PM — The battle for EV batteries

Good afternoon, wonderful people. It’s been a slowish start to the news day, but we expect things to pick up as the afternoon wears on. And we’re working with big grins on our faces after Saudi’s shock 2-1 victory against Argentina in the first of today’s World Cup matches.

THE BIG STORY TODAY-

Hisham Ezz Al Arab is back at CIB: Ezz Al Arab (LinkedIn) has returned to CIB’s board of directors as a non-executive director, on the recommendation of the board and following the approval of the central bank yesterday, according to a CIB statement. Ezz Al Arab led CIB to its position as Egypt’s leading home-grown bank in everything from profitability to sustainability as its chairman and managing director between 2002 and 2020, before stepping down after a central bank audit said it found regulatory, compliance and governance concerns. He was appointed an adviser to CBE governor Hassan Abdallah over the summer, after Abdallah took over the reins at the central bank from Tarek Amer.

CIB shares were up 1.47% to close at EGP 38.05 on the news.

THE BIG STORY ABROAD-

The business press still can’t tear its gaze from the meltdown at FTX. One-time crypto darling Sam Bankman-Fried’s failed firm FTX will appear in Delaware bankruptcy court later on today, the Wall Street Journal reports. Management at the defunct firm has located more assets at the company ahead of the court hearing, bringing the running tally to USD 1.24 bn, according to the Financial Times. And Reuters is reporting that the company, Bankman-Fried’s parents, and senior executives built a USD 121 mn property portfolio in the Bahamas before it all went belly up.

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

• Developers interested in bidding for a piece of the Madbouly government’s multi-bn USD water desalination program can start handing in pre-qualification files starting on Thursday.
• Employees at Beltone SME have reportedly resigned en masse in opposition to a restructuring being carried out by parent company Beltone Financial.
• Honoris United Universities’ acquisition of Merit University in New Sohag City has fallen through after the two sides failed to reach an agreement

???? CIRCLE YOUR CALENDAR-

The US and Russia will hold nuclear talks in Cairo next week: Washington and Moscow will discuss resuming mutual nuclear inspections during week-long talks from Tuesday, 29 November through to 6 December, Russian Deputy Foreign Minister Sergei Ryabkov said, according to CNN.

The deadline to apply for the Chicago Booth Executive Program in El Gouna is Sunday, 27 November. The two-week program, which kicks off in March 2023, offers executives from Egyptian public and private sector the skills to help them “become a better leader for your organization and support Egypt’s growth in the years ahead.”

☀️ TOMORROW’S WEATHER- Expect temperatures to rise to 25°C during the day tomorrow before falling to 15°C at night, our favorite weather app tells us.

The West could unwind its reliance on Chinese EV batteries by the end of the decade — but it’s going to come with a hefty price tag, Goldman Sachs strategists wrote in a report seen by the Financial Times. The US and Europe would need to put down more than USD 160 bn in capex spending to become self-sufficient in EV batteries and break their reliance on Chinese manufacturers, who currently hold some 75% of market share. Protectionist policies, alternative kinds of batteries that don’t rely on minerals mined mainly in China, and more battery recycling could also help break Beijing’s dominance in the industry.

South Koren firms are stepping in: Major government subsidies have attracted South Korean giants LG and SK to invest in EV battery factories in the US. Goldman thinks US-based Korean manufacturers could capture more than half of market share in the next three years, up from a current 11%. LG Chem only today announced it will build a new USD 3 bn battery cathode factory in Tennessee, the largest of its kind in the US.

Not everyone thinks China can be beat so easily: One EV consultant told the FT that Goldman’s USD 160 bn estimate is way below what’s needed, adding that the 2030 time frame is too optimistic and the impact of battery recycling had been overestimated. The US is already facing labor shortages and wage inflation, making EV batteries more expensive to produce — with capex per unit some 78% higher than in China.

Earmark more time for your World Cup watch parties: The first five World Cup matches saw an average of 16 extra minutes of playtime, as FIFA changes up its rules to more accurately measure stoppages and maximize time when the ball is in play. The England-Iran match ran for 30 minutes longer than scheduled after a goalkeeper and a defender were injured, while yesterday’s other matches also all saw significant extra time, football news outlet Goal reports. “Think about it: if you have three goals in a half, you'll probably lose four or five minutes in total to celebrations and the restart” alone, chairman of FIFA's referees committee, Pierluigi Collina, told ESPN (Listen: 1:08:35).

The EGX30 rose 1.39% at today’s close on turnover of EGP 1.79 bn (32.7% above the 90-day average). Local investors were net buyers. The index is up 5.63% YTD.

In the green: Heliopolis Housing (+5.7%), Alexandria Containers and Cargo Handling (+4.8%) and Fawry (+4.5%).

In the red: Ezz Steel (-3.3%), Elsewedy Electric (-2.4%) and Juhayna (-1.8%).

OUR FOUNDER OF THE WEEK– Every Tuesday, Founder of the Week looks at how a successful member of Egypt’s startup community got their big break, asks about their experiences running a business, and gets their advice for budding entrepreneurs. Speaking to us this week are Farah (LinkedIn) and Ahmed Selim (LinkedIn), siblings and co-founders of co-working space startup CO-55.

We both studied at Northeastern University in Boston before joining the family business, an export-import firm. We worked there for two years until we noticed a gap in the market for co-working spaces and seized the chance by establishing CO-55 three years ago.

We first came up with the idea for CO-55 after noticing that entrepreneurship is becoming increasingly popular among younger generations and that social media was placing a lot of attention on the startup ecosystem. We wanted to find a way to service the industry — all of these businesses would require a working location at some point in time.

We were introduced to different co-working space concepts while living in the US. We conducted market research and discovered that 99% of co-working spaces operating in Egypt were housed in two-bedroom residential apartments and lacked a license. The remaining 1% were affiliated with global companies that needed an office to use when visiting Egypt on business. Since 2019, it has been our job to build something that is entirely Egyptian, meets international standards, and serves all startups.

Before we entered the industry, we wanted to learn everything we could about it. There were few market participants at the time and no manual for how to carry out the business. We were taking shifts at the front desk and juggling work to understand the ins and outs of the business.

Three years later, we have reached the point where we have accumulated enough knowledge to begin expanding. We established two new facilities in New Cairo this year.

We have shifted our focus to serviced offices. We currently cater to multinational corporations that want to operate in Egypt but do not want to own assets and prefer flexibility. Companies are also showing heightened interest in satellite offices, as employees are becoming more reluctant to commute. Now our clients include VMWare, Oncare, DiDi and Verizon. We owe a great deal to our outsourced services from LEOS’ DEN marketing agency and Two Emms interior design firm.

Farah: The best part about our job is hearing positive feedback. This brightens my day. It also makes me really happy when I introduce myself to someone and mention CO-55 and they already know about it.

Ahmed: The best thing about our job is that we get insights about how the economy is performing. Companies — no matter what field they operate in or how big or small they are — are always looking for workspaces. Sometimes there are a lot of international corporations interested in opening offices, and other times there aren't any leads or sales. We also work with a variety of industries, which allows us to become acquainted with and have a comprehensive understanding of the job industry as a whole.

The worst aspect of our job is the stress, responsibility, and its ups and downs. We have a lot of responsibility and monthly commitments to meet. Also, we’ve switched all of our attention, energy, effort, time, and money to CO-55, which forced us to quit working on other projects.

The three most important KPIs we monitor on a regular basis are office turnover, occupancy rate, and how quickly we occupy the space. We always aim to open the space with at least 40-50% occupancy, and the footfall and how busy the space is are also crucial KPIs for us.

When we have a problem at work, we always turn to our father. He has more than 30 years of experience in real estate, including residential complexes, commercial centers, five-star hotels, and administrative offices. CO-55 is a real estate company with a twist, so he knows how to help. He’s also always challenging us to think outside the box and determine our next steps.

Moving forward, our plan is to expand to more governorates, but with tailored services and offerings. We want to build an infrastructure that provides people working in governorates with good internet, amenities, and all the necessary services for a comprehensive and spacious working environment that matches them and the nature of their work.

Our future plans also include owning the assets we operate rather than renting them. We have already purchased a property in New Cairo and will begin operations in Q4 2023. We are also heading to Sheikh Zayed very soon.

If we could give budding entrepreneurs one piece of advice, it would be to grow a thick skin and to be extremely resilient and persistent. We also encourage working with a co-founder.

Farah: I believe we are aligned in terms of business inspiration. We were inspired by the energy of “I want to establish my own business and be the CEO of myself.” There was a lot of potential, and we were able to be very generous with our spaces given there was no adequate competition.

Being a startup founder is a lonely journey. You must forego your social life and other interests in order to focus on your career, and establish the name you told yourself you would build.

Ahmed: The last great thing I watched was WeWork: Or the Making and Breaking of a USD 47 bn Unicorn.

At first, our family was very skeptical of the industry. However, now that we have reassured them, they are happy and proud of what we do.

Farah: A startup I believe is killing it is Thndr. Ahmed: I believe Breadfast and MaxAB are doing a great job.