EgyptAir flight missing with 69 on board, was on Paris-Cairo route

EgyptAir flight from Paris to Cairo missing; disappeared from radar screens. EgyptAir’s official Twitter feed confirmed at 4:57am CLT today today a flight from Paris to Cairo disappeared from radar screens. EgyptAir’s flight MS 805, which left Paris at 23:09 CEST last night, had 69 souls on board, including 59 passengers and 10 crew.

Sir Suma in town to ink EUR 320 mn 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.

President Abdel Fattah El Sisi will inaugurate the new administrative capital project in June, Gen. Kamel El Wazeer, head of the Armed Forces’ Engineering Authority, told Al Borsa. This follows the inaugural board meeting of the New Administrative Capital Company for Real Estate Development, which will manage the project. The company estimates that investments in the 10,500 feddan first phase development have reached EGP 60 bn, Al Borsa reports.

Renaissance Capital concluded an EGP 257 mn accelerated book build of Crédit Agricole Egypt shares on the EGX on behalf of Mansour-Maghraby Investment and Development (MMID), according to an emailed statement. MMID sold 11 mn shares at EGP 23 per share, representing around 4% of the company’s share capital, but it “continues to be a significant shareholder in Crédit Agricole Egypt.” Renaissance Capital says the “issue [was] significantly oversubscribed [with] substantial participation from foreign investors from Europe, Africa and the US.” Reuters’ Arabic service notes that MMID controlled 7.86% of the bank’s shares prior to the sale and cites unnamed sources as telling it the buyers are a foreign and domestic investment funds, including Deutsche Bank. Renaissance Capital was sole bookrunner for the transaction; CI Capital was the executing broker. The transaction is Rencap’s first in Egypt, said Ahmed Badr, the outfit’s CEO for MENA, who noted, “we remain optimistic about Egypt’s economy, which is expected to grow by 3.3% in 2016 and become one of Africa’s fastest-growing economies.”

Sticking to his knitting: Top emerging markets private equity outfit Abraaj Group has no plans to expand into markets in North America and Europe, CEO Arif Naqvi told Bloomberg. Naqvi is not concerned that US firms are looking to emerging markets, either. “I’m a big believer that if you’re not No. 1, 2 or 3 in a particular marketplace then you shouldn’t be there … More and more firms are looking at our markets. We welcome that, and we show the way,” he says. Is Abraaj ever going public? It’s “a wait-and-see approach” Naqvi suggests: “Never say never,” he said, “and never say it’s imminent.”

Going public may not be in the cards for Abraaj in the short term, but Egypt’s Misr Italia Holding is reportedly looking to offer 10-20% of its shares on the EGX in 3Q2016, according to reports in the domestic press. The company hopes to raise EGP 600 mn from the IPO, which would probably require it to spin off the Mousa Coast developments in Sinai, where properties cannot be legally owned by foreigners. The offering is set to be managed by Prime Holding. Meanwhile, Misr Italia is looking to build a university at an investment cost of EGP 100 mn, to be completed within three years, said company Chairman Hani El Assal.

The long-rumored EFG Hermes healthcare private equity fund is looking into acquiring three hospitals, with the fund set to launch next month, Al Borsa says, citing sources close to the matter.The fund is said to be seeking 51-75% stakes and could spend EGP 500-600 mn in total on the three. The sources did not name the hospitals, but said they specialized in ophthalmology, gynecology, and urology.

It would appear that the Finance Ministry has not yet set the rate at which Egypt will collect a value-added tax (VAT), opting instead to leave that politically charged decision to the House of Representatives. If true, Al Borsa gets credit for the exclusive on this piece of political theater, which it says it has pulled out of an exclusive copy of the recently passed cabinet-level amendments to the act that will create the VAT. Other highlights:

• Cancelling the 3% surtax on those not required to register for VAT;
• Subjecting e-commerce transactions to VAT;
• Requiring businesses to retain all records related to their VAT for a period of five years;
• Establishing a new appeals system and new appeals committee for the VAT;
• Sets a three-month grace period in which the VAT will be phased on;
• Sets a fixed tax on certain goods and services.

The usual pre-Ramadan commodities push is on, with government officials scrambling to ensure that staples including oil, rice and sugar are available and affordable in the run-up to the consumptionfest that is the Holy Month. Among the latest measures: the Official Gazette reports the Trade and Industry ministry is levying a EGP 900 export fee on every tonne of  sugar effective May 18 through 31 December 2016. Meanwhile, officials are have reportedly signed contracts for the import of 60k tons of Asian rice at a price of USD 350-360 per ton, sources tell Al Mal. The rice is expected to be in markets within 20-25 days at a cost of EGP 4 per kg, according to the sources. The state is looking to import up to 80k tons of rice in total after shortages saw prices spike to EGP 10 per kg in some areas. (No link for the Official Gazette entry, as it’s an email-only PDF to which Enterprise subscribes.)

Israel may agree to settle for half of the USD 1.73 bn fine Egypt was ordered to pay it so talks can resume on exporting Israeli offshore gas there, two people familiar with the negotiations told Bloomberg. A settlement would tear down one of the roadblocks to a multi-bn USD natural gas agreement that Egypt and other countries in the region have painted as imperative until newly discovered fields like Zohr are developed. The export agreement would also firmly establish Egypt as a regional gas export and (potentially) petrochemicals hub. Negotiations are still underway, with authorities in both countries still expected to approve the final figure; one source suggests the payments would be spread-out over 14 years. Egypt in December froze negotiations between Egyptian and Israeli companies when an international arbitration court ordered it to pay Israel damages for violating a contract to supply Israel Electric with Egyptian gas.

Meanwhile, Israel has struck a new deal with Texas-based Noble Energy and Israel’s Delek Group to allow them to begin developing the Leviathan field after a Supreme Court blocked a previous agreement in March, Israel’s Finance Minister Yuval Steinitz said on Wednesday, according to Reuters. The agreement will be brought to the government for final approval in the coming days and gives the state more leeway to change policies if needed, said Steinitz.

Suez Canal USD revenues were up 0.2% year on year in 1Q16 to USD 1.3 bn, or an increase of USD 3 mn, said Mohab Mamish, head of the Suez Canal Authority. Revenues in EUR were also up 2.4% to EUR 1.2 bn for the period, said Mamish during a visit by a delegation from the House of Representatives on Wednesday, Al Shorouk reports. Currency basket revenues counted in Special Drawing Rights (SDR) unit were up 0.6% to 884.2 SDR, Mamish added. Mamish’s statements were not accompanied by a detailed accounting of the results or whether March’s devaluation was accounted for. As we noted earlier this month, the Suez Canal Authority did not provide USD-denominated revenues in March and February.  As for EGP, Mamish stated that revenues were up 6.5% year on year for the quarter to EGP 9.8 bn, up from EGP 9.2 in 1Q15. These reported gains come on the back of a 2.7% rise in the number of ships passing through to 4,178, up from 4,067 ships in 1Q15. This data flies in the face of numerous reports that traffic has decreased as a result of a global slump in trade and the prominence of alternate shipping routes due to falling oil prices.

Is the NTRA about to give TE a leg up on 4G services? It would appear that the National Telecommunication Regulatory Authority is considering allowing state-owned Telecom Egypt (TE) an exclusive six-month window of opportunity in which to offer 4G network services before the other three telecom operators can follow suit, senior sources from the regulator tell Al Borsa. The move will be part of a series of “competitive advantages” which include giving TE exclusivity in providing voice-over-IP call services such as Skype, Whatsapp Voice and Viber for a period of time. The move would allow TE to build up a customer base to compete with the other established telecoms, the source adds. Sources add that the three telcos “will be consulted” because, well, TE would be piggy-backing on one or more of their networks at first.

Electricity Minister Mohamed Shaker let it slip on Tuesday (runtime: 0:15) that the Aswan High Dam and the 2.1 GW it produces have been taken off the power the grid. Shaker was about to reveal more projects taken off the grid at the opening of the New Assiut power plant, but was interrupted by President Abdel Fattah El Sisi. The awkward exchange was widely picked up by the media, prompting officials from the Irrigation Ministry and the Aswan Water Company to issue official statements saying that the dam was running at full capacity. The Electricity Ministry also issued a statement calling the issue a misunderstanding, but gave no concrete explanation about what was meant.

CBE Governor Tarek Amer’s anticipated meeting last Monday with the House to discuss FX availability to industries turned into a meeting of his deputy Gamal Negm to discuss the CBE initiative to support SMEs, according to MPs speaking to Parlamany. Amer had called off his attendance due to “an emergency”. There is no word as of yet if this meeting was postponed or the House was given the runaround.

CORRECTION- EFG Hermes and Acumen-Beltone are the two front runners to manage Housing and Development Bank’s EGP 500 mn property fund. Acumen-Beltone is a JV between Acumen Holding and Beltone Private Equity (BPE), not Beltone Financial as we mentioned incorrectly in yesterday’s issue. Acumen-Beltone is led by Hany Tawfik. H/t Mohamed H.

We have Fed minutes, folks. It looks like the U.S. Federal Reserve is leaning heavily toward a June rate hike if the American economy continues to improve, according to Bloomberg. “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen and inflation making progress toward the committee’s 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June,” according to minutes of the Federal Open Market Committee’s April 26-27 meeting. However, the minutes, which were released yesterday, also saw officials divided on whether the conditions would be met in time. The Financial Times (paywall) also has coverage of the minutes.

Is Abu Dhabi retrenching too fast? Economists believe the emirate’s serious spending cuts — to about a fifth in 2015 and by 17% this year — are too much too fast, according to Bloomberg. With the IMF predicting a rapid deceleration in economic growth to 1.5%  from 4.3% last year, “applying the brakes so sharply could put at risk progress already made toward diversifying the economy beyond oil,” according to Razan Nasser, senior economist at HSBC in Dubai. “They are feeding the slowdown and it is weighing on growth,” she said. “They have modest budget deficits and a large asset position and can afford to be a bit more counter-cyclical.”

Speaking of oil, the Financial Times (paywall) has a primer on the five things we need to be on the looking for as oil approaches USD 50 per barrel, which Goldman Sachs predicted for the second half of the year in a report dated 15 May. We looked at Nigeria earlier in the week, but the FT’s David Sheppard and Neil Hume tell us to also turn our attention to supply disruptions outside of OPEC, Saudi Arabia potentially raising output ahead of its Aramco IPO, and a potential US shale comeback, with David Hager, chief executive of Devon Energy saying in February that at USD 55-60 “the vast majority” of US shale fields are economically viable.

Run for the hills, we have a “spinster crisis” in Egypt, according to a bunch of very wise and not at all misogynistic old men. On this very pressing issue, Al-Monitor’s Rami Galal thought it was best to get the opinion of only three men. After all, when it comes to serious matters like women singlehandedly damaging national security by virtue of being unmarried, old male opinions are the only ones that matter. The gist of it: Women “are viewed negatively by society” when they “[pass] the age of 30 without getting married” they pose a “national security” threat to all the hard working men of the state. We understand the Al-Monitor ‘article’ was translated from Arabic, but are confused that the term “spinster” is repeated throughout, even outside of direct quotes, as if it were a description of a contagious medical condition. Also: Perhaps everyone should just mind their own business.

Vice News’ Avi Asher-Schapiro chimes in on a report saying the State Department is not sufficiently vetting the sale of weapons to Egypt. Senator Patrick Leahy says “the law can protect American taxpayers and uphold American values by preventing our aid from being used to commit abuses, and by encouraging governments to hold perpetrators accountable." The report was first first made public last week and we reported about it on Sunday.

Fatah stands accused by no less than Hamas of plotting to assassinate President Abdel Fattah El Sisi, Hamas representative Salah al-Bardawil claimed in a press statement on Monday. The terror cell implicated in the plot was allegedly forged by Fatah official Tawfik Tirawi, according to the Jerusalem Post. Surprising no one, Fatah has denied the allegations, with Tirawi saying in a conversation with the Egyptian news site Dot Msr: “These allegations are ridiculous and do not deserve a reaction.”

US Secretary of State John Kerry held talks with President Abdel Fattah El Sisi yesterday on “a range of bilateral and regional issues, including recent developments on Libya and Syria,” State Department spokesman Mark Toner said after the meeting, Reuters reported. A US official said “Kerry wanted to explore in more detail a proposal on Tuesday by Sisi to mediate a reconciliation between rival Palestinian factions to pave the way toward a lasting peace accord with the Israelis.”

Apparently, however, Egyptian authorities made clear that reporters “would not be welcome” at the presidential palace, State Department officials told journalists set to make their way to Egypt with Kerry. The move appears to be over “fear we might ask President Abdel Fattah el-Sisi a question or two about the dissidents he has jailed,” according to the New York Times’ David E. Sanger. “Even China’s leaders routinely let the news media pool in, though they do their best to ignore them … Egypt used to do the same — in what now looks, by comparison, like the days of openness when Hosni Mubarak was still president.”

Meanwhile, Prime Minister Benjamin Netanyahu and opposition leader Isaac Herzog of the Zionist Union may be planning a joint trip to Cairo to meet with President Abdel Fattah El Sisi to jumpstart the Israeli-Palestinian peace process after El Sisi promised warmer ties with Israel if it would resume talks, the Jerusalem Post reports. “A Netanyahu-Herzog-Sisi meeting would be staged in order to “justify” the Zionist Union’s entry into the Likud-led government, Channel 10 reported.”

International Cooperation Minister Sahar Nasr is hoping to cement USD 3 bn in financing petroleum supplies to the EGPC at the 41st annual meeting of the Islamic Development Bank Group’s Board of Governors in Jakarta. To that end, Nasr had been holding meetings with a number of regional finance institutions who have pledged financing for Egypt, and is attempting to secure new loan agreements, Al Ahram reports. Also coming from the meeting, former Saudi Haj Minister Dr. Bandar bin Mohammed Hajjar’s nomination as new President of the was approved, Bahrain’s news agency report

Circle Oil has flowed oil from the AASE-24 well on the North West Gemsa field in Egypt. Part of the company’s 2016 infill drilling campaign on the Egyptian field, AASE-24, recorded output at a gross average rate of 1,714 bbl/d and 3 mcf of gas per day through a 40/64 inch choke, according to Rigzone. Circle said the well will now be produced at a lower rate “to best manage the long term field production.” The company also said it has no further drilling planned for 2016.

The Electricity Ministry is studying a project to build a 1,300 MW power plant in Qena at an investment cost of USD 1.5 bn, Electricity Minister Mohamed Shaker told Al Borsa. The studies include building two combined-cycle units each with a capacity of 650 MW as part of the development projects planned for Upper Egypt, he added.

Food products company Atayb Bader is investing EGP 50 mn into its dairy and cheese products next year, Al Borsa reported. The self-funded investments will go into a new factory, developing existing production lines, and rolling out new products, said Chairman Saeed Bader. The company is aiming to grow its exports to the Gulf to EGP 30 mn by the end of this year, up from EGP 20 mn last year, he added, noting that the company allocates 50% of its production to exports.

The Agriculture Ministry has bought 3.25 mn tonnes of domestic wheat since the start of the local procurement season on April 15, it said on Wednesday, adding that it plans to buy 4 mn tonnes in 2016, it said, according to Reuters. The ministry has been buying up wheat at rapid speeds over the last week, which the ministry has attributed to a decision by the government to open additional storage space. We reported on Wednesday that farmers are complaining the government has paid them only a small fraction for local harvests, receiving around EGP 1.3 bn out of EGP 9 bn owed for c. 3 mn tonnes of wheat.

Louis Dreyfus Commodities is reportedly interested in investing in logistics projects in Middle East ports including Egypt, Saudi Arabia, and Iran, according to a Reuters article which ran in Al Mal. The company is looking to capitalize on the push towards privatization in Saudi Arabia and the lifting of sanctions in Iran, said Louis Dreyfus MEA CEO James Wild. As for Egypt, the company will continue selling grain to Egypt as long as the standards are reasonable, Wild said in response to a question on whether the Egyptian government’s confused policy on ergot contamination of shipments had made dealing with Egypt less savory.

Cotton farmland utilization has dropped 55.7% y-o-y in March to 95,400 feddans from 216k, Al Mal reports. This year’s drop will prove very problematic for the government as it only meets 40.3% of the land space it had targeted for growing cotton, according to the Trade Ministry’s Cotton Trading Organization Committee.

Siwa mineral water has inaugurated an EGP 12 mn production line with a capacity of 9 mn bottles a month, according Al Borsa. The new line will double the company’s output, Chairman Ayman Fathy says, in time to meet the growing demand in summer months. Fathy says the company is suffering from the increased overlays that followed the EGP devaluation, but it is unable to raise prices due to ongoing contracts with a number of hotels and restaurants.

The Egyptian Resorts Company (ERC) sent the EGX a disclosure refuting a story run by Al Mal on Tuesday. Regarding its dispute with Pyramisa, ERC says it finalised a complete settlement with the subdeveloper. The settlement does not, as Al Mal mentioned, include a pledge by ERC to pay Pyramisa a set amount of reparations. ERC also notes that reporting on disruption of the water and electricity supplies are inaccurate as the infrastructure is present and active and Pyramisa has even been billed for its usage. The company has also allocated Pyramisa a plot of land in the first phase of Sahl Hasheesh in lieu of Pyramisa dropping its contractual and legal rights to another plot. ERC’s offer has been received and will be reviewed by Pyramisa’s board of directors in a meeting today, according to a separate disclosure from Pyramisa

The Egyptian Tourism Authority is negotiating with Malaysian tourism officials to launch an online campaign to attract more of the Malaysia tourism market, especially the unfortunately named MICE sector (it apparently stands for meetings, incentives, conferences and exhibitions), according to Hotelier Middle East. The Malaysian market needs to be directed to new factions of the tourism industry, like “MICE, honeymoon, adventure, and diving tourism,” according to the authority’s general director of its international tourism department Adel El Masry.  Apparently we’re ignoring the fact that there may not be much in the way of diving after the King Salman bridge is built.

EgyptAir will halve the cost of business-class tickets during the summer, but only for EgyptAir international flights that stop in Cairo, Al Shorouk reported. The statement circulated like wildfire in the press, except they neglected to mention that the promotion doesn’t actually apply to flights departing from or arriving to Cairo. The promotion applies to flights booked between 23 May and 29 May for flights 1 June and 30 November.

Egypt’s SICO Technology and China’s Megan Group have signed an agreement to establish an electronics factory in the Borg El Arab tech park, according to a statement from the ICT Ministry. The factory will produce smartphones and Internet of Things products in Egypt, said SICO’s chairman Mohamed Salem. Development of the factory will begin in January 2017 and will be completed in one year. 65% of output will be exported. The agreement was signed during ICT Minister Yasser Al Qady’s visit to Beijing on Wednesday.

Tech-reseller Starlink has transformed its Egypt office into its North Africa hub as part of a geographical expansion plan, the company said in a statement. Investments will be made in the region to expand on-the-ground presence, the statement adds.

The automotive market is experiencing a 30% drop in sales as the lack of FX liquidity curbs imports, said GB Auto Chairman Raouf Ghabbour, according to Al Mal. Car sales will remain flat for the remainder of the year until consumers can absorb the 40% price hike caused by the devaluation, he added. Despite market conditions, GB Auto has increased its market share to 39% from 30%, he said.

Bavaria Auto Group has released locally assembled BMW X4 and X6 models, the latest editions of the X-series assembled locally in their Sixth of October assembly plant, Al Borsa reports. The cars will go for 30% less than the price of the imported cars. The company already began delivering pre-ordered cars a few days ago, said Yahia Abdel Qodoos, director of marketing at Bavaria Group at the launch party on Wednesday.

NBE launched a new service facilitating the transfer of money from abroad to its domestic clients through mobile phone transfer service Phone Cash. The service allows instant access through the bank, one of its ATMs, or Fawry outlets, Al Borsa reported. The service will allow transfers in foreign currencies that can be withdrawn in EGP at no additional charges, and will be launched first in the UAE through Alfardan Exchange offices in Abu Dhabi.

Egypt Post is reconsidering plans to invest in e-commerce following the success of upgrading 420 of its branches, an official told Al Borsa. The authority is studying multiple scenarios for investment, including offering transportation and logistics services through its 3,980 outlets to major e-commerce companies. A second, less likely scenario is acquiring a stake in an e-commerce company or establishing a new one.

State-run Media Production City asked on Tuesday that Sigma Media, which owns Al Hayat channel, to pay debts worth EGP 220 mn owed to it within 15 days, Al Borsa reports. Sources tell the newspaper that if at least 30% of the debts are not paid before Ramadan, the company will not allow Al Hayat to broadcast during the month. The company already cut off the channel for several minutes on Tuesday in what appears to have been a ‘non-official’ warning.

Misr Cement Qena reported a 1Q2016 net profit of EGP 36.69 mn, down 54.7% y-o-y due to  financing expenses amounting to EGP 28 mn, according to an EGX statement.