infrastructure provider e-Finance is pulling the trigger on its sale this fall. EGX chairman Mohamed Farid has telegraphed that the pipeline is deep.

^^ We’ll more on AUF’s IPO in tomorrow’s edition of EnterpriseAM.

#2- Egypt inched up slightly in Bloomberg’s Covid Resilience Ranking to #36 from the 53 countries included, compared to standing at #39 in August. The news comes as government officials continue to suggest we’ll hit the peak of the pandemic’s fourth wave toward the end of October.

HAPPENING NOW- Major European indexes are firmly in the red this afternoon from Paris and Frankfurt to London and the Stoxx600. Futures suggest Wall Street will follow suit later this afternoon at the opening bell. Here at home, the benchmark EGX30 closed the day down 0.5%. Trading was light, with total turnover for the day down about a quarter from the trailing 90-day average. The selloff is providing the only glimmer of excitement on what is so far a very quiet news day in Egypt and abroad.

ALSO- Brent crude breached the USD 80 / barrel barrier for the first time in three years, building on a performance that saw it test that limit yesterday.

Why should you care if you’re not in the hydrocarbons business? The Financial Times thinks this is “the clearest signs yet that the world is heading into a global energy crunch likely to weigh on economic growth.” Prices are skyrocketing in Europe for everything from natural gas to coal and hydropower, thanks in large part to supply constraints heading into winter.

Things are getting nasty in the UK, where Boris Johnson’s government has put the army on standby after consumers drained filling stations of petrol. Officials say that supply to petrol stations is improving, but that has so far done little to reduce lineups for the pumps.

Wait — it could get worse. We can all starve, warns Bloomberg, writing that global commodities markets are being upended after crops in Brazil have been “scorched, frozen and then dried out by the worst drought in a century.” Brazil accounts for 75% of global orange exports, 54% of soy exports, 50% of sugar, 32% of coffee and 22% of worldwide corn exports.

Throw in a global shortage of tennis balls and it’s enough to make you worry that, indeed, Winter Is Coming.

LATER TODAY- Fed boss Jay Powell will speak at the Senate Banking Committee in Washington at 6pm today. Expect inflation to be very high on the agenda.

CLOSER TO HOME- Where in the world is Jake Sullivan? Axios reported last week that the White House national security advisor was due in Cairo this week as part of a Mideast tour that would also take him to Saudi Arabia and the UAE. Sullivan was scheduled to meet yesterday with Saudi Crown Prince Mohamed bin Salman. A White House statement out yesterday confirmed only that Sullivan “will travel to the Middle East, including Saudi Arabia and the United Arab Emirates,” but made no mention of a stop in Cairo.

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

• As of today, university students can get jabbed within 24 hours of making an appointment to receive a covid-19 vaccine. The news comes as the state rolls out walk-in vaccination clinics nationwide and prepares to launch a digital proof of vaccination status.
• State-owned banks launch EGP 1 bn+ fintech fund: Several state-owned banks will next month join forces to launch a fund to invest in fintech startups.
• Flat6Labs raises USD 7 mn in second close for Tunisia fund: Flat6Labs announced the second close for its Tunisia-based Anava Seed Fund, during which it raised USD 7 mn, pushing the fund’s total commitments to USD 10 mn.

THE BIG STORY ABROAD- Selling pressure in global equities markets, the prospect of a global energy crisis and worries about how the Fed will unwind its stimulus program still dominate the front pages of the global business press on an otherwise quiet afternoon.

First, we all wanted to do corporate leasing. Now, everybody wants to be a BNPL player. The latest entrant to the buy-now, pay-later space is none other than Mastercard, which is launching Mastercard Installments in the US, UK and Australia in a space that “has become a battleground between banks and fintech” players. CNBC has the story. Nearly 15% of online shoppers in the west have used BNPL services according to data from Pymts. Here in Egypt, the space is being hotly contested by players ranging from banks to EFG Hermes’ valU as a sensible approach to regulation and legislation at both the CBE and the Financial Regulatory Authority have helped create a revolution in financial inclusion.

Let the new Seychelles help you hide from the tax man… The European Union is set to rehabilitate the country alongside Dominica and Anguilla by removing them next week from a list of blacklisted tax havens. Panama has apparently failed in its bid to also get off the naughty list, Reuters reports.

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???? CIRCLE YOUR CALENDAR-

Today is the deadline to register for the AUC Business School’s Private Equity Diploma.

Winter retail opening hours in effect from Thursday: Shops and malls will close one hour earlier at 10pm (11pm on Thursdays, Fridays and national holidays) while cafes and restaurants will shutter at midnight rather than 1am. As during the summer, essential services such as grocery stories, supermarkets and pharmacies are exempt from the rules and can open and close their doors when they want.

Conference season continues this week:

• ITIDA’s DevOpsDays Cairo 2021, takes place tomorrow, 29 September.
• The Cairo International Fair opens on Thursday, 30 September at the Cairo International Conference Center. It runs through 8 October.
• The Egypt Projects 2021 construction expo also opens on Thursday at the Egypt International Exhibition Center and wraps on Saturday, 2 October.
• Dubai’s Expo 2020 opens on Friday, 1 October. The event, which takes place somewhere on the planet once every five years, runs for six months and will be open seven days a week. You can learn more here.

PSA #1- Next week is a short work week. You can expect to have a three-day weekend 7-9 October in observance of Armed Forces Day, which is on 6 October. Folks whose workdays are tied to banks and the market can expect confirmation from the Central Bank of Egypt and EGX early next week.

PSA #2- We’re probably also looking at a long weekend starting Thursday, 21 October in observance of the Prophet’s Birthday, which is formally Monday, 18 October.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

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☀️ TOMORROW’S WEATHER- The weather will be a little bit warmer in the next two days, with the mercury maxing out tomorrow at 34°C and dropping to 22°C overnight.

Hedge funds and private equity hope to score with football investments: While jersey-clad fans watch their favorite teams run across the field, the financial world calculates how profitable this match will be for them, writes Bloomberg. Investors have piled into football clubs in past years, from funds in the US to ultra-high-net-worth individuals and sovereign wealth funds in the Middle East — despite football’s often ugly business model. “It is very volatile, you can be relegated, don’t know how well a specific player you’ve bought will perform and the value of the assets is very difficult to assess,” said Nicolas Blanc, founder of Sport Value.

What’s the game plan? With the various sizes and geographies of football clubs worldwide, investors have gotten creative with how to monetize the group of athletes. Some chose to invest in smaller clubs, such as Brugge, which sometimes play in major leagues or sell players to bigger clubs. Others are targeting big clubs in financial crisis, such as Internazionale Milano, with agreements that will see them either make a profit or take over the team. Meanwhile, others have taken the advice to diversify the games they play, with Blanc recommending the approach taken by City Football Group, which has a portfolio of clubs of different sizes and countries. Finally, some investors take on the bull from its horns and choose to buy into a league. That’s not to say that it’s an easy move — just take CVC who has been in talks for years to acquire 10% of Serie A’s new media unit.

BTC miners are targeting partnerships with nuclear power plants — what could possibly go wrong? As nuclear power plants struggle with competition from cheaper resources, BTC miners are saying they could help stabilize the nuclear industry. Energy firms Talen Energy, Oklo, and Energy Harbor Corp have all recently embarked on partnerships with BTC miners amid a backlash from environmentalists who criticize the growing use of fossil-fuel by the industry. The Wall Street Journal has a deep dive.

There’s hope for cancer patients that new types of targeted therapies will help an increasing number of them avoid chemotherapy. We’re not suggesting you plan your medical care based on a New York Times article, but being educated enough to help participate in decisionmaking about your own health? Kind of priceless.

** Need a break? May we suggest the latest teaser for Stranger Things season four, which is set to make its debut in 2022 (watch, runtime: 1:35).

Soft-spoken former head designer at Apple, Jony Ive, is helping Ferrari build its first electric vehicle: Ive’s company, LoveFrom, has reportedly entered a “long-term, multiyear collaboration” with Exor group, Ferrari’s largest shareholder, to bring the Italian carmaker’s first fully electric vehicle to market by 2025, the FT reports. Jony Ive helped bring the Mac, iPod and iPhone to life during his 27-year tenure at the company between 1992 and 2019. He’s also the man with the hypnotizing voice from those dreamlike product introductions Apple ran in the last two decades.

Meanwhile, Chinese automaker Geely is getting into the smartphone business after Eric Li-founded Hubei Xingji Shidai Technology signed a strategic cooperation agreement with Wuhan Economic and and Technological Development Zone to make mobile phones, according to CNBC. The company is looking to go head to head in the high-end smartphone market, positioning its new product as an Apple, Samsung and Xiaomi competitor. The move comes as part of what executive Eric Li says is a trend in creating “more convenient, smarter, and seamlessly connected multi-screen experiences.”

Instagram’s kid version has been shelved temporarily so that the platform can “listen to concerns” from parents, experts and policymakers and do more to demonstrate the value of a version focused on minors, according to a statement (pdf) from Instagram. The decision comes after a Wall Street Journal piece found that Instagram is harmful for a sizable percentage of young users. For example, one in three teenage girls said that the platform amplifies their body-image concerns.

Instagram brushed off the allegations, saying that in 11 out of 12 issues surveyed about such as anxiety, loneliness, sadness, and eating problems, teenage girls said that Instagram helped make the matter better, not worse.

What even is “Instagram Kids”? Facebook was planning on rolling out a children’s version of Instagram with no advertising — and promise parents can monitor their kids’ activity on the platform. It was initially intended for children between the ages of 10 and 12, Instagram head Adam Mosseri said.

A hearing on the subject will take place in the US Senate later this week, also prompted by the WSJ series, headlined The Facebook Files.

Even Microsoft’s Satya Nadella can’t get his head around TikTok, with the CEO commenting that his company’s failed takeover bid was “the strangest thing I’ve ever sort of worked on,” according to CNBC. Nadella did not comment on whether Microsoft was still eyeing the video app, but gave a salute to its technical design and called it an “interesting product.” Last year’s potential acquisition was spurred by former President Donald Trump threatening to ban the app unless parent company ByteDance found a US buyer. Afraid of losing a huge market share of users, TikTok began to sift through cloud providers that could also offer security services, with Oracle and Microsoft being top candidates. The whole shebang was eventually abandoned after the Biden administration revoked Trump’s order. ByteDance is now looking closer to home, heading toward a Hong Kong IPO despite Beijing’s escalating crackdown on its tech industry.

???? ON THE TUBE TONIGHT-

(all times CLT)

Netflix’s new crime docuseries takes you into the heart of a feud with the Italian mafia: Vendetta tells the story of Telejato, a tiny, local Sicilian television station fronted by Pino Maniaci, who brashly took virulently anti-mafia stance on TV. His show grew in popularity and Maniaci never shied away from exposing alleged mafiosi by name — and added some colorful language to boot. His antics soon brought the full force of the mafia down on him, with death threats and torched cars becoming the norm. For the first few episodes, Maniaci seems like the ultimate icon in the pursuit of justice, but Vendetta presents a dramatic twist that makes viewers question both his integrity and motivation. The Guardian is out with a review.

⚽ Eight matches will kick off the UEFA Champions League tonight: At 6:45 pm, it's Inter Milan against Shakhtar Donetsk, while Ajax kick off against Beşiktaş. At 9 pm, Real Madrid take on Sheriff, Milan will be up against Atletico Madrid, Dortmund will face Sporting Lisbon, PSG will go up against Man City, RB Leipzig kick off against Club Brugge, and last but definitely not least, Liverpool face Porto.

????EAT THIS TONIGHT-

Zamalek’s recently opened La Terrace promises good food and great views: Located in The President Hotel, the restaurant has an earthy aesthetic full of wood and green plants, drawing inspiration from the gorgeous Zamalek trees below. It’s a great place to have brunch with friends or family in the airy atmosphere with all the eggs, salmon, and sausage essentials present on the menu. We love their salad combinations, such as their warm goat cheese, walnuts, and honey bowl as well as their apple, broccoli, and raisins salad. For main courses, try out their shrimp pesto pasta or their buttery chicken masala. Finally, it isn’t a full meal without a dessert, and La Terrace’s cranberry pancakes offer a perfect ending.

???? OUT AND ABOUT-

(all times CLT)

Jazz band The Sinatras will be playing tonight at Room Art Space and Cafe in New Cairo at 9 pm, featuring guest vocalist Hana Abaza, who will be performing a tribute to Frank Sinatra, Billie Holiday, Ella Fitzgerald and more jazz classics.

El Sawy Culturewheel in Zamalek will be hosting a musical concert performed by Creative Band at 7 pm.

Safar Khan Art Gallery in Zamalek is kicking off an exhibition titled Charisma today, featuring Kinda Adly, alongside debutantes Tasneem El Mashad and Khaled Abdo. The exhibition will run through 17 October.

???? UNDER THE LAMPLIGHT-

How will AI change our lives by 2041? The book, aptly titled AI 2041, offers 10 visions of a future that will increasingly be intertwined with advanced technologies including artificial intelligence. AI has the ability to help generate wealth, revolutionize healthcare and education, and provide new and innovative entertainment and communication. Co-authors Kai-Fu Lee and Chen Qiufan explore these possibilities through narrative-style short stories that each take place in a different place and context. From a teenage girl in Mumbai rebelling when AI data gets in the way of romance to a rogue scientist in Munich who uses quantum computing, computer vision and other AI technologies in a revenge plot that imperils the world, AI 2041 is a creative snapshot of the future that will question whether humankind will remain the mastermind behind their destiny.

OUR ANALYST OF THE WEEK- Lina Hesham, investment analyst at Azimut Egypt Asset Management (Linkedin).

My name is Lina Hesham and I’ve been at Azimut Capital since the start of 2020. This is what I wanted to do since college and it’s a series of fortunate events that brought me here. I studied at Cairo University’s Georgia State University joint program and a professor of mine, Hussein Atta, was the one who made me fall in love with the job of analyst. He really directed me on what I needed to do to get there. I started off as a graduate trainee at the National Bank of Abu Dhabi and then came closer to the field as a financial data analyst at Mubasher International. I then moved to Fawry and then Naeem Holding for a few years before landing my position as a buy-side analyst at Azimut.

Working on the buy-side during the pandemic was challenging, but exciting. Things were changing at such a fast pace and the full force of the lockdown really came down on the markets. We always had to stay on top of everything, but here we are, somewhat on the other side of it all.

I cover healthcare, F&B, and petrochemicals. It’s a very diverse mix and it really gives you an overview of everything going on. It also ensures that the job is never boring — one day you’re working on an oil company and the next on manufacturing. The petrochem sector is my favorite though as there are so many global and local dynamics to keep in mind.

The best part of my job is the rush you get when you make a correct call. At Azimut we always clap for each other and have a mini-party for the person when their judgement turns out correct [laughs].

The worst part of my job is that you can’t disconnect. Everything comes with a price, but it can be a bit hard when you feel that even if you travel to the ends of the Earth, it’s essential to have a cellular connection. It’s also very hard to explain my job to my friends and family, so I usually just end up saying I work in the stock market [laughs].

My theory of investment is to observe what the focus of the state is on. If there’s a government initiative in a sector, that usually causes a big push for firms on the EGX. The same goes for global trends as well. For example, if commodity prices are rising globally, there’s a big chance they’ll grow here as well.

I always like to put things into context when it comes to looking at firms. I need to understand the industry’s demand, supply, big players, competition, red tape, and growth rate to assess if it’s maturing. Then I look at the individual firm as a part of the overall picture and one of the important factors that comes into play at this point is the management as they are in charge of capturing potential growth in the sector.

It’s unclear whether the EGX30 will close in the green or red this year. News keeps shaking the market from the capital gains tax to GERD. That isn’t to say that there isn’t major improvement compared to last year, but it can go both ways given the many uncontrolled variables in the mix.

I think 2022 could be the year of Egypt. Once the E-Finance IPO comes through, it could open the door for more companies to list. There are also a lot of indicators that we’re looking at that have us feeling optimistic. GDP growth rates so far are really positive and many firms reported really strong results so far this year. Meanwhile, tourism is recovering steadily which helps other sectors as well such as F&B who will have a major customer for their products. LNG prices are also going up which Egypt could capitalize on in the balance of payments and initiatives such as the export rebate program are taking off.

The last great thing I watched was Legally Blonde. It’s such a good film and I’ll probably watch part two after I finish this call [laughs]. However, Friends is my go-to almost every day.

I’m currently reading Fooled by Randomness by Nassim Nicholas Taleb after it was recommended to me by a friend.

I like to practice kickboxing for fun. It’s definitely my thing as I get to relieve all my stress into the sandbag. I always leave the class energized and pumped. Otherwise, I’m very into the Netflix and just chilling out.

MARKET ROUNDUP-

The EGX30 fell 0.5% at today’s close on turnover of EGP 1.2 bn (24.5% below the 90-day average). Local investors were net sellers. The index is down 3.7% YTD.

In the green: Abou Kir Fertilizers (+2.7%), Ezz Steel (+2.6%) and GB Auto (+2.5%).

In the red: MM Group (-3.4%), Fawry (-3.1%) and Cleopatra Hospitals (-3.0%).

14-30 September (Tuesday-Thursday): 76th session of the UN General Assembly, New York.

29 September (Wednesday): DevOpsDays Cairo 2021 is being organized by ITIDA and the Software Engineering Competence Center in cooperation with DXC Technology, IBM Egypt and Orange Labs.

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

30 September-8 October (Thursday-Friday): The Cairo International Fair, Cairo International Conference Center, Cairo, Egypt.

30 September (Thursday): Winter opening hours for shops and restaurants begins.

30 September: Closing of 2021’s first oil and gas tender in the Gulf of Suez, Western Desert, and the Mediterranean.

30 September (Thursday): First tranche of overdue subsidy payouts will be handed to eligible exporters.

30 September (Thursday): Direct flights between Egypt and three Libyan airports resume.

October: Romanian President Klaus Iohannis could visit Egypt in mid this month to discuss ways to boost tourism cooperation between the two countries.

1 October (Friday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

1 October (Friday): Expo 2020 Dubai opens.

1 October (Friday): Deadline for state-owned companies and government agencies to sign up to e-invoicing platform.

2 October (Saturday): House returns from recess; new legislative session begins.

5 October (Tuesday): Senate returns from recess; new legislative session begins.

6 October (Wednesday): Armed Forces Day.

7 October (Thursday): National holiday in observance of Armed Forces Day.

9 October (Saturday): Public schools begin 2021-2022 academic year

11-17 October (Monday-Sunday): IMF + World Bank Annual Meetings.

12-14 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

24-28 October (Sunday-Thursday) Cairo Water Week, Cairo, Egypt.

27-28 October (Wednesday-Thursday) Intelligent Cities Exhibition & Conference, Royal Maxim Palace Kempinski, Cairo, Egypt.

28 October (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

28 October (Thursday): Second tranche of overdue subsidy payouts will be handed to eligible exporters.

30 October – 4 November (Saturday-Thursday): The first edition of Race The Legends, Egypt.

November: The French-Egyptian Business Forum is set to take place in the Suez Canal Economic Zone.

November: Egypt will host another round of talks to reach a potential Egyptian-Eurasian trade agreement, which can significantly contribute to increasing the volume of Egyptian exports to the Russia-led bloc that includes Armenia, Belarus, Kazakhstan and Kyrgyzstan.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

2-3 November (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

16-17 November (Tuesday-Wednesday): Africa fintech summit, Cairo.

26 November-5 December (Friday-Sunday): The 43rd Cairo International Film Festival.

29 November-2 December (Monday-Thursday): Egypt Defense Expo, Egypt International Exhibition Centre.

7-8 December (Tuesday-Wednesday): North Africa Trade Finance Summit.

8-10 December (Wednesday-Thursday): Global Forum for Higher Education and Scientific Research (GFHS), Cairo, Egypt.

12-14 December (Sunday-Tuesday): Food Africa Cairo trade exhibition, Egypt International Exhibition Center, Cairo, Egypt.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

14-19 December (Tuesday-Sunday): The Cairo International Festival for Experimental Theater.

14-15 December (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

15 December (Wednesday): Deadline for joint stock companies and investment companies in Cairo to join e-invoicing platform.

16 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

22-24 April 2022: World Bank-IMF spring meeting, Washington D.C.

May 2022: Investment in Logistics Conference, Cairo, Egypt

16 June 2022 (Thursday): End of 2021-2022 academic year for public schools

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.