EnterprisePM — Macro Group taps EFG Hermes to advise on IPO.

Good afternoon, wonderful people. We’ve made it through another workday together — one more to go and we slide into the weekend.

THE BIG STORY TODAY- The first-half IPO window may now be closed, but companies in the chute to go public are already looking to fall. Cosmeceutical giant Macro Group confirmed that it is working with EFG Hermes on its initial public offering on the EGX, expected as early as this fall. Meanwhile, shares of state-owned Egyptian Iron and Steel’s mining spinoff will be listed on EGX as of tomorrow. We have chapter and verse on both transactions in this afternoon’s Speed Round, below.

ALSO big today: Egyptian and Russian investigative teams have met to discuss and “exchange information” about the 2015 Metrojet crash in Sinai. The incident saw Moscow impose a ban on direct flights between Russia and the Red Sea that has so far lasted six years. The five-hour sitdown ended with no word on when travel between the two countries will resume, according to a statement issued yesterday by the Prosecutor General’s Office. President Abdel Fattah El Sisi agreed last month with Russian leader Vladimir Putin that flights would resume, but Russian Deputy Prime Minister Dmitry Chernyshenko has since suggested that a June date for the resumption of flights is uncertain.

HAPPENING NOW- US Secretary of State Antony Blinken arrived in Cairo today ahead of planned talks with President Abdel Fattah El Sisi and Foreign Minister Sameh Shoukry, the Associated Press reports. Blinken’s regional visit has already taken him to Jerusalem and Ramallah, which remain largely calm after Egypt brokered a ceasefire that brought an end to 11 days of Israeli attacks on Palestine. Blinken is also due today in Jordan. You can find Blinken’s latest update here.

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

• Egypt gets good marks from the IMF: Egypt expects to unlock the third and final USD 1.6 bn tranche of its USD 5.2 bn IMF standby loan after an IMF review found that we met all structural benchmarks under the agreement.
• Port roz on the way? KSA’s Red Sea Gateway Terminal (RSGT) has over USD 1.5 bn to invest in ports, and Egypt is on the short list.
• Has Ethiopia already started the second filling of GERD? Sudan says it has evidence to suggest that Ethiopia began the second filling of the Grand Ethiopian Renaissance Dam’s (GERD) reservoir at the beginning of May. Ethiopia denies.

???? CIRCLE YOUR CALENDAR-

The Gouna International Squash Open 2021 is ongoing and runs until Friday. Spectators have been allowed to watch the matches live and tickets are currently being sold for the semis and finals. You can also watch the matches live on PSA Squash YouTube page. The event is supported by our good friends at CIB. Two men’s and two women’s top half quarter final matches will be played today, while Egyptians Tarek Momen and Nouran Gohar have both made it to the semi finals which will kick off tomorrow.

Also for fans of racquet sports: The CIB PSA World Tour Finals will run on 22-27 June in Cairo.

Bibliotheca Alexandria is organizing a webinar tomorrow to discuss safekeeping artifacts and heritage. Headlined “Fighting treasure hunting from Africa for the Americas: Protecting the history of the drowning world,” it will feature University of Edinburgh’s Arturo Rey da Silva. You can tune in live at 2:30pm from the Alexandria Center for Hellenistic Studies’ Facebook page.

???? FOR YOUR COMMUTE-

WhatsApp could be suing India over regulations that would force the messaging app to break privacy protections, according to Reuters, citing unnamed Indian government officials. WhatsApp has nearly 400 mn users in India and messages have end-to-end encryption. Twitter has recently been the subject of a media crackdown after the platform refused to remove posts from government critics.

The European Commission will open a formal probe into Facebook’s Marketplace, with the organization claiming the feature shows anti-competitive practices as it is offered without charge, reports The Financial Times. This comes after European Union officials sent three rounds of questions to Facebook inquiring as to whether Marketplace is “distorting the classified ads business.” Facebook has previously taken the EU to court over their broad questions that allegedly invaded the privacy of employees. Meanwhile, the UK also has its eye on Mark Zuckerberg’s platform, having launched its own antitrust probe back in March that is expected to look at Marketplace as well as data usage in advertising.

Iran has banned cryptocurrency mining to avoid electricity blackouts ahead of peak demand season waiting around the corner, Bloomberg reports. Iran has become an especially attractive location for cryptocurrency mining in recent years–which by some estimates has indicated it is home to 4.5% of global mining–as economic sanctions have constrained access to much-needed foreign currency. The energy intensive process has also benefited from the country’s subsidized electricity prices, but with drought holding back Iran’s hydroelectric production this year and a peak demand season up ahead the country has decided to suspend mining activities until 22 September.

???? ON THE TUBE TONIGHT-

Zack Snyder's Army of the Dead paves the way for Netflix franchises. The film combines a handful of tried-and-true movie plots from zombies to a ragtag team of fighters and a heist. Army of the Dead follows Dave Bautista’s character Scott Ward and a team he’s put together to empty the vault of a Las Vegas casino during the zombie apocalypse. We won’t spoil the ending for you, but it's not a happy one as it paves the way for a sequel (or two). Netflix has already shot a prequel to the film titled Army of Thieves that’s up for release later this year, according to the Wall Street Journal. The streaming site has also begun production on an anime series Army of the Dead: Lost Vegas to be released next year, as well as a virtual reality game that will pop up in cities across the US. Netflix is trying to add more franchises to its belt in order to compete against WarnerMedia and Disney, whose successful franchises have allowed them to sell merchandise and open theme parks.

⚽ The Europa League final match between Villareal and Man United is on tonight at 9pm.

As for the Egyptian Premier League, National Bank of Egypt will play Smouha at 5pm while Ceramica Cleopatra will face off against Enppi.

???? UNDER THE LAMPLIGHT-

Jean Hanff Korelitz’s The Plot is a tale of deceit and betrayal. Washed up fiction writer and low-level professor Jake is going nowhere in life. When one of his students dies after showing him a novel he wrote, Jake decides to help himself to the plot and publishes it in his own name. The literary theft pushes him to stardom, but the fame threatens to be short-lived when Jake starts getting emails from an anonymous sender claiming that they’re on to him. The author blends suspense with complex characters the same way she did in her best-seller You Should Have Known, which later became the basis for the hit HBO series, The Undoing. Stephen King calls the book “remarkable” while the New York Times and Washington Post give it two thumbs up.

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???? TOMORROW’S WEATHER- We’re still bordering 40s, with expected daytime highs of 39°C tomorrow which will fall to 21°C at night, our favorite weather app tells us.

Cosmetics pharma giant Macro Group Pharma has reportedly tapped EFG Hermes to quarterback its planned IPO alongside Renaissance Capital, according to a report by Al Mal quoting founder and chairman Ahmed El Nayeb. Sources close to the transaction confirmed to Enterprise that EFG Hermes is involved in the IPO, but would say only that final roles have yet to be determined. CI Capital and Renaissance Capital had been splitting duties as lead coordinators and bookrunners when the transaction was first announced. CI Capital was unable to comment on the story as of dispatch.

Macro hasn’t yet made a final decision on the IPO timeline and is waiting for market conditions to improve before pulling the trigger, El Nayeb was quoted as saying. Macro had been expected to sell 45.8% — or 264.5 mn — of its shares at an indicative price range of EGP 5.30-6.15 apiece in a secondary sale on the EGX in April, but pushed the offering due to “the market’s capacity to absorb multiple offerings” at the time.

There’s been no change to the transaction size or structure, El Nayeb reportedly said today. The sale will see an exit from PE outfit Alta Semper, which owns a 33% in the company, while another majority shareholder, Kingsway Capital’s CHI Consumer, will sell down some of its 46.3% stake, he reportedly added. El Nayeb didn’t clarify if Alta Semper planned to make a full or partial exit.

Shares of state-owned Egyptian Iron and Steel’s mining spinoff — Iron and Steel for Mines and Quarries — will be listed on EGX at the end of tomorrow’s session after the EGX’s securities registration committee this morning greenlit the move, according to a bourse disclosure (pdf). Egyptian Iron and Steel’s five-working-day period to make a public disclosure to list ended today, after which the EGX will decide on a date to when trading on the new company’s shares will be beginning. The Financial Regulatory Authority (FRA) on Thursday gave the all-clear for the new company’s registration and trading on the EGX.

The new mining company is listing around 978 mn shares at EGP 0.2 a piece, giving it a market cap of EGP 195.4 mn. This will happen through a 1:1 stock split and a capital decrease, which should see Egyptian Iron and Steel’s share price reduced to EGP 1.8, reducing its market cap to EGP 1.76 bn from EGP 1.95 bn, according to a separate filing (pdf).

Background: Egyptian Iron and Steel announced earlier this year that it will spin off its mining operations under a two-year liquidation process that would see it sell its steel plant in Helwan as part of a government strategy to streamline the public sector. Public Enterprises Minister Hisham Tawfik previously said that the perennial lossmaker will have to sell off 6 mn sqm of its land assets to be able to pay off its EGP 9 bn in outstanding debts before liquidating.

The listing comes as Egyptian Iron and Steel reported EGP 724.1 mn in consolidated net losses in 9M2020-2021, compared to EGP 783.8 mn a year before, the company said in a statement (pdf). Revenues also fell almost 10% to end the July-to-March period at EGP 776.2 mn, down from EGP 859.4 mn in the same time last year.

OUR ANALYST OF THE WEEK- Mohamed Sobol, equity research analyst at Sigma Capital (Linkedin).

My name is Mohamed Sobol and my entry into the finance field was very coincidental. It’s a story of how a bad circumstance brought out a great result. During my stint at Ain Shams University, two of my classes were dropped in my graduating year and I had to go to a makeup class. During that makeup class, the professor was giving us questions from the CFA and I asked him about it. He explained the test and the career path to me and it suddenly just clicked that this is something that I might want to do. I called Nour Eldin Sherif and he managed to get me an internship at Mubasher and that was my start. I then moved to Shuaa where I had the pleasure of working with Amr Elalfy and he made sure to teach me everything he knew. I then moved to Sigma Capital and the amazing AbouBakr Emam took me on from there.

I now cover the education, healthcare, and F&B sectors in Egypt and working on all three of these sectors has helped my professional development a lot. We have a small team at Sigma and I also learned how to work the entire research process from start to finish.

The best part of my job is seeing my personality reflected in the work I do — whether it's writing, research, or analysis. Creativity really factors into the job and it's never a routine when you’re always talking to new companies and management teams.

The worst part is I can’t put down my work when I leave the office. Some things need to be done right away and you always need to be updated on the most recent news.

Work from home wasn’t great for me. I focus more at the office — when I’m away from my bed [laughs]. I think a balance would be ideal. Maybe divide jobs between physical and remote work on certain days or certain weeks.

My theory of investment is to look at fundamentals first and foremost. If I were to invest my own wealth, however, I’d try and put around 75% in companies with strong fundamentals and the rest I’d allocate to swing trading by looking at technical analysis.

I tend to look at potential positive catalysts before recommending stocks. The strong firms with good stories are well known, but it’s all about timing. I like to create scenarios and assess based on what the results could be. This needs a lot of creativity to come up with a feasible scenario and be able to communicate it to clients.

In the industries I cover, education was the most resilient in 2020. Schools were quick to transfer to online education and the demand was still there — understandably. We had thought healthcare would do well, but people opted out of going to hospitals due to lockdowns or fear of getting sick. F&B was on and off, some companies did better than others. Most companies managed to get their top line in check, but margins definitely took a hit. In 2021, I think healthcare will have the fastest recovery.

I don’t think 2021 will be the year of Egypt. The country itself is forecasted to grow this year and the next year, however, the growth rate isn’t always seen on ground. I think that there needs to be more initiatives for this growth to be more inclusive to more companies and employees. The stock market is also not doing great with the selloff from the foreigners, so I’m hoping that once they’re back we’ll rise to new levels.

If I had to cover another industry, I would go for non-banking financial services. I’ve been following the advent of fintech in the country and I find it very interesting. I think the biggest issue facing these companies is finding and retaining good talent, and it would be a new experience to see how that plays into my analysis.

The best things I’ve watched are Breaking Bad and Game of Thrones. The story and acting in both is amazing and I’m a huge fan.

The last great thing I’ve read is The Happiness Trap. It’s all about accepting things you can’t change and moving on in order to have the best life you can. My favorite book is The Subtle Art of Not Giving a F**K, which I think brings you to the same result [laughs].

When I’m not working I like to watch football. I’m a diehard Zamalek fan, much to the despair of my health. I also go to the gym or hang out at the sporting club. I love the culture of sporting clubs where you can go from one group to the other or just walk around.

MARKET ROUNDUP-

The EGX30 fell 1.5% at today’s close on turnover of EGP 1.36 bn (5.1% above the 90-day average). Local investors were net buyers. The index is down 4.4% YTD.

In the green: Orascom Financial Holding (+4.2%), Export Development Bank (+2.7%) and Pioneers Holding (+2.5%).

In the red: CIB (-3.2%), ElSewedy Electric (-2.3%) and Fawry (-2.3%).

As the pandemic forced work from home upon us all, people globally began to tune into office TV shows to get their fix of the cubicle drama, water cooler gossip, unlikely friendships, and of course, the office romance. “Watching actors hold meetings, stack shelves and make calls has triggered both relief and curiosity,” writes Emma Jacobs for a piece in the Financial Times. Workplaces have felt like a distant memory, a tale we’ll tell our grandchildren someday saying ‘in my day we had to physically be at the office everyday.’

The dramas and comedies on TV acted as a sort of reminder of office dynamics from hierarchies to HR. However, even before covid-19, office dramas have always been a hit from the 2005 classic The Office, to the droll life of bureaucrats in Parks and Recreations and Brooklyn 99, and the Egyptian series Al 3eyada. But 2020 and 2021 showed an all-time high demand for these shows, with The Office being the most watched show in the US, reeling in a total of 57.1 bn minutes, followed by Grey’s Anatomy with 39.4 bn minutes, according to Nielsen.

But beyond streaming services smelling a niche and getting us hooked, why are office shows just generally so addictive? Justin Spitzer, the producer of the US version of The Office and Superstore’s creator, believes it's tied into the fact that you can justifiably put a mismatched group of people in one space and force them to spend the day together. Especially when there’s a big chance they don’t like each other. Just like in real office spaces, different backgrounds, passions, and beliefs are sure to get in the way — all with the added bonus of being able to see each coworker’s own narrative play out during their off time, adds Jamie Demetriou, creator and co-writer of the office comedy Stath Lets Flats.

The workplace is a great place to explore the human condition: Office TV shows tend to skim the surface of the usual day-to-day tasks: calls, reports, boring meetings. Instead, they focus on interactions with each other and the business in general, explains Lucy Prebble, a writer for the ongoing HBO series Succession. “Work like this is really onlys interesting when there are character or relationship dynamics being played out underneath,” Prebble says.

Will we ever see covid-time work TV shows?: Some shows, like Superstore, have already shot seasons during the pandemic, depicting patrons wearing face masks, frozen Zoom calls, and social distancing. The show touches upon some pandemic-brought corporate bad talk, with a character saying “you gotta look at it from corporate’s perspective. They love money, and they don’t care if we die.” However, Superstore is one of the rare exceptions, with most shows filming new episodes that show life as it was before. That could change if the pandemic continues to overhaul our lives and the new normal sets in as something TV and cinema need to portray. Mickey Down, who co-created and co-wrote Industry, says workplace dramas created post-2020 can’t avoid the biggest shock to workplaces in 100 years, “you have to acknowledge it.”

How NFTs made plagiarism a business: The recent boom in NFTs — the unique digital vehicles that enable users to tokenize real world assets and are causing a ruckus in the art world — has been accompanied by another less welcome boom: Intellectual property theft. Since an NFT is non-duplicable, the process of trading them does not require an auction house or an authenticator as an intermediary. Nor, apparently, does it require the consent of the artist whose work is being digitally reproduced, which has led more and more artists to speak out about the content of their work being hijacked, digitized, and traded as an NFT without their knowledge, the Guardian writes.

How are artworks being stolen? A number of platforms allow you to easily tokenize images, websites and practically anything you can find online. Marblecards are a type of NFT that have been likened to “baseball cards for websites,” where users can turn urls into unique tradable cards, while Tokenized Tweets allows you to “archive your favorite social media memories as digital collectibles,” with an NFT of the first tweet ever written selling for as much as USD 2.9 mn.

From your favourite social media posts, to the best moments from the NBA, everything is seemingly tokenizable. This may not be a huge issue for someone whose tweets are being commodified, but it becomes particularly problematic for artists, particularly those producing digital art, whose livelihoods are dependent on being compensated for the media they are putting online. By reproducing their work as NFTs, traders are depriving this content’s creators of the right to decide how their work is used, and making financial gains off of trading these digital shadows of existing media.

Artists have been speaking out: Swedish illustrator Simon Stålenhag took to Twitter to decry the tokenization of his work into an NFT, while some who purchased crypto art were outraged to discover that the sellers were not the original creators of the media. Some artists are encouraging fellows to file copyright claims, while others have stood by scratching their heads at finding tokenized versions of their artworks for sale online without their consent. It’s still unclear where NFTs of artworks stand with regards to intellectual property law, and with regards to the terms and conditions of platforms they poach from (Twitter for example, prohibits the permanent archiving of tweets, but it is unclear whether, and how, this could apply to NFTs).

The sidelining of artists represents a real blow to their earning potential: The value of crypto art traded over the past year has soared from the mere thousands in mid 2020, to USD 12 mn in January 2021, to nearly USD 90 mn last month.

And the environmental cost of crypto-art is putting some creators off: Similar to the massive energy requirements of cryptocurrency mining (Bitcoin mining alone is estimated to generate around 37 mn tonnes of CO2 annually) the creation of NFTs is extremely energy intensive. Critics worry that the increasing popularity of NFTs will significantly up the carbon footprint of the art world. For perspective, one artist writes that her release of six relatively small crypto artworks in about 10 seconds consumed more electricity than their entire physical studio over the course of two years.

But some artists are working with the NFT format to enhance the value of their work: Christie’s made waves last week with their sale of a digital collage — along with an NFT to guarantee authenticity — by an artist known as Beeple for a whopping USD 69.6 mn, marking the first time a major auction house has sold a digital artwork, and making this the third highest price paid for an auctioned artwork by a living artist. In a surreal twist of events, an original artwork by Banksy was burned and destroyed, in order to drive up the price of its tokenized doppelganger which is now the only version of its physical referent in existence. The piece sold for USD 380k.

The art world is not the exclusive arena where NFTs can be useful, but it is the main area where their use is becoming problematic. Other popular uses in gaming and software licensing do not present the same issues, since the item being sold as an NFT is the thing of value itself (the upgrade in a game or the computer program for example) and not a mirror or a copy of something that exists and has value elsewhere. Whether NFT’s are a short-lived trend in the artworld, or a paradigm shift for curators and collectors, they are opening up a new frontier for intellectual property theft. If they persist, we can expect to be presented with complex questions as to who really “owns” an artwork in an era where a digital item’s blockchain is more a marker of its authenticity than the testimony of the artist who created it.

20-28 May (Thursday-Friday): Gouna International Squash Open 2021.

24-26 May (Monday-Wednesday): British Egyptian Business Association virtual healthcare week.

26 May (Wednesday): Final day for Africa-based startups to apply for the French government-sponsored AFD Digital Challenge (pdf).

27-29 May (Thursday-Saturday): Informa Markets’ Nextmove real estate exhibition, Cairo International Convention Center, Nasr City.

30 May (Sunday): Al Mal GTM is organizing the Portfolio Egypt conference under the theme ‘Growth under the weight of the pandemic.’

31 May (Monday): Egypt is hosting Trescon Global’s World AI Show with the support of ITIDA.

7 June (Monday): British Egyptian Business Association hosts an event featuring Oil Minister Tarek El Molla.

14 June (Monday): Egypt's Green Economy Forum.

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

17-20 June (Thursday-Sunday): The International Exhibition of Materials and Technologies for Finishing and Construction (Turnkey Expo), Cairo International Conference Center.

22-27 June (Tuesday-Sunday): The CIB PSA World Tour Finals for 2020-2021 will take place in Cairo.

24 June (Thursday): End of the 2020-2021 academic year (public schools).

26-29 June (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center, Cairo, Egypt.

30 June (Wednesday): The IMF will complete a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: National Book Fair.

July + August: Thanaweya Amma exams take place.

1 July: (Thursday): National holiday in observance of 30 June Revolution.

1 July (Thursday): Large taxpayers that have not yet signed on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

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

15 June (Saturday): EGX-listed will have to complete filing their financial disclosures for the period ended 31 March.

19 July (Monday): Arafat Day (national holiday).

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday).

23 July (Friday): Revolution Day (national holiday).

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

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

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

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.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

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

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.

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

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

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

29 November-2 December (Monday-Thursday): Egypt Defense Expo.

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

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.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

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

**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.