Sunday, 9 January 2022

PM — 2021 was a boom year for global M&A

TL;DR

🔎 WHAT WE’RE TRACKING TONIGHT

Good afternoon, ladies and gents, and welcome to a relatively calm Sunday afternoon. We may have a full five working days this week, but judging by the volume of out-of-office replies in our inbox, many of you aren’t out of holiday mode just yet.

THE BIG STORY TODAY-

Nafeza is coming to air freight: The Customs Authority is rolling out a three-month trial period for the Advance Cargo Information (ACI) on air freight, Al Shorouk reports. The trial means that businesses using air freight to import goods will be required to file shipping documents and cargo data digitally via ACI and register on the Finance Ministry’s digital customs system Nafeza. Enterprise reached out to a source familiar with the matter, who confirmed the report.

^^ We’ll have more on these stories in tomorrow’s edition of EnterpriseAM.

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

  • Fintech, consider yourself regulated: Legislation to regulate the fintech industry received final approval from the House of Representatives on Wednesday.
  • The Finance Ministry is penciling in 5.7% growth for its FY2022-2023 state budget, along with a 6.1% budget deficit and 2% primary surplus, Finance Minister Mohamed Maait said.
  • Get ready for Sovereign Sukuk Act exec regs: The government is looking to finalize the executive regulations of the Sovereign Sukuk Act by the end of the month, setting the stage for the country’s c.USD 2 bn maiden issuance before the end of the fiscal year in June, said Mohamed Hegazy, head of the Finance Ministry’s debt unit.

IN MEMORIAM- Egypt’s first woman judge passes away: Former vice president of the Supreme Constitutional Court and Egypt’s first woman judge Tahani El Gibali passed away at the age of 72 due to complications from covid-19, Youm7 reports. El Gebali took on her history-making judiciary role in 2003, and is remembered as the only woman to have held such a high post in our judiciary.

THE BIG STORY ABROAD- It’s covid as far as the eye can see: Bloomberg is looking at the logistical hurdles and public perception issues that are slowing down vaccination rates in developing nations. Meanwhile, the UK wants to cut down on isolation periods in a bid to ease workforce pressure, Reuters reports, as “omicron absenteeism” from employees’ isolation could cost the UK to forego some 8.8% of its GDP in January and February.

This comes as we’re now learning two new names: Deltacron and flurona. Cypriot scientists have identified 25 cases of omicron and delta co-infections, the result of a mutation that combines both strains that is being called deltacron, reports Bloomberg. Researchers have sent their findings about the strain to GISAID, an international database for tracking viruses, but it is still not clear if the strain is more contagious or pathological than other strains. Meanwhile, there’s a growing trend of people contracting the common cold and covid-19 at the same time or back to back, a case now dubbed flurona, due to the spread of the infectious omicron variant, according to Bloomberg. People with flurona have a higher threat of mortality and health complications, a study by the University of Wisconsin found.

FOR TOMORROW-

Inflation figures for December are due out tomorrow. Annual urban inflation slowed for the second month running in November and dipped to its lowest since July as pressure on food prices continued to ease, but some analysts have flagged a potential acceleration in inflation figures. Inflation will be a key metric to watch over the next several months, particularly for the Central Bank of Egypt as it makes interest rate decisions. There are also suggestions that global commodity prices could have knock-on effects on domestic inflation. Global food prices soared 28% last year, reaching their highest level in a decade, driven by poor weather, rising commodities prices and supply chain disruption, according to figures from the UN Food and Agriculture Organization.

The World Youth Forum kicks off in Sharm El Sheikh tomorrow and runs until Thursday, 13 January.

🗓 CIRCLE YOUR CALENDAR-

SODIC shareholders will vote on the company’s new board of directors at an extraordinary general meeting on Sunday, 16 January. The formation of the new board comes after an Emirati consortium of real estate giant Aldar Properties and Abu Dhabi sovereign wealth fund ADQ in December acquired 85.5% of SODIC in an allcash, EGP 6.1 bn transaction.

Egyptians expats stranded in Morocco following border closures will be able to come home on Wednesday, 19 January on a flight operated by national flag carrier EgyptAir from Casablanca to Cairo, the Egyptian Embassy in Morocco said in a statement. Moroccan authorities have twice extended the suspension of all passenger flights in and out of the country first introduced at the end of November amid the emergence of omicron, with the flight ban now set to last until at least the end of January.

First interest day of 2022 next month: The Central Bank of Egypt (CBE)’s monetary policy committee will hold its first policy meeting of 2022 on Thursday, 3 February.

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

☀️ TOMORROW’S WEATHER- It’s getting cold again, with the mercury forecasted to fall to 17°C during the day tomorrow and a brisk 9°C at night, our favorite weather app tells us.

🚙 FOR YOUR COMMUTE

National star and Liverpool forward Mo Salah is in the running to be crowned the Best FIFA Men's Player: Salah has been shortlisted for the award, along with 2020 laureate Bayern Munich striker Robert Lewandowski and Paris St Germain forward Lionel Messi, FIFA announced over the weekend. Last week, Salah was voted the Premier League player of the year in a BBC poll.

Djokovic is really earning his “Novax” nickname Down Under: Tennis world number one Novak Djokovic — who has been held in quarantine at “a modest hotel” in Australia since last week — is arguing that he received medical exemption from vaccination as he had recently been infected with covid-19, according to Reuters. The Serbian athlete was heading to the Australian Open to defend his title (and earn his 21st Grand Slam) but was stopped at the border and his visa was canceled because he has not been vaccinated. Border control rejected his medical exemption. Djokovic has been a vocal opponent of vaccine mandates, causing tensions between Australia and Serbia, in addition to creating a battleground for pro and anti-vaxxers.

Greenflation: Sustainability may come at the cost of rising inflation: The transition to a green economy could lead to rising energy prices in Europe, where an energy shortage has already pushed up prices, and may force the European Central Bank (ECB) to cut back its stimulus program faster than planned, senior ECB executive Isabel Schnabel told the Financial Times. The ECB said it would keep its ultra-loose monetary policy for at least another year, based on projections that energy prices would fall, but the move away from fossil fuels could derail that, and force the bank to rethink its position — especially after soaring energy prices pushed eurozone inflation to a record high of 5% in December.

PayPal is looking to launch its own stablecoin as it eyes the crypto market, reports Bloomberg. The company’s experiment with stablecoin, PayPal Coin — the product of a recent hackathon in PayPal's blockchain, crypto and digital currencies division — will likely be backed by the USD. Stablecoins, which are cryptocurrencies backed (and priced) against the value of existing currencies or commodities, have drawn recent interest from tech giant Facebook / Meta Platforms and financial services network Visa. PayPal made its first foray into crypto when it launched its crypto checkout service in March of last year, which allows US users to pay online merchants using crypto, converting cryptos into fiat currencies.

The latest weight loss trend: Just not trying: A growing number of nutritionists are advocating an end to diets, and focusing on other health aspects such as mental wellbeing, sleep, and endurance, the Wall Street Journal reports. The anti-diet movement is driven by an evolving definition of what it means to be healthy, as well as the latest scientific research on diets and health — for example, yo-yo dieting has been linked to an increased risk of heart attacks. Most doctors emphasize the health benefits of staying within a specific weight range, but anti-diet proponents want people to ditch the latest fad diets and get more in touch with their natural hunger cues, calling for a focus on self-care, rather than self-control, when it comes to nutrition and exercise.

👌 ENTERPRISE RECOMMENDS

The Power of the Dog is Netflix’s ticket to the Oscars + Afcon kicks off today + a mental health guide to keep around

📺 ON THE TUBE TONIGHT-

(all times CLT)

The cowboy western expected to help Netflix bag some Oscars: Set in 1925 Montana, on the ranch of the bachelor Burbank brothers, The Power of the Dog is both mysterious and menacing, writes The Guardian. The two brothers, Phil (Benedict Cumberbatch) and George (Jesse Plemons), get along pretty well until George decides to marry widow Rose Gordon (a finely wrought Kirsten Dunst). Phil is a menacing bully to both Rose and her son Peter, causing tension within the house and unveiling a psychodrama aspect to the film. The constant taunting drives Rose to depression and it is only then that Phil warms up to Peter and takes on a mentor-like role in the boy’s life that is left somewhat ambiguous in its motives. The film is expected to get a nod for the fantastic directing by Jane Campion who creates the movie with “artistry and command.”

Afcon kicks off later today with a match between Cameroon and Burkina Faso at 6pm followed by Ethiopia and Cape Verde at 9pm. Egypt will play its first match on Tuesday against Nigeria.

La Liga has four matches on: Rayo Vallecano is currently on the field against Real Betis, while Sevilla and Getafe will compete at 5:15pm. Later at 7:30pm, Alaves will face Athletic Club and Osasuna will face Cadiz.

Serie A: Venezia and Milan are finishing up their match as we dispatch, with the score at 3-0 in favor of Milan. Meanwhile, Empoli and Sassuolo just hit the field and Napoli and Sampdoria are due to pla at 5:30pm. In a highly-anticipated match, Roma and Juventus will compete at 7:30pm, at the same time as Genoa and Spezia.

🍤 EAT THIS TONIGHT-

Seafood lovers need to try out Catch 5: Egyptians can appreciate the importance of baladi bread when it comes to a seafood meal and New Cairo’s Catch 5 delivers on that front, with all their sandwiches coming in the soft homemade bread. If you’re expecting your grandmother’s shrimp seasoning, you’ll be sadly mistaken as the new eatery adds a twist to its seafood, blending Egyptian and Asian spices. Their menu includes fried shrimp, fish, and calamari with ginger and wasabi, black radish, sweet togarashi, and charred carrots. There’s also the option of getting their mixed fried box which gets you a bit of everything — we recommend trying out some of their sauces with this such as their wasabi green tahini or their togarashi baba ghannoug.

🎤 OUT AND ABOUT-

(all times CLT)

Motion Art gallery is hosting Amani Moussa’s solo exhibition Displacement, which explores the complexity of Cairo’s urban planning as it changed over the years.

Meanwhile, Mashrabia Gallery has on Alexandria Blues by Amre Heiba, which uses depictions of abandoned objects and spaces to reflect on human existence.

Dance to latin jazz thanks to the performance ‘A Night in Havana ft. Cocoonat Cairo Jazz Club tonight at 9pm.

💡 UNDER THE LAMPLIGHT-

Your guide to mental health: Why Has Nobody Told Me This Before? by Dr Julie Smith divulges skills therapists teach their patients to overcome day-to-day mental health challenges. The book covers everything from managing anxiety and finding motivation to building self-confidence and forgiving yourself. Smith opted to write each issue in short, bite-sized entries to allow readers to jump to the section they need quickly while in the midst of the situation. Smith gained popularity on social media during the pandemic, putting into words and explaining why people were feeling the way they were feeling. Her biggest strength, however, is giving simple methods to make people feel more resilient and in control of their lives.

🌊 GO WITH THE FLOW

Porto Group rebrands to Arab Developers Holding

MARKET NEWS-

Porto Group is changing its name to Arab Developers Holding after receiving board approval, according to a bourse disclosure (pdf) today.

MARKET ROUNDUP-

The EGX30 fell 0.5% at today’s close on turnover of EGP 484 mn (61.3% below the 90-day average). Regional investors were net buyers. The index is up 0.3% YTD.

In the green: Raya Holding (+6.2%), Aspire Capital (+1.0%) and Eastern Company (+1.0%).

In the red: Palm Hills Development (-2.8%), Rameda (-2.7%) and Abu Qir Fertilizers (-2.6%).

📈 MACRO PICTURE

2021 was a boom year for global M&A: A record M&A rally saw agreements worth USD 5.8 tn signed throughout the year, growing 64% y-o-y and marking the fastest pace of growth for M&As since the mid-1990s, the Financial Times reports, citing Refinitiv data.

Underpinning the rally: Booming markets, widespread stimulus measures, and the growing popularity of SPACs. A total of 334 SPAC agreements were announced for companies valued at a combined USD 597 bn, equivalent to 10% of the total figure by value, according to the salmon-colored paper. SPACs began to slow down towards the end of 2021 after being “overdone,” and will likely account for a much smaller percentage moving forward, JPMorgan’s global co-head of M&A told the FT.

The two biggest M&As of the year: The USD 132 bn merger of WarnerMedia and Discovery, which saw telecom operator AT&T spinning off WarnerMedia to create a USD 43 bn media giant with Discovery. Canadian Pacific Railway’s USD 31 bn acquisition of rival Kansas City Southern, which closed last month, led to the creation of the only single-line railway linking Canada, the United States and Mexico.

There were already signs of the boom earlier on in the year: In January, advisers signaled their expectations that the 2020 tech M&A boom would hold up in 2021, predicting enterprise technology companies with market values in the range of USD 20-100 bn to look at acquisitions. The forecast was fueled by surging M&A volumes in 2020, which hit a record USD 470 bn as surging tech stocks and central bank liquidity provoked a wave of market concentration. And by the end of 3Q2021, it was clear that the boom was materializing. Nearly USD 4 tn-worth of M&A agreements were reached by September, helped in part by a surge in agreements in August, which is typically a quiet month for M&A.

Egypt was no exception: M&A also had a strong year here at home, we noted in our year in review story. SPACs are widely expected to be a driver of further activity this year, after being recently introduced as a financial vehicle to the local market. At the moment, SWVL is attempting to speed up a SPAC agreement that could be completed in the coming weeks to beat Anghami in taking the title of the first firm to SPAC in MENA.

Could we see more of the same this year? Altogether, the expectation is that there will continue to be a flurry of M&A activity in 2022, despite anticipated interest rate hikes from the US Federal Reserve and rising company valuations potentially slowing down the pace. A Grant Thornton survey showed that more than two thirds of dealmakers and advisers expect M&A volumes to rise this year “despite challenges posed by regulations and the pandemic,” according to Reuters. Businesses are likely to bite the bullet on higher valuations “because they need to remain on the offense with the competition, they have access to record amounts of [liquidity], and they feel pressure from investors to raise their own valuations,” a separate KPMG survey of US business leaders signaled.

📆 CALENDAR

Early 2022: Results to be announced for the second round of the state’s gold and precious metals auction.

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

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

1H2022: e-Finance’s digital healthcare service platform, eHealth, will launch its services.

1H2022: The government will respond to private companies’ bids to build desalination plants.

1Q2022: Launch of the Egyptian Commodities Exchange.

1Q2022: Swvl acquisition of Viapool expected to close.

1Q2022: Waste collection startup Bekia plans to expand to the UAE and Saudi Arabia.

January: Sovereign Sukuk Act executive regulations expected to be finalized.

January: Tenth of Ramadan dry port tender to be launched.

1-15 January (Saturday-Saturday): Qualified Industrial Zones (QIZ) Joint Committee.

9 January – 6 February (Sunday-Sunday): 2021 Africa Cup of Nations, Cameroon.

10-13 January (Monday-Thursday): World Youth Forum, Sharm El Sheikh.

Second half of January: Egypt will host the Egyptian-Bahraini Joint Committee.

Second half of January: Regulations for installing EV charging stations will be published.

16 January (Sunday): SODIC shareholders will vote on the company’s new board of directors at an extraordinary general meeting.

17-19 January (Monday-Wednesday): World Future Energy Summit, Abu Dhabi.

20 January (Thursday): Kadmar Shipping’s new line transporting agricultural crops between Alexandria and Russia begins its operations.

23 January (Sunday): Deadline for Macro Pharma to IPO on the EGX.

25 January (Tuesday): The IMF will release its World Economic Outlook.

25 January (Tuesday): 25 January revolution anniversary / Police Day.

25-26 January (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 January (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

End of January: The Egyptian-Romanian business forum will take place with the aim of strengthening joint investment relations.

January-February 2022: Construction work on the Abu Qir metro upgrade will begin.

February: Hassan Allam Construction’s new construction firm established with Russia’s Titan-2 to handle construction work on the Dabaa nuclear power plant begins its operations.

February: Ghazl El Mahalla shares will begin trading on the EGX this month.

Mid-February: End of grace period to comply with new minimum wage for firms who sent in exemption requests.

3 February (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

3 February (Thursday): January PMI figures for Egypt, Saudi Arabia, and the UAE will be released.

4-20 February (Friday-Sunday): 2022 Winter Olympics, Beijing.

11 February (Friday): Deadline for Anghami SPAC merger.

11-13 February (Friday-Sunday) FIBA Intercontinental Cup, Cairo.

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

15 February (Tuesday): The Industrial Development Authority’s deadline for receiving offers from companies for licenses to manufacture steel products.

19 February (Saturday): Public universities begin the second term of the 2021-2022 academic year.

End of February: Lebanon to receive gas from Egypt via a pipeline crossing Jordan and Syria.

March: Rollout of the government financial management information system (GFMIS), a suite of electronic tools to automate the government’s financial management processes (pdf) that will replace the existing “closed” financial management system.

March: 4Q2021 earnings season.

March: Deadline for the World Health Organization’s intergovernmental negotiating body to meet to discuss binding treaty on future pandemic cooperation.

March: World Cup playoffs.

March: Target date for Saudi tech firm Brmaja to IPO on the EGX.

9-18 March (Wednesday-Friday): The 55th edition of the Cairo International Fair.

15-16 March (Tuesday-Wednesday): Federal Reserve interest rate meeting.

24 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

31 March (Thursday): Deadline for submitting tax returns for individual taxpayers.

31 March (Thursday): Supply Ministry expected to take final decision on bread subsidies by this date.

2 April (Saturday): First day of Ramadan (TBC).

3 April (Sunday): Bidding begins on the Industrial Development Authority’s license to manufacture tobacco products.

4 April (Monday): CDC Group will formally change its name to British International Investment.

22-24 April (Friday-Sunday): World Bank-IMF spring meeting, Washington D.C.

24 April (Sunday): Coptic Easter Sunday (holiday for Coptic Christians).

25 April (Monday): Sham El Nessim.

25 April (Monday): Sinai Liberation Day.

28 April (Thursday): National Holiday in observance of Sham El Nessim.

30 April (Saturday): Deadline for submitting corporate tax returns for companies whose financial year ends 31 December.

Late April – 15 May: 1Q2022 earnings season

May: Investment in Logistics Conference, Cairo, Egypt.

1 May (Sunday): Labor Day.

3-4 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

5 May (Thursday): National Holiday in observance of Labor Day.

2 May (Monday): Eid El Fitr (TBC).

19 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

14-15 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15-18 June (Wednesday-Saturday): St. Petersburg International Economic Forum (SPIEF), St. Petersburg.

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

23 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

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

30 June (Thursday): June 30 Revolution Day, national holiday.

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

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

July: A law governing ins. for seasonal contractors will come into effect.

1 July (Friday): FY 2022-2023 begins.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

30 July (Saturday): Islamic New Year.

Late July – 14 August: 2Q2022 earnings season.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

September: Egypt will display its first naval exhibition with the title Naval Power.

20-21 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday, national holiday.

18-20 October(Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

Late October – 14 November: 3Q2022 earnings season.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across Egypt.

**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 above between the actual holiday and its observance.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

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