PM — Good news: Egypt is still at zero Omicron cases

It’s another Omicron-led news day, ladies and gentlemen. The new variant is still very much driving the conversation abroad on an otherwise quiet afternoon in global headlines.

No Omicron cases have been detected in Egypt so far, Health Ministry spokesperson Hossam Abdel Ghaffar said this morning in a phone-in to state TV (watch, runtime: 12:41). The government is tightening safety measures across airports, seaports and landports to reduce the chances of the new covid variant making its way into the country, Abdel Ghaffar said.

THE BIG STORY TODAY-

SODIC’s board nods to Aldar-ADQ’s offer: SODIC’s board of directors gave its nod to the UAE’s Aldar Properties and sovereign wealth fund ADQ’s offer to purchase at least 51% of the company’s shares at EGP 20, according to an EGX filing (pdf). The developer cited the “current global economic conditions and the effect of the covid-19 pandemic” as well as the consortium’s “economically strong” position as good enough reasons to go through with the transaction. The board’s blessing comes despite the Aldar-ADQ offer falling short of the EGP 23.42 share price SODIC’s independent financial advisor BDO had set in its fair value study, according to an EGX disclosure (pdf).

Shareholders have until next Tuesday, 7 December to respond to the ongoing mandatory tender offer.

HAPPENING NOW-

The Egypt Defense Expo (EDEX) kicked off this morning, after President Abdel Fattah El Sisi inaugurated the exhibition, according to an Ittihadiya statement. The event will run until this Thursday, 2 December. Some 400 international manufacturers and suppliers are set to showcase military equipment and defense technologies at New Cairo’s International Exhibition Center, with live firepower demonstrations planned for the five days.

Foreign Minister Sameh Shoukry is in Barcelona to attend the Regional Forum of the Union of the Mediterranean and the EU-Southern Neighborhood Ministerial Meeting, which are taking place back-to-back today, according to a Foreign Ministry statement.

What’s on the agenda? Shoukry is set to discuss with foreign ministers of 42 Mediterranean states the progress on priority areas agreed upon in last year’s forum, including environmental and climate action, sustainable and inclusive economic and human development, social inclusiveness and equality, digital transformation, and civil protection at the UFM Regional Forum. The ministerial meeting will focus on Egypt’s bilateral relations with European countries, including ramping up investments from Europe and exports to the continent.

The Creative Industry Summit continues today at the Nile Ritz-Carlton, running through Wednesday.

The Cairo International Film Festival continues its 10-day run after kicking off on Friday. The festival wraps next Sunday, 5 December.

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

• Pfizer jab coming for 12-15 year-olds: Egypt has authorized the use of the Pfizer-BioNTech covid vaccine for children aged 12-15, and kids as young as 12 can begin to register for the jab as of this Wednesday.
• Emirati port operator DP World will invest USD 25-35 mn in Ain Sokhna seaport over the next 2-3 years, which will be geared towards improving the logistics services at the port and increasing capacity at the newly-built second dock.
• House says ‘yea’ to more Khaleeji money: A multi-bn USD bank loan agreed between the government and a syndicate of international banks led by Emirates NBD and First Abu Dhabi Bank earned approval by the House of Representatives yesterday.

THE BIG STORY ABROAD-

WHO says Omicron risk is “very high”: The newly-emerged variant of covid-19 could have “severe consequences'' and poses a “very high” risk globally, the World Health Organization said (pdf) this morning, in what appears to be an about-face from its calls earlier this week to remain calm. The global health body is now calling on governments to consider adjusting “international travel measures in a timely manner” and planning for a surge of cases to weigh on health systems.

The warning comes as Omicron’s world tour is really picking up steam: At least 17 countries have at least one either confirmed or suspected case, with Canada, Switzerland, France and Scotland joining the list, according to Bloomberg’s Omicron tracker. The variant continues to spread despite governments across the globe tightening entry restrictions in efforts to curb the new strain, including Japan, which closed its borders to foreigners, the country’s prime minister said in a press conference today, joining Israel in taking hardline border control measures to contain the spread of the new variant.

Subscribe to Enterprise

FOR TOMORROW-

KfW Development Bank is launching its open call for green project proposals in Egypt as part of their Investing for Employment facility (pdf) tomorrow. The facility will give grants to projects that drive job creation. You can find out more about the facility and the application process here.

???? CIRCLE YOUR CALENDAR-

Young professionals can now apply for the recently-launched McKinsey Forward program which focuses on leadership, business, and the transition to digital, McKinsey announced in a press release (pdf). The six-month program aims to teach participants how their business can combat challenges and use them to their advantage, integrate tech, and be adaptable and resilient during times of change. Forward will be available without charge to those eligible to apply, and one of the requirements is having less than five years of work experience. You can apply via this link before the 12 December deadline.

The new round of Silicon Waha’s Startup Factory will kick off on 10 December at the Assiut Technology Zone. The program will offer marketing tips and tricks for startup founders, who can apply here.

A new month is around the corner. The key news triggers to keep your eye on as we approach December:

• PMI: Purchasing managers’ index figures for November for Egypt, Saudi Arabia, and Qatar will be released on Sunday, 5 December. Figures for the UAE, which normally come out on the same day as Egypt and Saudi, will be released two days later on Tuesday, 7 December.
• Foreign reserves: November’s foreign reserves figures will be released during the first week of the month.
• Inflation: Inflation figures for November will be released on Thursday, 9 December. Data for inflation typically appears on the 10th of every month, but is moved up one day if that falls on a Friday.
• Interest rates: The Central Bank of Egypt’s Monetary Policy Committee will hold its final meeting for the year to review interest rates on Thursday, 16 December.

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

☀️ TOMORROW’S WEATHER- Are we finally saying goodbye to summer weather? Expect a daytime high of 29°C and a nighttime low of 16°C tomorrow before the mercury falls to 22°C for the next few days, according to our favorite weather app.

Domestic violence could be costing EU economies bns, with the European Institute for Gender Equality estimating that European economies are losing out on EUR 366 bn every year due to the negative psychological and physical effects of domestic violence on victims, Bloomberg reports. Victims of domestic violence, predominantly women, suffer from reduced productivity, are forced to miss work, or find it difficult to take on a job altogether with trauma and toxic work environments coming into play. Some companies have tried to mitigate the effects of domestic violence — with Vodafone and Facebook for example offering paid leave to victims — but more needs to be done to ensure an understanding work environment for women if companies and governments want to hit their gender equality employment goals.

Nissan will invest USD 18 bn in EVs as part of its Nissan Ambition 2030 strategy, in efforts by the company to stay competitive in an automotive market that is increasingly going electric, the Financial Times reported. Nissan’s strategy includes having EVs account for 75% of European sales by FY2026 and 40% of its US sales by 2030, as well as converting its Sunderland operations in the UK into an EV production hub. The company will introduce 15 fully electrified models and 8 hybrid / e-power models by 2030, and aims to offer its all-solid-state battery (ASSB) technology to the mass market by 2029. In spite of its EV ambitions, the Japanese automaker has yet to announce that it will halt production of fossil fuel vehicles, and was not one of the signatories to the declaration to end production of fossil fuel vehicles by 2040 at COP26 earlier this month.

???? ON THE TUBE TONIGHT-

(all times CLT)

Amazon Original film The Electrical Life of Louis Wain is another brilliant performance by Benedict Cumberbatch: The biopic follows English artist, inventor, entrepreneur and caretaker Louis Wain as he adopts a stray kitten that inspires him to create surreal cat paintings and art that are published in the Illustrated London News. The art soon makes him world-famous and the biopic intelligently uses the paintings to elaborate on Wain’s mental state as relationships around him change, especially as his wife falls ill with cancer. The cinematography and execution of the film create a beautiful portrayal of the loneliness and confusion that many artists experience and then transform into creative works. The biopic retains a sense of whimsy and cheerfulness despite the hard circumstances, and it’s a film that will definitely make you feel something.

⚽ The Arab Cup returns after an absence of 9 years: The Fifa Arab Cup 2021 will kick off tomorrow in Qatar. This is the first time that the tournament will be under the umbrella of the International Football Association; in the past, Arab nations had organized it themselves. Iraq currently holds the most Arab cup titles, having taken home the trophy four times. Saudi Arabia snagged the title twice, followed by Egypt, Algeria, Sudan and Lebanon who each came out on top once.

The first match will take place between Tunisia and Mauritania tomorrow at 12pm.

Arab Cup groups: 16 Arab teams are participating in the current edition and have been divided into four groups. The first and second ranked teams from each group will qualify for the playoffs, with the final to be played on December 18.

• Group A: Qatar – Iraq – Oman – Bahrain.
• Group B: Tunisia – UAE – Syria – Mauritania.
• Group C: Morocco – Saudi Arabia – Jordan – Palestine.
• Group D: Algeria – Egypt – Lebanon – Sudan.

???? OUT AND ABOUT-

(all times CLT)

Vibrant accordion player and singer Youssra El Hawary is performing at the GrEEK Campus on Thursday at 8pm as part of The GrEEK Beats series.

It’s Christmas bazar season: Visit Zamalek’s All Saints’ Cathedral on Friday for their yearly Christmas Bazar from 11am to 3:30pm.

???? UNDER THE LAMPLIGHT-

Part of knowing what’s next is knowing why you’re moving in that direction: Start with Why by Simon Sinek was released a decade ago and inspired people to start demanding purpose at work and looking to find the “why?” behind their organization. Sinek argues that leaders who have had the greatest influence in the world all think, act and communicate the same way, dubbing this idea “The Golden Circle.” From there, he provides a guide on how to utilize this method of thinking in whatever venture is currently on the table and of course, why you should. To truly convince people to buy into a product, service, or idea, you have to show them the Why behind it, meaning of course, that you have to find it yourself. You can check out Sinek’s Ted Talk based on the book for a distillation of his ideas.

EARNINGS WATCH- Orascom Financial Holding’s net income came in at EGP 17.9 mn in 3Q2021, with net earnings of EGP 54.6 mn since its inception in December last year, according to the company’s financials (pdf). The Orascom Investment Holding spinoff reported EGP 107.6 mn in operating revenues for the quarter, and brought in EGP 268.9 mn since a demerger that concluded earlier this year and saw the company start trading separately on the EGX.

EDITOR’S NOTE- This story was amended on 29 November to correct the operational revenue figures. 

MARKET WATCH-

The EGX30 fell 0.6% at today’s close on turnover of EGP 955 mn (33.7% below the 90-day average). Local investors were net buyers. The index is up 3.4% YTD.

In the green: Aspire Capital (+5.5%), Pioneers Properties (+4.3%) and Orascom Development Egypt (+3.5%).

In the red: Eastern Company (-10.1%), Speed Medical (-3.0%) and AMOC (-2.6%).

The record IPO rush could soon dwindle down: After 2021 panned out as the biggest year for IPOs on record, a confluence of factors could be bringing the boom to an end. As central banks around the world scale back stimulus and look to hike interest rates, the surplus liquidity that propelled the record figures raised by companies in their stock market debuts could dry up, leaving markets with a more normalized environment in 2022, analysts told Bloomberg.

How big were IPOs this year? Global initial public offerings so far in 2021 surpassed the USD 600 bn mark last week, making it the biggest year for IPOs in history. Nearly 3k businesses and special purpose acquisition companies (SPACs) worldwide have debuted on stock exchanges so far in 2021. The biggest IPO of the year was credited to Amazon-backed electric vehicle startup Rivian, which raised almost USD 12 bn on the Nasdaq earlier this month.

What’s behind the rise? Post-pandemic economic recovery, unprecedented support from central banks and an aggressive SPAC boom all gave rise to the IPO frenzy, the Wall Street Journal reports. Retail investors have also been cashing in on the high valuations, pushing listing counts and proceeds higher than the previous records posted in 2007 — the year also known for the bust of the dot-com boom, which had given rise to tightened financial regulations and a general fear of the public market, prompting more and more companies to stay private.

But the market has become more attractive: Recent IPO successes, especially in 1Q2021, are encouraging more startups to list, a strong marker that the public market is healthier than previous years. Unicorns like Rivian, India’s Paytm and online brokerage Robinhood, have all gone public as individual investor activity grew — ironically, with many trading through the Robinhood platform itself. SPACs, which offer companies a slightly more flexible path towards going public, also boomed at unprecedented levels at the start of the year, but have largely dwindled for the past few months.

It hasn’t all been sunshine and rainbows though, with half of the year’s large IPOs now trading in the red. The high price valuations coupled with rising interest rates set several IPOs up for disappointment, with Dealogic data showing that 49% of companies in the UK, US, Hong Kong and India — which all raised over USD 1 bn from their IPOs — are trading below their issuance prices. This is well above the 27% of 2020’s big IPOs that were also trading in the red, and 2019’s 33%, raising questions about the valuations produced by underwriters and large investors.

Cases in point: Robinhood’s share price tumbled 10% below its IPO price after going public this summer. The blockbuster IPO of Chinese ride-hailing giant DiDi also faltered soon after its debut following the country’s crackdown on the app, now trading roughly 40% below its initial price. More recently, Paytm’s shares fell 40% on its second day of trading.

Regulatory scrutiny has also been a damper on the SPAC boom: The US securities and exchange commission demanded more information from a number of Wall Street banks about their underwriting activities in the SPAC market and how they’re managing risk after the frenzy began to raise concerns over the due diligence shell companies actually do in order to go public. Several IPOs, including aesthetics device maker Candela Medical and fitness tech company iFit, were postponed in October following the decision, and another SEC warning that could require some SPACs to restate their financial results put the brakes on a number of new offerings, according to WSJ.

The story was not much different here at home: Egypt’s IPO market saw its revival from a two-year drought earlier this year with Taalem’s debut in April and e-Finance’s blockbuster listing a few months later. LSE-listed healthcare player IDH also completed a technical listing, transferring a portion of its shares from London to the EGX in May. But a handful of IPOs have been persistently delayed due to market conditions, and things have been relatively quiet since e-Finance’s moment in the spotlight last month.

But our IPO pipeline looks to be going strong: The state’s privatization program is also beginning to see the light of day, with over five state companies slated for a listing before the end of FY2021-2022. EGX-listed Abu Qir Fertilizers is expected to sell additional shares on the bourse sometime next month. State-owned Ghazl El Mahalla sports club was set to debut in October, but delayed its plans to this month, while cosmetics pharma giant Macro Pharma had been expected to list shares in a secondary sale on the EGX in April. The offering was delayed due to concerns over “the market’s capacity to absorb multiple offerings.” Al Gioshy Steel has also been considering an IPO for over two years, but has been delaying the decision until it sees market indicators improve.

And the entry of SPACs to the Egyptian market could turn things around: The Financial Regulatory Authority’s approval of a proposal led by EGX boss Mohamed Farid to bring SPACs to Egypt sparked within a day announcements of plans to establish blank-check firms and list on the EGX. Allowing SPACs could offer startups a chance to list on the EGX early in their development, boosting the number of IPOs in Egypt, Farid previously said. Regulators have been working to persuade more companies to list on the EGX, most recently amending listing rules to make it easier for larger firms to go public.

So, are we in for a continuation of the global IPO boom in 2022? While some analysts warn that the change in monetary conditions globally will bring an end to the boom, others say the trend is set to continue. Money managers still consider investing in IPOs a key tool to outperform markets, while banks reap massive sums from underwriting fees. But monetary tightening continues to be a headwind for the IPO boom going forward, and wary market watchers warn that a market correction could soon be in the cards.