Secrets of the GDR trade revealed as window closes.

The Press Syndicate will hold another general assembly today to discuss what’s next in its showdown with the Interior Ministry, Al Mal reports. The Syndicate postponed an assembly which was supposed to take place last Wednesday to decide on whether to hold a general strike.

U.S. Secretary of State John Kerry stops in for a visit today. The visit is already being positioned by wire services as coming “amid a stark crackdown on political freedoms in Egypt.”

Sir Suma in town to ink EUR 320 in agreements: The President of the European Bank for Reconstruction and Development, Sir Suma Chakrabarti, will arrive in Cairo on Wednesday, 25 May to sign EUR 320 mn in loan agreements with the Egyptian government. The loans will help finance transportation, irrigation, and water infrastructure development projects, Al Borsa reports. His visit will continue until early June where he will meet with a number of government officials.

On 25-26 May (Wednesday-Thursday) The Middle East and North Africa Solar Conference and Expo MENASOL 2016 kicks off at the Hyatt Regency in Dubai.

Also on Wednesday: The FAO’s and EBRD’s conference: Securing the future of Baladi bread: how Egyptian public-private partnerships can help deliver tomorrow’s food security, Sofitel El Gezirah, Cairo. Register here.

The second Africa and Middle East conference on software engineering (AMECSE) is happening at Intercontinental Citystars in Cairo on 28-29 May.

N Gage’s Investment Regulation Forum in cooperation with Pepsico kicks-off on 29 May (Sunday) at the Four Seasons Nile Plaza, Cairo. Register here.

It’s the story all of Egypt emailed us / forwarded / sent us on El-Whats yesterday: When an arbitrage loss becomes the go-to solution to overcome FX shortages: The “hot trade” in Egypt is a guaranteed money-loser, Ahmed Namatalla writes for Bloomberg (autoplay video). Desperate for USD, clients buy CIB shares in EGP on the EGX and sell them as global depository receipts (GDRs) in London for losses as big as 30%. “Big international companies are so desperate to get [USD] that they’re willing to swallow the losses on the deals.” The method is “perfectly legal,” Mohamed Radwan, head of equities at Pharos Holding, says and cost is not an issue “for investors that are looking for a full exit or immediate access to hard currency, because they cannot afford to wait and risk further devaluation of the [EGP].” Head of arbitrage at Beaufort Securities says the “trade is pretty crazy … The only reason anyone would do this is because they must really want the currency. It’s purely to get the money out of the country.” This is causing CIB a problem, as it means the bank is close to reaching the regulatory limits of how much of the company’s shares can be traded offshore as GDRs. The EGX banned the trade for local investors last year, mandating them to be paid in EGP, but left the door open for overseas investors.

Abraaj’s Cleopatra announces indicative price range on offering; company in London today for first leg of roadshow: Egypt’s second public offering of the year has been priced at EGP 8.75-11.88 per share, according to a price range announcement (pdf) released this morning by Cleopatra Hospital Company, Egypt’s largest private-sector hospital group. That range values the offering of 40 mn shares at EGP 350 mn to EGP 475 mm. EFG Hermes has the company in London this morning for the first leg of the roadshow. The offering will “raise capital to support expansion and growth” and includes up to 34 mn shares for international investors and 6 mn in an Egyptian retail offer. Selling shareholders will re-inject the net proceeds of the transaction into Cleopatra to fuel growth by subscribing to a rights issue for the same number of shares as are sold in the secondary sale. The company’s shares are likely to begin trading in the first week of June. Our previous coverage of the transaction, including a downloadable copy of the company’s intention to float, is here, or you can tap here for a link to the company’s website for the transaction. EFG Hermes is sole global coordinator and bookrunner for the offering; Pharos Holding is manager. 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.

More on the VAT bill: Professional service providers, including doctors, lawyers, and accountants, will not be required to pay value added tax (VAT), sources told Al Mal. It also looks like an “unfeasible” proposal to slap on an additional 3% if sellers do not provide receipts will be scrapped. Sources also said the general VAT rate will be 14%, up from the current 10% general sales tax system.

The Media Act is expected to be sent to parliament at the end of the month once it’s been reviewed by the Egyptian Council of State (Maglis El-Dawla), sources tell Al Borsa. Among the legislation’s contentious articles are ones that enforce a EGP 500k licensing fee for media websites. Many, including Cairo University journalism professor Mahmoud Khalil, have voiced complaints that this condition would greatly restrict growth in online media. Proponents of the law, including the former Press Syndicate head Diaa Rashwan (one of the bill’s authors) feels that is precisely the point: Proponents argue that the law aims to establish a standard of quality for journalism and the high fee would help enforce that. (He obviously doesn’t watch evening talkshows…) Others also criticised the act’s appointment of the head of the proposed national media regulatory authority, which they feel should be an elected position.

Selling ONTV is part of Naguib Sawiris’ shift in investment strategy, according to a statement covered by Al Mal. ONTV was the cause of multiple “headaches” for Sawiris from all sides of the political spectrum, he says. He is, however, looking to expand in the field of advertising and media production through subsidiary Promomedia, which he announced would be increasing its paid-in capital to EGP 500 mn. Ihab Talaat was appointed CEO of Promomedia and Sawiris appointed himself chairman. Selling ONTV should eliminate what some have called a conflict of interest arising from Sawiris’ ownership of both a TV channel and the rights to advertise on rival channels through Promomedia, Sawiris said. He also doesn’t believe it possible to make money through a channel that focuses only on news without relying on ad revenue from variety shows, movies, and series.

Meanwhile, Ahmed Abou Hashima’s Egyptian Media Company, which acquired ONTV, is considering establishing an ONTV Sport channel as part of its expansion plans, Al Borsa reports. These plans include acquiring the rights to four new television shows that it will air during Ramadan. As part of the shakeup at the channel, the board is reportedly considering firing Gaber Al Armooty (Hallelujah…), Yousef El Housseiny, Liliane Daoud, and Khalid Taleema. ONTV will retain Promo Media as its exclusive marketing and advertising agency, with the latter planning to invest EGP 500 mn on new programing for the network.

Russian Trade Representative to Egypt Fedor Lukashin expressed hope Tuesday that the ban on flights from Russia to Egypt would be lifted this fall, according to Sputnik. "As far as we know, the United Kingdom postponed the resumption of the air traffic from the summer to November. It means that our British colleagues are waiting for their Egyptian partners to revise the security measures [in the country]. Hopefully, the restrictions to be lifted this fall," he said. On Sunday, we reported that Russia’s aviation watchdog (Rosaviatsiya) said security measures in Egyptian airports are “satisfactory” and resuming flights was “very much in sight.”

The Oil Ministry has reached an agreement with Royal Dutch Shell to pay BG part of its receivables, with the company due USD 400 mn in June and complete payment of dues by the end of 2016, Al Borsa reported. BG halted developments on its Phase 9B project after failing to reach a satisfying agreement with the Oil Ministry on its receivables. BG accounts for over 30% of money owed to IOCs.

The Central Bank of Egypt sold USD 120 mn at an unchanged rate of EGP 8.78 per USD 1 in its regular FX auction yesterday, Reuters reported. The USD were directed toward imports of pharmaceutical products, manufacturing components, vaccines and related chemicals, and infant formula. The newswire says the parallel market rate hovered between EGP 10.88 and 10.95 per USD 1.

National Commercial Bank (NCB), Saudi Arabia’s largest lender by assets, plans to look into new markets including Egypt, Malaysia, and Indonesia as early as next year and also grow its Turkey franchise, chairman Mansour al-Maiman told Reuters on the sidelines of an industry conference in Jakarta. With USD 120 bn, the bank is considering acquisitions and greenfield operations to “leverage on its product know-how,” al-Maiman said. A “specific timeframe and mode of entry” will depend on local investment climates and regulatory frameworks, he added.

Beltone Financial is increasing its authorised capital to EGP 3 bn from EGP 1 bn and approved boosting issued capital by EGP 1 bn through issuing shares to existing shareholders, according to a bourse statement. Head of IR Osama Rashad told Reuters the capital increase is aimed at supporting expansions regionally and domestically, particularly in brokerage and asset management operations. The new shares will be issued at the par value of EGP 2 per share.

Egyptian Kuwaiti Holding reported a 1Q2016 net attributable income of USD 21.8 mn, up 45% y-o-y, according to a company statement. Consolidated revenues also rose, up 13% y-o-y to USD 104.7 mn. The results reflect the deconsolidation of its oil and gas operations, which the company says was part of its growth strategy. “EKH kicked off the year with a fresh start, outperforming budget expectations almost entirely across the board. The first quarter of 2016 serves as a foretaste of the coming months, giving clear indications of a promising year and putting us on track to deliver excellent results,” said chairman Moataz Al-Alfi.

Jam maker Hero will invest USD 5 mn in its Qalyubia factory, having already invested USD 40 mn in the domestic market since it acquired a majority stake in Vitrac, said Managing Director Mahmoud Bazan. The company’s expansion strategy includes boosting sales to EGP 1 bn from the current EGP 640 mn by 2020 with an emphasis on expanding sales to the GCC and Levant. (Read in Arabic)

Pharos Holding has been named the 2016 Mergermarket Middle East Consumer M&A Financial Adviser of the year. Pharos won the award for its role as the exclusive sell-side advisor for the following transactions: Mass Food Group’s acquisition by Kellogg Company, Halayeb’s acquisition by Danone, Misr Glass Manufacturing’s acquisition by Middle East Glass, Misryeen Cheese’s acquisition by Kamal Hagag Group, and the acquisition of 58% of the shares of Arab Dairy Products by Pioneers and 51% of the shares of Meivo International by Spimaco. Pharos edged out other short-listed finalists including Bank of America Merrill Lynch, Ernst & Young and Deloitte to win the inaugural awards. In addition to Pharos, winning financial advisors included “Barclays for advising on transactions in both the Energy and Industrials sectors, Perella Weinberg Partners for advising on Financial Services deals, Rothschild in the Pharma sector and Deutsche Bank for Real Estate.” Clifford Chance was named best legal advisor in financial services and pharma, Herbert Smith Freehills or industrials and White & Case got the nod for real estate.

Power sector deregulation not forgotten: Electricity Minister Mohamed Shaker alluded to government plans to partially deregulate the power market, calling it one of the five main points of the ministry’s strategy. This is the first statement to come from the minister about deregulation for some time now. For those who have understandably forgotten about it with the passage of time, the previous Mahlab cabinet had approved a bill that would govern electricity production and distribution in February 2015 that, if enacted, would see private companies take an increased role in directly managing power facilities, with the government retaining responsibility for overall policy-making, organization and monitoring of the industry. The strategy’s other key points include increasing generation capacity, ensuring their sustainability, working on making power companies and institutions more efficient, and cutting pollution. Shaker added that at present the ministry was working on projects worth EGP 515 bn, financed mainly through 35-year loans, Al Ahram reports. His statements come at a round of inspection with President Abdel Fattah El Sisi at the launch of the development of the 1 GW power plant west of New Assiut. The president also inaugurated eight other plants, including a 2.3 GW combined-cycle plant in North Giza, according to Al Ahram.

On a less positive note, Petroleum Minister Tarek El Molla admitted for the first time that investments in the sector have dropped despite major agreements on fields such as Zohr and Atol, Al Masry Al Youm reports. In a statement read on his behalf by Deputy Minister Mohamed Taher at a summit on the effects of the oil crisis on economic management in the region, the drop was attributed to shrinking oil prices worldwide. El Molla had spent the better part of this and last year speaking about how investments had increased despite challenging times. Also speaking at the summit was former Minister of State for Administrative Development Hany Mahmoud who spoke of how the oil slump places the livelihoods of 2 mn Egyptians expatriate workers in the region at risk.

The reform process, or lack thereof, and the perceived failures of monetary policy took center stage at the Egyptian Capital Market Association’s 20th anniversary which took place yesterday. Monetary policy had become a real impediment to economic growth as they lacked clarity, said former Finance Minister Ahmed Galal. Political reform and the democratic process were the key to economic reform, he added. What Egypt needs in the coming period is a shot in the arm to its institutions, said Galal. Former Foreign Minister Amr Moussa, who fended off questions about Tiran and Sanafir by saying the border demarcation talks did not take place during his tenure between 1991 and 2001, agreed with Galal. He blamed the failure in implementing the one-stop shop policy on stalled administrative reforms. Former head of the Egyptian Capital Market Authority Hany Sarie El Din pointed to legislative failures as the reason behind investments leaving the country. Mounir Abdel Nour, the former Industry and Trade Minister, blamed government bureaucrats and their conflicting interest with policy makers on the current state of affairs. He was joined by ECMA chairman Mohamed Taymour in his criticism of the all-powerful bureaucracy. In one of the more unusual developments at the conference, Public Enterprise Minister Ashraf El Sharkawy dismissed questions about the IPO of state-owned companies, saying that he never explicitly said IPOs would happen, so apparently we all imagined the whole thing. “All I ever talked about was restructuring them,” he added. This came as Investment Minister Dalia Khorshid had spoken about the IPOs in her strategy brief at the conference.

Settlement talks between the government and Mubarak-era Trade and Industry Minister Rashid Mohamed Rashid have broken down after the latter refused to pay EGP 1.056 bn demanded by the government, AMAY reports. A Cairo Criminal Court had sentenced Rashid and his daughter to 15 years back in 2013 on corruption charges and smuggling EGP 500 mn out of the country.

CLARIFICATION- Beltone Financial is advising on two acquisitions worth a total of EGP 1.5 bn. The acquisitions, both for minority stakes in companies operating in the manufacturing sector, will be executed in 3Q2016 and 4Q2016. Beltone Financial is also planning IPOs for a construction building materials company and another in the consumer goods sector. H/t Mohamed El-A.

Everyone needs to be worried about China’s burgeoning debt, said to BlackRock Inc.’s Laurence D. Fink, Bloomberg writes. “You can’t grow at 6 percent and have your balance sheets grow faster,” Fink said on the sidelines of a forum in Hong Kong on Tuesday. But he still contends that he’s bullish on the country in the long term, even though slowing growth and increasing debt are threats to the outlook. Last month we reported that bn’aire George Soros warned about the debt-fueled nature of the country, saying it was starting to look like the US in 2007 and 2008.

The mystery’s been solved, ladies and gents. The US Treasury Department yesterday released a breakdown of Saudi Arabia’s holdings of US debt for the first time since 1974 after Bloomberg News filed a Freedom-of-Information Act request. According to the data, the Saudi held USD 116.8 bn in the instruments as of March. The total has led to more than a few questions, with Saudi Arabia having USD 587 bn in foreign reserves and the debt holdings only representing 20% — much lower than the two thirds central banks usually hold in USD-denominated assets. To say nothing of the fact that that the senate just passed a bill exposing Saudi Arabia to 9/11 legal claims, meaning the kingdom “might begin selling off up to [USD] 750 [bn] in Treasury securities and other assets in the United States before they face a danger of being frozen by American courts,” according to the NYT.

It was a mercifully slow news day for Egypt in the international press, with most papers concerned with President Abdel Fattah El Sisi’s backing of Israel-Palestinian peace efforts. The JP carried the news, while Haaretz quotes Palestinian President Mahmoud Abbas as saying on Tuesday that the Palestinian Authority welcomes the call. And while Netanyahu praised El Sisi, a separate Haaretz peace quotes Zionist Union head Herzog as saying that the move is a “dramatic statement that reflects an opportunity for a historical process, in which the moderate Arab world expects a brave, strong and realistic reaching out by Israel. It’s our duty to examine it seriously, otherwise we will be finding ourselves doing so after the next funeral procession”

Read up on the historical and political story behind the Cairo Tower and why OZY’s Farah Halime calls it “Egypt’s giant middle finger to America” in the middle of the city.

President Abdel Fattah El Sisi promised Israel warmer ties if it resumes peace talks with the Palestinians, Reuters reported. El Sisi said Egypt is willing to mediate the reconciliation effort between rivaling Palestinian factions. The international conference in Paris meant to relaunch peace talks has been postponed from May to the summer, announced French President Francois Hollande. Meanwhile, Israeli Prime Minister Benjamin Netanyahu told France’s foreign minister that Israel remained opposed to a French initiative for an international conference to try to revive peace talks.

Egypt and China agreed to sign an MoU to bolster cooperation and investment in the ICT sector during ICT Minister Yasser Al Qady’s meeting with China’s Industry and IT Minister Miao Wei in Beijing on Tuesday. Representatives of China Telecom who attended the meeting expressed interest in investing in developing fiber optic cables and telecom infrastructure in Egypt, Al Ahram reports.

EGAS is planning on renting the floating storage and regasification unit (FSRU) currently moored in Aqaba, Jordan and dock it in a private port controlled by SUMED in Ain Sokhna in 2017, an official told Daily News Egypt. The vessel, Golar Eskimo, has a capacity to regasify 500 mcf/d. Since 2015, Egypt has entered into an agreement to share the output of the FSRU and buys 200 mcf/d “to meet summer’s fuel requirements for power plants,” which is pumped through Arab Gas pipeline between the two countries. The official says Egypt is expected to achieve self-sufficiency in by 2022, which is when gas imports would be stopped. Al Borsa covered the news in Arabic.

The final Dabaa power plant project contract is set to be concluded next month, a senior government official told Daily News Egypt. On Tuesday, Russian Trade Representative to Egypt Fedor Lukashin said Moscow and Cairo were finalizing negotiations on the USD 26 bn contract to the Dabaa plant, but stopped short of pinpointing a date, according to Sputnik. Electricity and Renewable Energy Minister Mohamed Shaker made “considerable progress” in the negotiations during his visit to Moscow, said the official, who went on to confirm that Egypt tasked a British legal consultant to review the contracts. Shaker reportedly submitted a detailed report about the negotiations and the contract to President Abdel Fattah El on Sunday, presumably after El Sisi met with Prime Minister Sherif Ismail and Shaker on Saturday, according to an Ittihadiya statement.

Water treatment developer Bamag is set to complete a EGP 150 mn industrial water treatment facility in August, said the CEO of Abu Qir Fertilizer Company Saad Abu Al Maaty. The project, which Abu Al Maaty calls the largest industrial treatment plant in the world, will process 300 cubic meters of wastewater per hour and produce 80 tonnes of ammonia per day. The project was financed through an 11-year loan from the Environmental Affairs Agency. (Read in Arabic)

Juhayna Food Industries is looking to complete the second phase of its dairy farm expansions within two years at an investment cost of EGP 300 mn, the company said in a statement. The farm will have a capacity of 16,000 milking cows and a total of 30,000 cows, spaced out over four phases. The first phase has a planned output of 45,000 tonnes of dairy annually. (Read in Arabic)

Domty is targeting a preliminary increase in sales in 2016 to 20% more than the total recorded in 2015, according to a bourse statement. The company also said it will raise the prices of some of it products gradually and with some degree of variation that could reach an 11% increase. (Read in Arabic)

Farmers are now complaining that the government has only paid them a small fraction of what it owes for the domestic wheat harvest it has collected. In total, farmers have received around EGP 1.3 bn out of EGP 9 bn for around 3 mn tonnes of wheat, Ali Ragab, deputy head of the farmers union tells Al Mal. As we noted yesterday, the Agriculture Minister stated that EGP 2 bn were paid, and by our last count, the Finance Ministry had allocated EGP 3 bn since the beginning of the procurement season.

Chile-based fertilizer manufacturer SQM (reported by Al Mal as Belgium-based) is looking to build a factory in Egypt, according to an official from the Agriculture Ministry. Representatives from the company met with Agriculture Ministry officials, Nasr Chemicals reps, and privately owned companies including Evergrow and Yara International, the official said. SQM is looking to establish a potassium sulphate factory in partnership with Egyptian businessmen, with the company providing technology and expertise. The value of the preliminary investment was not revealed. (Read in Arabic)

New Giza University has completed its EGP 460 mn Phase 1 development that will include the faculties of medicine, dentistry, and pharmacology, Al Borsa reports. The university also signed a cooperation agreement with the University College of London Medical School on Tuesday. A EGP 1 bn New Giza University has also invested EGP 560 mn in the development of a teaching hospital. The second and third phases will see it establish faculties of law, sociology, political science and other humanities, while the fourth phase will include an ICT department. If you’re thinking of sending your offspring to their med school, be informed that it will run you EGP 160k per year. (Read in Arabic)

Madinet Nasr Housing is studying a loan worth EGP 1 bn to finance infrastructure work, including high-voltage cable installation and sanitation, on its Sarai project, Amwal Al Ghad quotes sources close to the matter as saying. Among the offers is one from a consortium comprised of National Bank of Egypt, Banque Misr, CIB, and Arab African International Bank, the sources went on to say. Phase one of the Sarai project, which is located in New Cairo, is built over an area of 200k sqm and has an investment cost of EGP 480 mn-EGP 700 mn. (Read in Arabic)

The New Urban Communities Authority signed an agreement with Italian building materials and equipment Schnell Home to help build 10,000 subsidized “green” homes in Badr City, Al Ahram reports. The project will be completed in 12 months, promised Housing Minister Moustafa Madbouly. (Read in Arabic)

Housing and Development Bank is currently evaluating offers from Beltone-Acumen and EFG Hermes to run its EGP 500 mn property fund, said the bank’s VP Essam Abu Hamed. The bank’s board of directors will come to a decision within a week, he added. EFG Hermes and Beltone-Acumen, a JV between Beltone Private Equity (BPE) and investment bank Acumen Holding, beat out numerous offers during the initially bidding round last month. (Read in Arabic)

The US State Department has approved Egypt’s procurement of Harpoon missiles for its submarines through the US Foreign Military Sales, according to UPI. The deal value is about USD 141 mn, according to the US defense Security Cooperation Agency, which administers the FMS program. The sale, for which Boeing is the prime contractor, will include “The sale would include 20 UGM-84L Harpoon Block II encapsulated missiles, two encapsulated Harpoon certification training vehicles and equipment such as containers, spare and repair parts, support and test equipment, plus logistics support.” (Read)

Bringing funerals online: Wamda profiles El Wafeyat, a service bringing “traditional funeral culture online, both building on the country’s deep-seated culture around death and trying to change it.” El Wafeyat provides services around death: obituaries, condolences, funerals, and charity donations. Its revenue stream currently comes from posting online obituaries, something co-founder Con O’Donnell says “need to be figured out better. We need to test the assumptions the business is based on. That people want to pay to inform, and for information.” El Wafeyat passed through several cycles of incubation and investment through Flat6Labs, Bahraini investor Fouz el Qusaidi, Cairo Angels, and Silicon valley-based 500 startups, but is looking for new investors now to help it expand regionally.

The sea was angry that day, my friends: Apparently Egypt’s environment minister met on Tuesday with a number of officials to put together a plan to bury a sperm whale that washed up on the Matrouh shore two days ago, Ahram Online writes. Apparently they’re also looking into moving the skeleton to Wadi El Hitan, which is a UNESCO World Heritage Site, we remind you, for that fact that it plays host to hundreds of fossils of some of the earliest forms of whale. No one at our offices has a single clue why we’ve decided to place this whale’s remains there. It’s too bad George Costanza wasn’t around to save the day (run time 2:36) before the whale met its maker, it would have saved us a lot of brainpower and confusion.