Abraaj’s Cleopatra Hospital Company announces intention to float

It’s a big weekend for the tech startup scene in Alexandria: The Techne Summit kicks off at the Bibliotheca Alexandrina on Saturday (you can tap here to register), as does Seedstars Alexandria. Techne will feature a pretty diverse lineup of speakers, ranging from Qalaa’s Hisham El Khazindar and tech superstar turned angel investor Khaled Ismail to Elmenus partner Hassan Massoud. Other speakers include tech types from the US, Dubai, the Netherlands, Germany, Lebanon…

Well folks, it looks like Donald Trump really is set to be the GOP candidate, crushing our hopes that his entire campaign was just an elaborate performance art piece a la Joaquin Phoenix. After Governor John Kasich of Ohio stepped down from the race and Ted Cruz’s crushing defeat in Indiana, Trump has pretty much cemented his nomination.

Oh, and: Ramadan is coming. By our count, there’s something around 40 days left.

Look for solid newsflow out of the Business News Foundation’s Third Annual Energy Conference: Energy and Sustainable Development, which kicks off on 10 May at the InterContinental Hotel Citystars Cairo. Register here.

Energy not your thing? Whether you’re into tech, all things food or medical stuff, there’s probably a gathering for you in Cairo this month as the conference industry prepares for the Ramadan slowdown:

• Tuesday-Tuesday: TheCairotronica Conference is taking place from 3-17 May at the AUC Falaki.
• Wednesday-Saturday: The Cairo Food Africa Exhibition is coming to the Cairo International Convention and Exhibition Center.
• Thursday-Saturday: The International Medical Exhibition & Conference takes place also at the Cairo International Convention and Exhibition Center.

Abraaj’s Cleopatra announces intention to float, will raise capital by offering 25% of outstanding shares in secondary offering on EGX, followed by closed subscription for selling shareholders: Egypt’s largest private-sector hospital group announced this morning that intends to “raise capital through a secondary offering of shares followed by a closed subscription to support its expansion and growth plans.” The offering of 40 mn shares will include up to 34 mn for international investors and 6 mn in an Egyptian retail offer. “Cleopatra is the largest private hospital group in Egypt when measured by number of hospital beds or number of operating hospitals,” said Chief Executive Officer Ahmed Ezzeldin in the intention to float released today (read here in pdf). The group’s four hospitals include Cleopatra Hospital, Cairo Specialized Hospital, Nile Badrawi Hospital and Al Shorouk Hospital. Proceeds from the transaction, Ezzeldin said, “will be re-invested in growth, funding our capital expenditure plan as we develop extensions of Al Shorouk Hospital and Cleopatra Hospital, as well as the acquisition of a site in New Cairo to develop into a new hospital.” The company is also studying longer-term expansion outside the Greater Cairo Area.

Market opportunity: The ITF notes that “Egypt is a market that exhibits characteristics of both emerging- and developed-market healthcare systems. The country has a young, fast-growing population that we believe is increasingly health conscious; in parallel, Egypt has a large aging population in absolute terms and is characterized by an increasing incidence of lifestyle-related medical conditions. The market is forecast to grow by a CAGR of 17.6% from 2015 through 2019.”

Selling shareholders through Abraaj’s Care Healthcare Limited include Abraaj NAH Limited (72.4%), the European Bank for Reconstruction and Development (12.5%), Germany’s DEG (7.55%) and France’s Proparco (7.55%). The selling shareholders will subscribe to a rights issue for the same number of shares as are sold in the secondary sale, reinjecting the net proceeds from the transaction into Cleopatra to fuel growth.

What it worth? Citing unnamed sources with knowledge of the transaction, Bloombergreports that Abraaj looking to generate USD 300 mn from the transaction, which could close as early as this month, the sources added, saying the Egyptian Financial Supervisory Authority (EFSA) has already approved the offering. Bloomberg’s sources are a bit off the mark, we’re told: Cleopatra obtained approval to list in April (as we reported at the time), but the EFSA and EGX processes are ongoing and approvals are “expected to be obtained within the coming weeks.”

Who’s advising? EFG Hermes is sole global coordinator and bookrunner for the offering. Freshfields Bruckhaus Deringer LLP is international counsel to Cleopatra Hospital Company, while Zulficar & Partners are local counsel. Shearman & Sterling (London) LLP is international counsel to the sole global coordinator and bookrunner, while Matouk Bassiouny is local counsel.

Devaluation won’t solve the FX crisis -Top advisor to El Sisi: The FX crisis cannot be resolved through devaluation, said Abla Abdel-Latif (CV, pdf), head of the President’s Council of Economic Advisors, in an interview with Khairy Ramadan on his CBC talk show Momken. The focus instead should be on developing industry and scoping out new sources for foreign currency, Abdel-Latif added. (Watch, starting at the 1:06:01 mark.)

…the comments came as the Central Bank of Egypt reported that its foreign reserves rose to their highest levels in eight months, registering USD 17.0 bn at the end of April, up from USD 16.6 bn a month earlier. The increase came through a USD 408 mn rise in the CBE’s foreign currency holdings. Bloomberg has coverage in English and the CBE data can be accessed here.

…Still, the EGP continued to slide as greenbacks were trading at EGP 11.10 per USD 1 on the parallel market yesterday, according to Al Shorouk. The continued drop in EGP and increased scarcity of USD domestically reminded us of one of the most ingenious Egyptian P2P solutions, which sprung to life in 2013 and has faded away gradually since then.

…CBE Governor Tarek Amer confirmed that the CBE has yet to receive new FX deposits since he took the helm last November, attributing the rise in FX reserves to the CBE’s “policies,” Al Mal reports.

…veteran finance writer Patrick Werr says the argument that the EGP is sliding because FX bureaus are speculating against it does not hold water. “Speculators make money only if their underlying bet comes true.” Werr believes FX bureaus play an important role in the economy — like them or loathe them, the market needs them.

Don’t fret, little day traders, only business owners in the real economy will pay taxes for the coming year. The two-year delay on the imposition of a 10% tax on capital gains extends to 17 May 2017, Deputy Finance Minister Amr Al Monayer said yesterday in an emailed statement. The announcement was meant to reassure retail investors that the taxation policy is stable in light of numerous complaints by the private sector that the government has “not fixed the taxation system” and to “dispel rumours” on the issue, said Al Monayer. The government caved to pressure from protesting retail investors in May 2015 and promised the capital gains tax wouldn’t be imposed for two years. Cabinet left in place a tax on dividends passed at the same time, rewarding the speculation of day-trading retail investors whose contribution to the real economy is zero while limiting upside for entrepreneurs and business owners who create jobs and meaningful growth. Brilliant policymaking.

4G licenses are coming: The National Telecommunications Regulatory Authority will hold discussions on the regulations governing the issuance of 4G licenses — and start chewing-over how much to charge for them — on Sunday, following the cabinet’s approval on the launch of 4G licenses yesterday. Sources tell Al Mal that it was likely the licenses would not be issued in an auction to guarantee widespread distribution of 4G services. Al Masry Al Youm had reported that 4G licenses would be coming on Sunday, quotingICT Minister Yasser El Kady, an unlikely scenario as the cabinet had made the licensing contingent on NTRA regulations being drawn up. El Kady said issuing 4G licences has been long overdue as Egypt is “just one of four countries without 4G in Africa.” The minister said the licences will be offered to the incumbent mobile operators — Orange Egypt, Vodafone Egypt, Etisalat Misr — as well as Telecom Egypt.

The Egyptian Financial Supervisory Authority (EFSA) has approved three new conditions exempting listed companies from issuing a mandatory tender offer. The provisions are in EFSA’s most recent amendments to the Capital Market Act’s executive regulations. Under these conditions, a company seeking to acquire another is not required to issue an MTO if the shareholders of the target company unanimously approve the acquisition. A shareholder planning to buy a 50% stake in a parent company is also not required to issue an MTO for the company’s listed subsidiaries in which it holds at least a 33% stake. Additionally, public sector holding companies restructuring their subsidiaries can appropriate employee-owned shares without an MTO. EFSA also amended listing regulations, requiring all companies to issue disclosures on any and all pending legal cases or actions involving management, assets, or subsidiaries that could have an impact a financial impact on the firm’s fortunes, Al Borsa reports.

What impact will these changes have on the acquisition of CI Capital or OTMT’s standing with EFSA? None whatsoever, EFSA’s head Sherif Samy tells Al Borsa, adding that the new conditions will not be applied retroactively.

Oriental Weavers founder says the rich should be taxed at 30%: The “rich” in Egypt should be included in a 30% income tax bracket, up from the current top rate of 22.5%, Mohamed Farid Khamis, the founder of Oriental Weavers and the head of the Egyptian Union of Investors’ Associations, said. Khamis also questioned the replacement of former Finance Minister Hany Dimian, according to Al Masry Al Youm, adding that Khamis had successfully pressured Dimian to increase the top income tax rate to 22.5% from 20%.

Siemens’ 1Q2016 profits from industrial operations beat estimates, rising 28% to EUR 2.12 bn after an increase in demand for power-generating equipment. Orders increased 7% to EUR 22.3 bn market by “two major contract wins, one for a power plant in Egypt and another for an offshore wind farm off the coast of England,” CEO Joe Kaeser said.

Sherif Ismail’s cabinet met yesterday. Among the primary decisions taken:

• Approved the issuance of 4G telecom licenses, with regulations governing the sale process to be determined by the National Telecommunications Regulatory Authority;
• Ratified and adopted the tourism rescue plan announced last month, according to Al Mal;
• Approved the Damietta governorate’s request to acquire capital in the company that will manage Damietta Furniture City. The governorate will acquire its stake through an in-kind contribution of land.
• Reallocated land to building the New Obour City and tasked the New Urban Communities Authority with presenting a plan for the city within a year and half;
• Approved the suggested amendments to the executive regulations of the anti-money laundering law.

The Press Syndicate’s general assembly adopted 16 demands following protests over the arrest of two journalists in a police raid of its downtown headquarters over the weekend. The demands include: the immediate resignation of the interior minister; an apology from the presidency; the release of all imprisoned journalists; the issuance of legislation protecting journalists from arrests and calling for the immediate adoption of the unified journalism act; calling for ending the gag order issued on Tuesday; filing a lawsuit against the MOI; organizing a weeklong demonstration next week and blacking newspapers on the first and last days of the protests; holding a meeting this coming Tuesday to discuss a full strike; and finally, banning the publication of news from the MOI. Journalists have also decided they will not print the name of Interior Minister Magdy Abdel Ghaffar, but will instead only refer to him by his image, with the colours in negative.

The showdown between the police and the press may yet have legs: Reuters has coverage in English, as do the Financial Times and the Wall Street Journal. Meanwhile, Ahram Online notes that state-owned Al-Ahram’s Arabic news portal has joined private outlets AMAY, Al Shorouk and Al Watan in the protest.

One of the memos accidentally sent to journalists by the Interior Ministry reportedly included a note on suggesting a gag order on the investigation into the killing of Italian student Giulio Regeni, according to AP. The news comes as an Italian security delegation is expected to arrive in Cairo on Saturday for talks with Egyptian officials the ongoing investigation, an Egyptian judicial source told Ahram Online. The Egyptian prosecutor general provided Rome with phone records of 13 individuals in the hopes of cracking the case ANSA news agency reported. Italian sources told ANSA that the the Cairo meeting follows a request from Egypt’s prosecutor general.

MOVES- Chatham House announced it appointed Lina Khatib to head its Middle East and North Africa Programme. Khatib was formerly director of the Carnegie Middle East Center in Beirut and is also a Senior Research Associate with the Arab Reform Initiative.

Fein el roz?: The world is expected to experience a “major rice shortage” driven by El Nino’s extreme weather patterns, “potentially fuelling an international price crisis.” The Independent reports that hot weather and droughts brought on by El Nino continue to “affect production in India, Pakistan, Thailand and Vietnam, where 60% of the world’s rice is grown.” Samarendu Mohanty from the International Rice Research Institute says “the extent of this crisis all depends on what happens during the upcoming monsoon season. If it goes badly in India and Indonesia and the crops don’t get the rain, there could be real trouble ahead… At the moment it looks like the situation won’t be as serious as in 2008 but the countries affected must act more rationally this time rather than panicking.” To put things into perspective: Egyptians consume about 4.0 mn tonnes per annum, or approximately 44 kg of rice per person per year.

To get more targeted with its stimulus efforts, the People’s Bank of China is “turning on the credit taps” to its policy banks to directly funnel credit to areas important to the government, according to Bloomberg. “The pledge shows the PBOC is determined to support credit expansion to stabilize economic growth,” said Ming Ming, head of fixed income research at Citic Securities Co. in Beijing. But not everyone is quite so bullish on China, according to the FT’s (paywall) James Kynge, who says “money is losing the power to energise important economic muscles”. A new wave of credit to ease debt problems is “like smoking opium to look healthy”, said Professor Li Weisen of Fudan University.

Both Egypt and Israel have objected to a US proposal to reduce the number of its troops as part of the Multinational Force in Sinai, writes Amos Harel for Haaretz. Egypt is opposed to the troop reduction for “fear it would be seen as an American expression of no confidence in the President Abdel Fattah el-Sisi,” he says. Washington is concerned about terrorist attacks in the region by Daesh affiliates Wilayat Sina, but Egypt is ready to consider alternatives including moving the multinational forces to central and south Sinai and using monitoring equipment.

Human rights activist Sanaa Seif has been sentenced in absentia to six months in prison for "insulting the judiciary", according to the BBC, which calls it “a renewed crackdown on dissent last month after anti-government protests were triggered by [President Abdel Fattah El] Sisi’s controversial decision to hand over control of two islands in the Red Sea to Saudi Arabia.” A prosecutor summoned Seif on suspicion of inciting protests against the president in April, but she did not comply, which “the court deemed an insult.” Seif said she would “hand herself in and not contest the verdict because she had no ‘energy left’ and the authorities were determined to jail her.”

The New York Times has picked up on the Interior Ministry’s fat-finger email slip, accidentally sending memos journalists memos on its PR strategy, which included suggestions on how to counter a “vicious” news media campaign triggered by the arrest of two journalists at the Press Syndicate — and a proposed gag order on the Regeni case. “The accidental leaks provide a rare glimpse into the mind-set and internal working of the notoriously opaque Egyptian government at a time when President Abdel Fattah el-Sisi is under intense scrutiny at home and abroad,” according to the NYT’s Declan Walsh.

Syrian students in Egypt are struggling, says Al-Monitor’s Nahla Elnemr. Not only do they struggle to get into schools, they struggle to pay for them seeing as they’re considered foreign nationals, with numerous Syrian parents telling to Al-Monitor about “the slow pace of administrative procedures inside the Passports, Immigration and Nationality Administration and the small number of schools accepting the enrollment of their children.” Some parents even believe the issue is a state ploy to avoid issuing permits. “Many Syrians living in Egypt believe the optimal solution to the education crisis is to establish a Syrian school that provides accredited certificates, unlike the current Syrian educational institutions in Egypt that are merely ‘learning centres.’”

US companies pouring bns into developing autonomous cars that Americans don’t want: Keith Naughton at Bloomberg takes a look at current efforts to bringing autonomous cars to fruition in the United States, despite scaring “the bejeebers” out of some concerned motorists, given that over 75% of Americans currently do not wish to ever own an autonomous vehicle. Kay Stepper, a vice president and head of the automated driving unit at Bosch sums up the problem facing such efforts: “Technologically, we will be ready for automated driving within this decade. But it will take well into the next decade to convince consumers.” (Read Bns are being invested in a robot that Americans don’t want)

Mehwar TV presenter Riham Said as Samara from the Ring, by Muhamed Elhagrasy. (View image)

Ted Cruz accidentally punching and elbowing Heidi Cruz in the face after announcing the suspension of his campaign. (Watch, running time: 5 seconds on infinite loop)

President Abdel Fattah El Sisi met yesterday with South Korea’s Minister of Trade, Industry and Energy Joo Hyunghwan, who is leading a delegation of representatives of over 143 executives representing 67 of South Korea’s largest companies, according to an Ittihadiya statement. Joo spoke of the need to enhance cooperation in infrastructure, the texture industry, the supply of medical devices, water desalination, electronics, cars, and petrochemicals. Joo also touched on the USD 3 bn package allocated to Egypt during El Sisi’s visit, adding that while he commends Egypt’s measures to ease restrictions on foreign deposits, which have directly benefited Korean companies in Egypt, he hoped for more. For his part, El Sisi said Egypt was working on facilitating Korean investments in Egypt and “eliminating impediments” under the umbrella creating an environment conducive to investment and business. The executives are set to take part in the Egyptian-Korean Business Forum in Cairo today, which will offer a “detailed overview of the economic zone of the Suez Canal and will showcase its numerous advantages.” Participating companies include Hyundai, Datsun, Daewoo, Hana Bank, GS Construction and Engineering, and Samsung, Al Borsa reports.

Emaar chairman Mohamed Alabbar expressed willingness to explore new investment opportunities in Egypt during meetings between Trade and Industry Minister Tarek Kabil, the UAE Economy Minister Sultan Bin Saeed Al Mansouri, and several investors on Wednesday in Dubai, according to Al Masry Al Youm. During the meeting, which were set to discuss general investment opportunities between the two countries, Alabbar called for joint business council meetings at Egyptian tourist cities to support Egypt’s ailing tourism sector.

Egypt is sending a delegation to Germany in June to discuss a EUR 170 mn debt exchange under the debt-exchange agreement signed in 1991, German Ambassador to Egypt Julius Georg Luy told Al Borsa. The debt exchange program channels the debt into development projects or to supporting the state budget as was the case in 2001 between the two countries.

Germany’s Agriculture Ministry is also sending a delegation in the coming weeks to Egypt to discuss providing Egypt with technical assistance on agriculture and irrigation projects as part of the 1.5 mn feddan project, said Egypt’s ambassador to Germany Badr Abdel Atty. These include assisting the Agriculture Ministry with research on drought-tolerant seeds and extracting ground water using solar power, Al Borsa reports.

Dana Gas announced 1Q2016 profits of USD 6 mn “despite 41% drop in realised oil prices.” Dana Gas said its capital optimisation measures could include “seeking, from time to time, to buy back its outstanding sukuk,” although at present the company has not yet determined the size of the buyback. In 1Q2016, Dana Gas “drilled and / or completed six successful development wells (including Balsam-4) and a new exploration well [in Egypt] … All were successful and encountered gas bearing reservoirs on or above expectation.” Its Egypt output dropped to 33,000 bbl of oil equivalent per day from 37,700 in 1Q2015 “due to the steady and predictable downward curve associated with normal field production decline in Nile Delta Egypt. This decline has now been arrested as production from the Balsam field ramps up.” (Read)

The Finance Ministry has approved a EUR 200 mn guarantee for Siemens’ 180 MW wind farm in the Gulf of Suez through the New and Renewable Energy Authority (NREA), a source from the Power Ministry tells Al Mal. On a related note, NREA head Mohamed El Sobky said the ministry is awaiting CBE approval on a EUR 180 mn facility from 11 banks and international finance institutions to fund wind farm projects. These include NBE, CIB, HSBC, the European Bank for Reconstruction and Development, and the African Development Bank. (Read in Arabic)

The Internal Trade Development Authority (ITDA) has issued a tender for 1.6 mn sqm of land for the development of retail outlets and logistical centres in eight governorates, according to a statement from the Supply Minister. The land is part of phase two of a strategy to facilitate land for retail development. Phase one saw EGP 6 bn invested in land for retail outlets by investors from the GCC, France, and the US, according to Supply Minister Khaled Hanafi. The ITDA had been authorized to tender the land by the New Urban Communities Authority, which granted it 600 feddans (2.5 mn sqm) in total for both phases in 18 cities, Al Borsa reports.

Hajj fees are set to increase 18-20% this year due to the devaluation of the EGP, Al Borsa quotes Tourism Minister Mohamed Yehia Rashed as saying. Five-star pilgrimage fees increased to EGP 59,000 from EGP 51,000 for the first tier and to EGP 57,000 from EGP 49,000 for the second. Four-star fees were upped to EGP 47,000 from EGP 41,000 for the first tier and to EGP 45,000 from EGP 39,000 for the second. (Read in Arabic)

General Electric (GE) has provided the Egyptian National Railways Company with 110 new locomotives, 80 of which are from GE’s Evolution Series, said CEO of GE MENA Ayman Khattab. In an interview with Amwal Al Ghad, Khattab suggests further locomotive sales to Egypt are in the pipeline and notes the company is also pressing on with its four power plant projects in Beni Suef and Ismailia. (Read in Arabic)

The Consumer Protection Agency (CPA) has filed a complaint with the Tax Authority against five car dealerships for manipulating receipts to consumers, calling the authority to investigate the dealership for tax evasion, said CPA head Atef Yacoub. The request against Auto Samir Rayan, El Masria for Cars, B Auto, National Motors, and Egyptian Engineering Industries were prompted by complaints by customers whose receipts were less than the value paid for cars. (Read in Arabic)

According to a Wamda Research Lab (WRL) study of over 170 entrepreneurship experts in MENA, the most challenging phase for entrepreneurs is not starting up, piloting, or even sustaining their company — it’s scaling. Egypt-based TA Telecom has not only accomplished this, but done it with such success they’ve become a model for a new report by the WRL called Customer Analytics, Agility, and Corporate Partnerships How TA Telecom Expanded Beyond Egypt. The gist? Startups need to be agile in response to market trends, use data to understand customers and drive innovation, find corporate clients who can facilitate your expansion, and prioritise recruitment and retention.

Domty’s share price has dropped below its IPO price of EGP 9.20 for the first time since the company went public in March, falling 3.15% to EGP 8.91, Al Borsa reports. The share price hovered between EGP 9.20 and EGP 10.85 since the IPO and has lately sagged with the wider market. (Read in Arabic)

The banking sector was the largest tax revenue generator with CIB, QNB, and HSBC topping the list, according to Finance Ministry data on the biggest contributors to Egypt’s tax base in FY2015-16, released yesterday. The energy and petrochemical sector was the second-largest contributor, with Sidi Kerir paying the most taxes. The data revealed just how significant Egypt’s economic crunch has had on tax revenue. Telecom Egypt, which held the top spot for the sector, saw its taxes fall 50% to EGP 300 mn from EGP 600 mn. Sectors heavily dependent on natural gas also declined, including steel and cement, Al Borsa reports. (Read in Arabic)

President Abdel Fattah El Sisi issued a decree extending the state of emergency in areas of North Sinai spanning from Tal Rafah to Al Awga and from west Al Arish Al Halal Mountain for an extra three months. The decision is subject to parliamentary approval. (Read in Arabic)

Egyptian Premier League club Zamalek’s manager Alex McLeish has joined the roster of managers quitting the club, according to Reuters. McLeish left the club “after just 65 days despite winning six of his 10 games while in charge,” making him the fourth manager to leave the club this season. (Read)

A Cairo Appeals Court acquitted former Prime Minister Ahmed Nazif of graft charges in his latest retrial, ABC News reported. Nazif was absolved of charges including abuse of office, and the ruling is final and cannot be appealed. Nazif was released in June 2013 when he had spent the maximum period in pre-trial detention for corruption charges. He was acquitted of charges in a separate graft case in February 2015.

Tom and Jerry are the root of all evil, according to the head of the State Information Service. Cue gales of laughter in the foreign press corps.