PM — Looming climate risks are driving investments in water

Good afternoon, wonderful people. We’ve made it through the last full workweek of August, which is going out with something of a bang on the news front. So much for the summer lull.

THE BIG STORY TODAY

Seven int’l firms sign MoUs for green hydrogen plants: Egyptian government agencies signed MoUs today with seven international companies to set up green hydrogen production facilities in Ain Sokhna, according to a cabinet statement. The companies include the UK’s Globelec, Saudi Arabia’s Al Fanar, Dubai’s Alcazar Energy, the UAE’s KK Power International, Mediterranean Energy Partners, Indian clean energy company ACME, and private equity firm Actis. The expected investment values of the facilities were not disclosed.

^^We’ll have more on this story and others in Sunday’s edition of EnterpriseAM.

THE BIG STORY ABROAD

It’s a thoroughly mixed bag of nuts in the international business press this afternoon. The Wall Street Journal and Reuters look at market movements and investor expectations ahead of tomorrow’s speech from US Federal Reserve Chairman Jerome Powell at Jackson Hole, while CNBC’s top story is about inflation forcing Sony to raise the price of its PS5 console.

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

• Is the CBE about to ease import restrictions? Meetings held yesterday by Central Bank Governor Hassan Abdalla and key cabinet members have stoked expectations in some corners that they may be looking for ways to ease import restrictions that have hobbled everyone from manufacturers to retailers.
• Hisham Ezz Al Arab, Mohamed Naguib are advising the new CBE governor: Central Bank of Egypt Acting Governor Hassan Abdalla has appointed banking industry veterans Hisham Ezz Al Arab and Mohamed Naguib as his advisors.
• B Investments has been granted an extension until 15 September to decide whether it will preempt Adnoc’s bid to acquire 50% of TotalEnergies Egypt.

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???? CIRCLE YOUR CALENDAR-

iSHEEP, Assemble: The launch event for the iPhone 14 will take place on 7 September at 1pm ET (or 7pm CLT), Apple announced in invitations to journalists yesterday, according to the Verge.

PSA #1- Climate tech entrepreneurs have one month to apply to the global ClimaTech Run competition: Tech startups that address climate and environmental issues have until 22 September to apply for the competition, which offers startups a top award of USD 100k and the chance to present their product at COP27, according to a cabinet statement. The competition is hosted by USAID-backed Business Egypt and backed by the international cooperation, environment and communication ministries.

PSA #2- Your deadline to catch a 65% break off late payment fines for your taxes is coming up next Wednesday, 31 August. The waiver applies to late payment fees for customs tariffs, income, real estate, and sales taxes, VAT, and stamp duties among others. The remaining 35% of your due payments will need to be paid before next March.

FURTHER DOWN THE ROAD- Egypt and Tunisia could sign an MoU to cooperate on solar power projects in the next two months, when a Tunisian delegation is expected to visit Egypt, Al Borsa quotes sources in the know as saying.

☀️ TOMORROW’S WEATHER- It’s going to be a sunny — but less humid — weekend: Expect a daytime high of 34°C tomorrow and 36°C on Saturday, with nighttime lows of 25°C on both days.

Time to bid farewell to business cards? The future is here — kind of. A new networking trend is making professionals across different fields ditch the old business card for what is admittedly a pretty cool, albeit somewhat creepy data exchange experience, the Wall Street Journal says. Derek Peterson, technology chief at Boingo Wireless merely brushes people’s phones to share contact information. Not sorcery, but close: Peterson had a chip installed under his skin by a company called (brace yourselves) Dangerous Things. Nice party trick, but imagine the awkwardness when there’s poor cell service.

Not everyone though is opting for fully virtual solutions. Some prefer hybrid ones, such as paper cards with printed QR codes, or NFC chips encased in rings while many (sometimes older individuals) are still opting for more traditional methods, the Journal says.

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The return of the trustbusters: Private equity firms may soon come under fire when the US’ antitrust landscape wakes up from its decades-long slumber to launch a sweeping crackdown on buyout groups, the Financial Times writes. Flush buyout firms make bns off of massive M&A transactions, antitrust officials are now weighing a major shift in competition policy that could potentially change the way the markets have been working for decades. The crackdown involves not only looking at whether a single transaction is in violation of the law, but whether the private equity industry itself poses a threat to business in the country through its “roll-up” and buy, strip and flip strategies — which leaves industries rife with monopolies and shuttered-down businesses.

The ECB could decide on whether it will launch its own digital currency next fall. An investigation by the European Central Bank (ECB) into the pros and cons of launching its own central bank digital currency (CBDC) is set to wrap up in October 2023, an ECB official tells Reuters. Central banks around the world — including our own — have been considering building their own hard currency-backed e-currencies as they look to bring more stability and regulation to digital money markets and facilitate payments.

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Our thoughts and prayers go out to the UK’s top football teams, which are grappling with a private jet shortage. Many English Premier League clubs have had to change their travel arrangements at the last minute, due to a surge in demand for chartered air travel in the UK, Bloomberg reports, citing sources with knowledge of the matter. Coaches have already blamed this issue for poor on-field performances: After Chelsea lost 3-0 to Leeds United earlier this month, manager Thomas Tuchel said that changes in travel arrangements had hampered his team’s preparations. Chelsea could not find a large enough jet to fly all its performers and trainers to the game, so Tuchel and other staff members had to use a bus.

The number of private plane departures from airports has increased considerably from pre-pandemic levels, according to data from the European Business Aviation Association cited by the business information service, which made it more difficult for football clubs to arrange last-minute travel. Since matches tend to be spaced close together, teams try to give their players as much downtime as possible between training and games. For wealthy clubs, flying to games is more convenient and time-efficient than taking a coach or rail and risking traffic or service delays.

???? ON THE TUBE TONIGHT-
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She-Hulk is a clever combination of courtroom drama and comedy: The new Disney+ original from Marvel Studios centers on Jennifer Walters, Bruce Banner’s cousin, who gets Hulk abilities through a bizarre car accident but chooses to go back to her career as an attorney. Now that she’s been Hulkified, Walters must figure out how to balance her professional, romantic, social, and superhero lives in a world that is already tough for women. Mind you, this is not the best we’ve seen from the Marvel Cinematic Universe — partly due to narrative inconsistencies, an overreliance on comedy, and a lack of supervillains (at least in the early episodes we’ve seen so far). Still, the show is fun and unique enough to entertain both casual and diehard Marvel fans.

⚽ No matches tonight folks, but there’s a lot going on this weekend:

Friday: Starting with the Egyptian league, Misr Lel Makkasa will face Smouha at 4pm. Later at 6:30pm, Al Ittihad will face Al Moqawloon and El Gouna will play Future. At 9 pm, Al Masry will face league champions El Zamalek and Ceramica Cleopatra will play against Pyramids, the runner-up.

La Liga: Girona plays Celta Vigo at 8pm and Real Betis plays Osasuna at 10pm.

Italian League: Monza faces Udinese at 6:30pm and Lazio takes on Inter Milan at 8:45pm.

Saturday: In the Egyptian League, Pharco will play with Ghazl El Mahalla and Enppi will face Ismaili at 5:30pm. Al Ahly will face El Gaish at 8 pm, while Eastern Company hits the field against National Bank at the same time.

English Premier League: Southampton faces Manchester United at 1:30pm and later at 4 pm, we have the following matches: Man City v Crystal Palace, Liverpool v Bournemouth, Chelsea v Leicester City, Brighton v Leeds, Brentford v Everton. Arsenal also takes on Fulham at 6:30pm.

La Liga: Elche v Real Sociedad (5:30 pm), Rayo Vallecano v Mallorca (7:30 pm), and Almeria v Sevilla (10pm).

Italian League: Juventus faces Roma and Cremonese plays against Torino at 6:30pm. Later at 8:45pm, Milan faces Bologna.

???? EAT HIS TONIGHT-

The Grocer’s bakery is an underrated source of buttery goodness: We stumbled upon the high-end supermarket’s fresh and flaky bites not too long ago, and we’ve been hooked ever since. Their artisanal bakery offers some of the best savory and sweet croissants, sourdough bread, and chocolate chip cookies. Also underrated: Their fresh salads. We particularly love their Japanese Shrimp Orange salad, and their Rocca Strawberry salad. For fellow grocery shopping enthusiasts (and those of you catching a final Sahel weekend), you simply must visit the Grocer’s branch in Marassi for one of the most enjoyable grocery shopping experiences.

???? OUT AND ABOUT-
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Warm up your vocal cords — Karaoke night at Room New Cairo starts at 8pm tonight.

Okasha takes the stage at Jazz Bar tonight at the Kempinski Nile Hotel for a night of blues, jazz and soul at 9:30pm.

Darkroom is hosting a one-day workshop tomorrow from 5-8pm demonstrating how to shoot, develop, and print film. The Darkroom Demo session will introduce the process of film photography from shooting in the studio to developing the film in the lab and finally printing in the darkroom. You’ll even get to take your print home with you.

A treat for Arabic rock fans: Three youth indie, pop-rock, and modern rock bands — Rocksea, Kawkab and Taht El Sefr — are performing their own original songs at Zamalek Theater tomorrow at 7pm.

???? EARS TO THE GROUND-

EARNINGS WATCH-

CI Capital reported EGP 1.612 bn in group revenues in 1H 2022, a 36% y-o-y increase (after normalizing for one-off adjustments), while net operating profit rose 115% to reach EGP 567 mn, according to its earnings release (pdf). Net profit after tax and minority interest nearly doubled to EGP 341 mn against EGP 172 mn in the same period last year.

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The EGX30 rose 1.8% at today’s close on turnover of EGP 1.54 bn (46.2% above the 90-day average). Foreign investors were net sellers. The index is down 13.9% YTD.

In the green: GB Auto (+9.5%), Madinet Nasr Housing (+9.2%) and Heliopolis Housing (+5.6%).

In the red: Credit Agricole Egypt (-0.5%).

Investing in water is garnering renewed interest as climate risks loom: As drought becomes more widespread and the pervasive effects of climate change intensifies the challenge of managing global water resources, investors are looking for ways to finance the technologies and infrastructure supporting more efficient water use. This trend is picking up globally as much as it is here in Egypt. Homegrown businesses such as Pylon, a data-driven startup working to improve our traditional infrastructure efficiency through the use of tech, are increasingly looking at ways to step water leakage and waste.

Water scarcity poses an existential threat to a lot of firms’ bottom lines: Financial services companies could stand to lose as much USD 225 bn from water-related risks, according to a report (pdf) prepared by environmental disclosure platforms CDP and Planet tracker. Of 377 listed financial institutions assessed by the CDP some 33% aren’t even taking these risks into account. What this means is that tons of new projects and companies (about 69% by CDP’s count) could soon become defunct or unfeasible due to “significant” water related challenges.

A group of investors, armed with USD 10 tn, is demanding better water management from companies: Ceres, a sustainability-inclined investor group consisting of 64 investors and pension funds with some USD 9.8 tn in assets under management, are pressuring the boards of companies they are invested in to do more to ensure they better manage their water use and protect neighboring ecosystems—how exactly they would follow through on these demands remains unclear.

Some investors have started their own water-focused equity funds in response: Over the past five years some 23 water funds with a collective USD 8 bn in assets have cropped up targeting various segments of water infrastructure and technology, according to Morningstar Direct data shared with Reuters. What some of these funds do is invest in firms like utilities company American Water Works, technology company Xylem or the Swiss transport outfit Georg Fischer AG — that are involved in the provision of water-related services.

Most of these investments aren’t in straight up utilities though: There’s estimated to be only 25-30 water utilities companies that can receive these investments, Simon Gottelier, co-manager of the USD 282 mn Thematics Water Fund, tells Reuters.

Ancillary services are where most of the money is going: Desalination plants, smart irrigation providers and pollution prevention companies are the sorts of businesses that these funds are most focused on investing in for the time being. Despite a lack of new companies boasting water solutions offerings “the outlook for existing companies has never been better,” Justin Winter, co-manager of the USD 7.3 bn fund Impax Water Strategy, tells Reuters.

Is technology-driven efficiency the future? Companies that can offer efficiency boosting technologies like leakage monitoring are leading the pack. Technology-focused Xylem is anticipating revenue growth of about 5% through 2025 as demand for water efficiency becomes more pressing–which the company’s senior vice president notes might not seem like dramatic growth at first sight but insists is huge for the generally slow and cash strapped water sector.

Some investors claim that water is currently the most tangible ESG sector to invest in: “Water as an industry, really leapfrogs a lot of the ambiguity around quote, ESG investing because of the very clear, positive metrics that are identifiable around the water,” Matthew Diserio, president of water-investing firm Water Asset Management tells MarketWatch.

As for the lay investor, there are growing opportunities to invest in water-related companies: Purchasing stock in straightforward publicly traded water companies is one way of getting your foot in the door of water investing in the US. Another way people are starting to invest in the sector is through exchange-traded funds like First Trust Water or Invesco Water Resources which are “the least risky way to invest in a portfolio of companies that are attacking water scarcity in several different ways,” Pattu Baum a financial advisor at RBC Wealth Management tells Barron’s.