EFG Hermes’ Vortex acquires European wind farm portfolio in EUR 550 mn deal

Unless Speaker of the House Ali Abdel Aal has changed his mind, the House of Representatives is scheduled to vote on the Ismail government’s agenda today. Prime Minister Sherif Ismail is also expected to give a final speech to the House on his government’s vision, Ahram Online reports.

US Secretary of State John Kerry is expected in town today to meet with President Abdel Fattah El Sisi and Foreign Minister Sameh Shoukry. No preview of the agenda for the brief stopover has been released as yet. Kerry, who will arrive in Cairo after meeting Iran’s foreign minister in New York yesterday, will then join US President Barack Obama in Saudi Arabia for the GCC summit in Riyadh. Kerry’s public agenda will be posted here some time later today and is your best starting point to track down what he might be saying in Cairo, if the State Department decides to go into detail.

Renaissance Capital’s inaugural Egypt Corporate Access Day begins today in Cape Town and will connect South African investors to key decision makers from select high-profile companies in Egypt. The two-day event ends Thursday.

Hillary Clinton and Donald Trump won their respective parties’ primaries in New York, according to projections by multiple media outlets. Clinton’s win is already being interpreted in the business press as having “halted [rival Bernie] Sanders’ momentum,” while Trump is now firmly in the running for the final sprint to lock down the delegates he needs to avoid a contested convention. As usual, we’ll be reading coverage from Politicoand the New York Times, which are in the uncomfortable position this morning (as of this writing) of having identical front-page headlines: “Trump trounces rivals in New York.” Tap here for Politico’s version, and here for the NYT’s.

Ohmygodno. Please. Anything but that. Apparently, we’re going to have to vote again — probably before the end of this year, Al Shorouk reports. A cabinet committee has been racking-up the hours recently to complete a draft Local Administration Act to fast-track it through the House within two months alongside a bill that would set up a National Elections Authority as a single regulator of elections. What’s the rush? They want us to head back to the polls for local elections by the end of the year.

Arriving in town this Thursday is Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, who will meet with President Abdel Fattah El Sisi to discuss bilateral ties and regional conflicts, Al Masry Al Youm reports. His visit will coincide with Kerry’s; both men will participate in the Riyadh US-GCC summit.

If you play your cards right, perhaps you could bridge next Sunday and get a four-day weekend? Monday, 25 April is a national holiday for Sinai Liberation day (that’s this coming Monday). The weekend after is a four-day break for Coptic Easter, Sham El Nessim and Labour Day, all rolled into one.

EFG Hermes platform in EUR 550 mn acquisition of European wind farms: Vortex, a renewable energy platform managed by EFG Hermes’ equity arm, is acquiring a 49% stake in an operational 664 MW portfolio of a subsidiary of EDP Renováveis (EDPR). The transaction is valued at EUR 550 mn and includes a portfolio of 23 wind farms in Spain, Portugal, Belgium and France, according to a company statement. EFG Hermes says the transaction is part of Vortex’s plan to own more than 1 GW of net installed capacity within the two years and will “nearly double” EFG Hermes’ private equity assets under management to USD 1.1 bn. All transaction financing is in place, with 40% percent of the transaction being financed through equity, “5% of which was a seed investment by EFG Hermes and 95% of which takes the form of sovereign capital from the Gulf Cooperation Council region. The remaining 60% of the acquisition finance is in the form of a 13-year facility provided by five prominent European banks,” said EFG Hermes Head of Private Equity Karim Moussa. Vortex acquired last year a 49% equity stake in EDPR France in a transaction worth USD 208 mn. The transaction is expected to close in 2Q2016. Linklaters (legal), Shearman and Sterling (legal), PwC (tax and accounting), DNVGL (technical), Willis (ins.) and BNP Paribas (financial advisor) advised Vortex on the transaction. EDPR did not disclose the names of its advisors in its statement on the transaction.

Are we backing off energy-price liberalization? Finance Minister Amr El Garhy reportedly said yesterday the government does not intend to follow through with its energy-price liberalization program for the time being, according to Al Shorouk. He added that the government does not believe in trickle-down economics, preferring to support the most vulnerable elements of society directly, a hint we’re reading as presaging the expansion of the government’s cash assistance program for the poor. Oil Minister Tarek El Molla had signaled before the cabinet shuffle that brought El Garhy into office that the government would be slowing the pace at which subsidies are being phased out, but it’s the first time we remember a finance minister making an even oblique acknowledgement that a cash entitlement system may be necessary to protect the poor. Garhy, speaking at a lobby group meeting in Washington attended by senior Egyptian business leaders, also refrained yesterday from wading into the murky waters that are Egypt’s FX policy, saying the shortage of hard currency in Egypt is “an issued controlled by the Central Bank of Egypt.” The minister also noted that the government is now led by a “strong” team working “in harmony.”

Speculation of a second round of devaluation has sent stocks up to an eight-month high, reports Bloomberg. “It’s all pure speculation at this point,” said head of brokerage at EFG-Hermes Mohamed Ebeid. “Local liquidity” is driving stocks higher “on expectations that there will be another devaluation after the government’s meetings with IMF officials this week and as the pound falls in the black market,” he said. The EGP fell to an all-time low on the parallel market yesterday, with Reuters quoting the greenback trading at a rate of EGP 11.00 to USD 1.00, up from the 10.73 we had reported on Monday, offering a 25% premium to the USD over the CBE’s official exchange rate of 8.78.

At last, some word on the Natural Gas Act: El Molla said yesterday that the current draft of the act, which received approval from cabinet and was a centerpiece at last year’s Egypt Economic Development Conference in Sharm El Sheikh, will be reviewed next week ahead of presenting it to the House of Representatives. The act, /which would de-regulate the natural gas industry and see the state step back to become the market regulator and provider of pipelines, has been sitting on the sidelines since last November, when El Molla had suggested that the legislation would be enacted by mid-year.

The Oil Ministry will offer 11 blocks in the Western desert and the Gulf of Suez for oil exploration and production, Oil Minister Tarek El Molla told Reuters. The government is also targeting launching two gas exploration rounds this year, the newswire adds. Meanwhile, demarcating the maritime border between Saudi Arabia and Egypt means Egypt could be able to issue E&P tenders in the Red Sea, Al Borsa quotes El Molla as saying. State-owned GANOPE has already identified concession areas it will tender, he added.

In other industry news: Egypt and Eni have agreed to begin production at a rate of 1 bcf/d from the Zohr field by the end of 2017, Oil Minister Tarek El Molla said, reports Reuters. Eni has completed three of the four wells in the first phase, with an estimated cost of USD 4 bn, he added. The field is expected to produce 2.5-3 bcf/d at maximum capacity in 2019. As for Eni’s Noras field, total reserves amount to 1.5 tcf/d, said Eni’s Chief Exploration Officer Luca Bertelli, Al Borsa reports.

It’s bye bye, ya sollar as Egypt may completely sever its imports of gasoline and diesel by 2019, said Oil Minister Tarek El Molla. 2019 is the conservative deadline for the near-elimination of all diesel imports, with the hope that gasoline imports will be completely halted before that deadline, said El Molla during the Eighth Mediterranean Offshore Conference and Exhibition, which kicked off yesterday. He tacked on the now-standard refrain that Egypt will emerge as a regional energy hub, a key component of which is its refinery development plan, Reuters Arabic reports. The story doesn’t explain the background to the elimination of gasoline and diesel exports, but Qalaa Holdings’ in-progress Egyptian Refining Company will reduce diesel imports by more than 50% when it enters commercial production next year. The facility will also allow the upgrading of gasoline quality in the Greater Cairo Area.

Federation of Egyptian Industries head Mohamed El Sewedy is due to meet with CBE Governor Tarek Amer next week to discuss freeing up FX for imports needed by industry after manufacturers complained of USD shortages and the sharp drop in the EGP on the parallel market. The CBE has allocated USD 4 bn for production inputs since December, with USD 3.5 bn already used up, El Sewedy tells Al Borsa, with the irony here being that El Sewedy was one of the biggest proponents of FX restrictions on imports and other protectionist policies.

The CBE has revised the mechanism by which it provides USD to banks, an unnamed source told DNE on Tuesday after the CBE sold USD 120 mn at its regular weekly auction to finance food commodity imports. The revised system will see banks submit requests to the CBE detailing investors’ expected demand for USD, instead of just selling a previously determined volume every week. “The CBE will then compile the reports for review before allocating currency to each bank. Banks are obliged to use the currency deployments to fund products that the CBE has approved for import,” writes DNE.

Careem Egypt looking for investors? Ride-hailing app Careem is reportedly in talks with investors who are looking to buy into a portion of the company’s operations in Egypt, Al Mal reported. Increased demand for Careem’s services is driving the company to expand its operations, co-founder Mudassir Sheikha says. He claims the app already controls a 50% share of the smartphone-based transportation market.

King Salman bridge cuts through two coral reefs: The King Salman Bridge will consist of two routes, according to maps obtained by state-owned Al Ahram. The 5.6 km Route A will connect Sinai to Tiran island by cutting through Jackson Reef, while the 4.8 km route B will connect Sinai to Tiran by cutting 10 m deep into Gordon Reef. See you in the next life, marine biodiversity, you’ve served your country (whichever it really was) well.

“Riot” ensues after policeman kills civilian near Al Rehab: A policeman shot three people near Al Rehab, a usually quiet Cairo suburb, killing one person. Reuters reports that the policeman opened fired following a dispute over the price of a cup tea. Al Masry Al Youm quotes a source as saying the policeman refused to pay for the cup, while Al Shorouk carries the same story with eyewitness accounts. A number of people protested at the site of the incident “overturning a police vehicle and beating up another policeman at the scene,” and an unspecified number were detained by the police. One unnamed police source told Al Shorouk the shots were fired “accidentally,” but an Interior Ministry spokesman vowed that the perpetrator would be referred to the prosecution. A video of some of the protesters chanting may be viewed here (running time: 1:41)

MOVES- Telecom Egypt-owned Xceed appointed Sayed El Gharabawy as Chairman, Al Mal reported. El Gharabawy was TE’s First Deputy Chief Executive for International Affairs and Operators.

Sound familiar? Papua New Guinea is attempting to nab a loan from the World Bank “rather than accepting the advice of the acknowledged crisis lender, the International Monetary Fund,” as it finds itself short on FX, the Financial Times (paywall) writes. The country gets USD “without the stigma of borrowing from the IMF” and the bank “occupies itself at a time that its core mission of development finance has been substantially eroded.” The World Bank is simply drawing itself into problems it cannot solve as the country pretends “that what is at heart a macroeconomic foreign exchange problem can be resolved through microeconomic intervention.”

Saudi Arabia is once again dominating international headlines this morning as the kingdom is raising USD 10 bn from a consortium of global banks for its first international debt issuance in 25 years as oil revenues tank, the FT (paywall) reports. “The landmark five-year loan, a signal of Riyadh’s new found dependence on foreign capital, opens the way for Saudi to launch its first international bond issue.” Meanwhile, Saudi has tapped JPMorgan Chase & Co. and Michael Klein on to advise on state-owned Aramco’s IPO, according to Bloomberg. “Klein is providing strategic advice to the government, while JPMorgan is working on preparations for the IPO and may be among the banks that underwrite the listing.”

Speaking of oil: Europe has become a “dumping ground” for diesel, according to Bloomberg, as “oil refineries ramped up processing of crude into products such as diesel last year because their single-biggest cost — crude — plunged in price.” This has, unsurprisingly, created a surplus that the International Energy Agency estimates at 87 mn barrels in OECD Europe. “Distillate prices in Europe are set for a hard time this summer. They are already low and they could easily go lower,” said Steve Sawyer, an analyst at FGE in London.

Bailouts Are Big in the Middle East This Seasonis the headline of a Bloomberg roundup on IMF bailouts in the region. Egypt’s bailout funds are still touch and go, with Germany’s Economy Minister Sigmar Gabriel offering to mediate for Egypt in talks with the IMF, the Paris Club, and the European Union, but urging the government to embrace economic reforms as a condition and pointed a finger at the country’s “worrying” human rights situation. Meanwhile, Iraq expects to receive about USD 6 bn from the IMF and the World Bank this year, the IMF approved a USD 2.8 bn credit facility for Tunisia, and Morocco is “seriously considering” renewing a USD 5 bn IMF credit line.

The Coptic community is still finding itself under fire despite promises from President Abdel Fattah El Sisi that he would uphold their rights and help rebuild damaged churches, writes Forbes contributor Doug Bandow. In fact, “there have been more religious-based convictions during [El Sisi’s] time in office than under the Islamist government the former general replaced two years ago,” he quotes the Washington Post’s Sudarsan Raghavan as saying. “Even if Copts believe they remain safer under al-Sisi, they may have sold their liberty birthrate for what turns out to be a mess of security pottage.”

Egypt played a walk-on role in a Reuters piece on how Italy is “bracing for an expected rush of boat migrants” this summer after the EU’s “failed relocation programme” put pressure on its shelter system, Mario Morcone, the official in charge of managing Italy’s immigration system, said. "Already three or four boats have arrived from Egypt this year," Morcone said. "Egypt could be the main worry,” he added. "Since there are people blocked in Greece, we fear that there will be a bypass either through Egypt or Albania or even from Morocco to Spain. We must wait and see how the situation evolves."

Photographers capture loss of Alexandria’s historic architecture over last 20 years. Photographers Mostafa Mamdouh and Abdallah Hanafy splice together vintage photos of Alexandria’s more iconic landmarks with photos of what they look like now.

Israel has refused to reduce the minimum Israeli content requirement on exports to the United States under the QIZ program, said the head of the Readymade Garments Export Council Mohamed Qassem. Egyptian manufacturers have been pushing for years to cut the minimum Israeli content component to as low as 8% from 10.5% today and to get permission to open new qualifying industrial zones. The rejection comes after an Israeli delegation visited Cairo last week to discuss the matter, Qassem told Al Borsa. Israel a reduction as contrary to its interest and a violation of prior agreements with the US and Egypt that set the percentage at 10.5%, said Qassem. A meeting on the QIZ agreement is scheduled to take place in three months’ time. Exports under the QIZ program enjoy duty-free access to the U.S. market provided the minimum Israeli content requirement is met.

The Egyptian government has granted Jordanian companies temporary registration in the import registry to facilitate the export of their goods to Egypt, said Egypt’s commercial attaché in Amman Mohamed Abdullah, Al Shorouk reports. The Trade Ministry approved granting these companies temporary quality certifications following a request by the Jordanian government recently.

Egyptian Undersecretary of Trade Ali Al Laithy and the Bosnian deputy prime minister have agreed to create a bilateral business council in an effort to boost trade relations, which topped USD 38.2 mn in 2014, according to Amwal Al Ghad. The pair met in Cairo yesterday to discuss bolstering cooperation.

Egypt and Somalia have signed cooperation agreements that will reduce bilateral trade restrictions, develop a joint trade committee, and help develop trade in infrastructure, agriculture, health, animal resources, and river transportation, Al Mal reports.

The Suez Canal Special Economic Zone hosted a group of Chinese investors to discuss investment opportunities with the zone and the Suez Canal Authority, according to Al Mal. The Chinese were briefed on the one-stop-shop system and shown existing Chinese investments in the Suez Canal region. The Chinese also visited factories in Ain Sokhna.

BP is “looking forward” to begin preliminary drilling at the El Matariya onshore concession, regional president Hesham Mekawi told Al Ahram. The 960 square kilometer concession will include the first drilling in the oligocene formation in the concession and presents one of the quickest sources of providing gas to the domestic market, he added. Mekawi also said the development of the West Nile Delta project is moving ahead of schedule, with three wells set to be drilled starting August. The company aims to boost its natural gas supply to Egypt to 2.5 bcf/d by 2020 from 1.2 bcf/d, said Mekawi, Amwal Al Ghad reports.

The Egyptian government purchased 10,000 tonnes of locally produced wheat in the first five days of the local procurement season, Supply Minister Khaled Hanafy said. The government is targeting buying 4 mn tonnes of local wheat this season. Farmers are being paid a higher price for their produced wheat “well above global market rates,” to “encourage farmers to grow wheat but has previously led to smuggling involving the sale of cheaper imported wheat to the government falsely labelled as Egyptian.” 105 shounas and 17 wheat silos will come online this month, said Hanafy, confirming statements earlier this month by David Blumberg, CEO of Blumberg Grain Middle East and Africa. Blumberg’s storage systems will be able to save the Egyptian government approximately USD 550 mn a year in wheat savings, he had told Reuters.

Eastern Company is looking to expand its exports into Tanzania and Zimbabwe as part of an overall strategy to boost exports and strengthen USD resources, said Chairman Mohamed Haroun, reports Al Borsa. Eastern Company is aiming for EGP 75 mn in FY 2016/17, up from EGP 70 mn in FY 2015/16, he added. The company will export 348 mn cigarettes and 1,656 tonnes of shisha molasses to Tanzania and Zimbabwe and will import tobacco in return, he added. The company’s EGM has advised the board to continue pushing for domestically grown tobacco, Al Mal reports.

The Arab Organization for Industrialization is looking to export 15 charcoal production kilns to Lebanese investors by the end of the year, sources told Al Borsa. The cost of the project is estimated at around EGP 350-400 mn and will be built in cooperation with the Minar Engineering Company to eliminate the environmental and health risks from traditional coal production methods. (Read in Arabic)

Ayaady for Investment has established Ayaady for Investment and Industrial Development with an issued capital of EGP 500 mn, said Chairman Osama Saleh. The company will receive technical and marketing assistance from the Federation of Egyptian Industries (FEI). A capital increase of up to EGP 5 bn will happen gradually, he added. The new company is studying potential projects including building minor industrial complexes in a thousand villages in cooperation with the FEI, the furniture city project in Damietta, as well as a project to build six specialized industrial zones in cooperation with the New Urban Communities Authority and the Industrial Development Authority in Tenth Ramadan, El Sadat City, Borg El Arab, New Minya, New Assiut, and New Tiba, he added. (Read in Arabic)

The Pharmacist Syndicate is lobbying the government to increase the prices of compounds currently priced under EGP 20, said the union’s head Mohy Obeid. The syndicate, which was supposed to meet with the prime minister and health minister yesterday, wants prices of these treatments to be raised at a minimum of EGP 2 and a maximum of 20% of its current selling price. The move is critical, Obeid tells Al Borsa, as a number of companies no longer see some of these compounds as economically viable in light of the continued weakening of the EGP, which is contributing to shortages in supply. As we noted earlier this month, the Health Ministry has finally agreed to raise the prices of compounds sold in Egypt, which have long remained unchanged.

French hotel operator AccorHotels signed an agreement to build the Novotel Cairo East hotel for EGP 1 bn in partnership with Al Yassin Holding. The hotel will include 350 rooms and is expected to be completed by 2019. AccorHotels manages around 4,000 hotel rooms in Egypt. (Read in Arabic)

Springboarding from the government plan we reported on yesterday, Egypt is aiming to attract 9 mn tourists this fiscal year and 20 mn by 2020, said Tourism Development Authority chairman Samy Mahmoud, according to Al Borsa. Yesterday’s plan put the figure at 10 mn. Egypt expects tourism revenues to hit USD 25 bn by 2020 driven by expansions into new tourism markets and not relying solely on conventional markets. Chinese tourists in Egypt have increased to over 125k in 2015 from 64k in 2014, with a projected 200k by the end of the year, he added. The authority has gotten in contact with the Chinese Ambassador in Egypt to discuss allowing Chinese airlines to operate in Egypt, said Mahmoud.

Transport Minister Galal Saeed pledged citizens would be able to feel a significant improvement in railroad services within a year, Al Borsa reports. A comprehensive plan to upgrade locomotives, train cars, train stations, traffic lights, and railroad crossings is already in place, he added. (Read in Arabic)

The Transport Ministry has so far signed agreements with the private sector worth over EGP 40 bn in 2016, of which EGP 10 bn were signed during the French delegation’s visit, according to the minister. The agreements include upgrading the national railway network and the Cairo Metro, which has already seen EUR 200 mn invested in its third line. (Read In Arabic)

The Food Industries Holding Company is seeking a EGP 2.5-3 bn facility to fund domestic supply purchases to feed into the supply smart card and bread point system, Al Mal reports. The company had apparently requested a EGP 3 bn facility from a local bank, which was reduced to EGP 2.5 bn, and is now working on the terms and conditions for the loans before bringing in more banks to fund it as a syndicated loan, according to company sources. Five local banks have already provided the company with a EGP 2.5 bn facility. This sudden drive to borrow could be related to reports that prices of domestic supplies have skyrocketed of late, despite mandates and instructions set by President Abdel Fattah El Sisi to keep them low. (Read in Arabic)

Air conditioning and solar energy systems manufacturer Egyptian German Air Treatment Company will sign a partnership agreement with Russian real estate developer Morton on 26 April in a ceremony attended by Russian Trade Minister Denis Manturov, Egypt’s Trade Minister Tarek Kabil, and International Cooperation Minister Sahar Nasr. Details on the partnership are scarce, but apparently this was one of the agreements promised during Manturov’s meeting with President Abdel Fattah El Sisi earlier this year, AMAY reports.

Egypt’s National Council for Human Rights is preparing a list of individuals arrested for nonviolent protesting or expressing their opinions to petition for their release when the council’s head Mohamed Fayeq meets with President Abdel Fattah El Sisi, Al Shorouk reports. The list will include those whose health has significantly deteriorated in prison. The list will include notable activists such as Ahmed Douma, Ahmed Maher, and Alaa Abdel Fattah. (Read in Arabic)

Former presidential candidate Hamdeen Sabahi has filed a lawsuit at the Administrative Court demanding that President Abdel Fattah El Sisi and Prime Minister Sherif Ismail put a stop to demarcating the maritime border between Saudi Arabia and Egypt, according to Al Shorouk. Sabahi argues that Sanafir and Tiran had long been part of Egypt’s sovereign control, and the move to relinquish them is illegal. Sabahi has maneuvered himself as a leader in the “Egypt is not for sale” movement, opposing the treaty and calling for the dissolution of the cabinet and protests on Sinai Liberation Day.

Don’t believe the rumor mill: we are not going back to using the “old” license plates, a source at the Traffic Authority told Al Shorouk. Reports on social media said Egypt might be reverting to using the old numerical licence plates for vehicles. The source said this was just a temporary measure in smaller cities that ran out of new plates, but the Interior Ministry has now commissioned a new supplier.

The Consumer Protection Agency is accusing beIN Sports of anti-competitive behavior. The agency says the Qatari network has increased prices and changed its TV channel packages in ways that “do not fit the Egyptian market,” Al Ahram reports.

OSN signed an agreement to add Comedy Central to its roster. This calls into question whether the content will be pulled from Netflix and other streaming services that carried the content.