Tuesday, 19 December 2017

IPOs of BdC, United Bank could be scrapped in favour of strategic stake sale


What We’re Tracking Today

US Vice President Mike Pence is delaying his visit to the region (again) and will arrive some time the week of 14 January, according to US media reports. Pence was scheduled to be in Cairo this week before heading to Israel. Prominent regional spiritual and political leaders, including Pope Tawadros II and the head of Al Azhar, had announced they would not meet Pence to protest the Trump administration’s decision to move the US embassy to Jerusalem. Reuters and CNN have the story.

Book-building and subscriptions for Al Tawfeek Leasing’s IPO of 24% of the company’s shares will begin today and continue until Sunday, 24 December. The listing has already garnered interest from some 15 funds, most of which are locally based, said Sherif Abdel Aal, head of investment banking at Pharos Holding, the sole coordinator and bookrunner for the transaction. Three quarters of the shares on offer will be sold through an institutional offering, with the rest earmarked for retail investors, the company had said on Sunday. The transaction could close in the EGP 150 mn range, Abdel Aal said, according to Al Borsa.

With the final days of the year now upon us, we’re leading this morning with four pieces we think you should ingest as you mull what to expect next year and beyond. Consider them essential — but not complete — primers on global macro to get you started. We’ll have more in the days ahead and then, in the new year, we’ll be back with thoughts from senior Egyptian execs on how things could play out here at home.

First up: The Pessimist’s Guide to 2028. Yes, Bloomberg’s annual feature (a favourite of Enterprise readers and editors alike) is out. It looks not just at 2018, but at how trends next year play out over the coming decade. Among them: Trump winning a second term in office, banks being killed by bitcoin, and the oil and gas economy being sent to its grave by electric cars. It takes a moment to figure out how to navigate the package, which is best experienced on a tablet or laptop / desktop, but it’s worth every tap and click.

Next: The man who helped save the global economy from *complete* meltdown thinks rate hikes could drive the US economy into recession. Think what you want about our friends across the pond, but a downturn there doesn’t bode well for global emerging markets. In an exclusive interview with the Wall Street Journal, “Federal Reserve Bank of Minneapolis President Neel Kashkari warned Monday that bad things may lie ahead for the economy if his colleagues at the U.S. central bank press forward with interest-rate increases.” The Fed, remember, has signaled it will do as many as three rate hikes next year. Kashkari, a former Goldman exec, is sometimes poo-pooed for not being an economist, but the Wharton grad and former aerospace engineer helped quarterback the US government’s response to the global financial crisis, running bailout programs including TARP while working under Hank Paulson at Treasury. Definitely a guy whose views are worth considering.

Is there a chance that the hive mind of private equity knows something that the rest of us don’t? Like perhaps we’re at a high-water mark and now’s a great time to get out of the market? “Private equity groups are selling businesses at a faster rate than in the years leading up to the financial crisis as they look to cash in on record-high prices while the global economy remains strong,” the Financial Times suggests. What’s more, the PE gang is landing new commitments, “raising [a] record amount of fresh capital as institutional investors come under pressure to deploy money in a low interest world” and look beyond alternative investments including hedge funds.

Finally: Donald Trump will continue to be a destabilizing influence on global policy, whether you’re talking trade, economics or international relations. The Donald was expected to outline a Cold War-style foreign policy yesterday that warns of “a treacherous world in which the United States faces rising threats from an emboldened Russia and China, as well as from what it calls rogue governments, like North Korea and Iran. To fend off these multiple challenges … the government must put ‘America First,’ fortifying its borders, ripping up unfair trade agreements and rebuilding its military might.” Economic security, the policy notes, is national security. Trump struck a much different tone, though, in the speech in which he was to outline the policy, leaving analysts, enemies and allies alike scratching their heads. Mark Landler and David Sanger have coverage for the New York Times. Also worth reading is this piece from the Associated Press.

Today in miscellany:

  • The way to riches is through a nation’s stomach. It’s been true here, where food in all of its forms (from the basics to packaged snacks and restaurants across the income spectrum) has been largely resilient despite all that’s transpired since 2011. Heck, it only stumbled after a 50% devaluation — and is now recovering. It’s also true abroad, where food companies including Hershey and Campbell Soup are snapping up smaller, faster-growing brands in the search for growth.
  • What technology changed our lives in 2017? AirPods, Alexa, wireless charging, FaceID and “genuinely mobile payments” are among them, the Financial Times suggests.
  • Continuing with our year-end theme: The Times’ Smarter Living newsletter suggests you don’t waste your time with bad New Year’s resolutions, instead outlining a way to get them right. (New York Times)

We’re always pleased to see Egyptian success stories abroad, which makes us that much happier to learn that Randa Fahmy Aboul-Nasr and Sylvia Van Vilet-Ragheb of Syra Arts held a trunk show for Azza Fahmy in New York on December 10. The show kicked off with a reception the day before. Among the attendees were Egyptian Consul-General Hisham El Nakib and Faika Zaki, the wife of Egypt’s ambassador to the UN, Amr Aboulatta. Pictured above: Actress Katrina Lenk, recently the subject of a glowing piece in the New York Times after her performance in the Egyptian-Israeli themed The Band’s Visit alongside Tony Shalhoub, which we noted a few weeks back was getting great reviews after opening on Broadway.

** Take our end-of-year survey — get a bag of Enterprise-branded coffee and cool mugs from which to drink it: It’s that time of the year again — we want you to help us gauge how well business went during the year. What are the biggest challenges you faced during the year? Where will the exchange rate stabilise? Do you expect big raises in 2018? Are you hiring? Help us find out. You’ll get the chance to become one of 25 people who’ll get our end of year giveaway package consisting of Enterprise swag and our first-ever Enterprise-branded batch of coffee, which we’ve put together with good friends in the coffee business. (More on that in a later issue.) The survey ends this Thursday, and we’ll have the results when we’re all back from the Christmas-New Year’s-Christmas break.

** We’re taking a break next week. As is our custom, we’ll be recharging our collective batteries in the final week of the year. Enterprise will not publish on 24 and 25 December. We’ll then be back with short issues on 26-28 December, and then off again until 2 January 2018. We hope you, too, are planning to relax with family and friends — whether you’re the kid returning home from college for winter break, or the parent looking forward to welcoming them.

What We’re Tracking This Week

If your commute takes you through the Giza area, be prepared for a very long three years spent in a car. The Giza Traffic Directorate in coordination with the National Authority for Tunnels plan to shut down Sudan street and a number of other adjacent roads divert traffic for a period of three years starting Friday as a result of the construction of the Cairo Metro Line 3, AMAY reports.

On The Horizon

The central bank will meet a week from Thursday to consider interest rates. The emerging consensus seems to be that the 28 December meeting of the Monetary Policy Committee won’t interest rates cut after a surprise month-on-month surge in inflation in November.

Enterprise+: Last Night’s Talk Shows

The passage of the Universal Healthcare Act, the Interior Ministry’s security preparations for the upcoming holiday season and delays in the distribution of ration cards were among the business-relevant topics on the airwaves last night.

Hona Al Asema’s Lamees Al Hadidi spoke to Vice Minister of Finance Mohamed Maait about the Universal Healthcare Act, which the House of Representatives passed in plenary session yesterday (we have the full story in Speed Round, below). Maait said the healthcare scheme includes requirements for the government to gradually improve services at public hospitals and clinics — and stipulate that citizens may receive medical care at a private facility. Maait also confirmed that cigarette prices will rise only six months after the legislation goes into effect (watch, runtime: 8:31).

Egypt’s draft resolution at the Security Council received 14 “yes” votes, which confirms the international community’s policy on Jerusalem is nearly uniform, Foreign Ministry spokesperson Ahmed Abou Zeid told Lamees. Abou Zeid pointed specifically to countries such as the UK, France, and Ethiopia — with whom Egypt may not always see eye-to-eye on other issues — as evidence. He also said that Egypt and other Arab countries have the right to call for a UN General Assembly session on Palestine’s behalf if it so wishes (we have more in Diplomacy + Foreign Trade, below) (watch, runtime: 4:29).

Picking up where Lamees left off earlier this week, Kol Youm’s Amr Adib sat down with Supply Minister Ali El Moselhy to discuss his price-printing policy. The minister said that all importers and distributors of food products will be required to submit documents proving the origin of the goods and the prices at which they bought them. El Moselhy continued to defend the policy as a measure that would ensure price transparency if applied correctly (watch, runtime: 1:27).

El Moselhy also said that, if the market continues to be regulated correctly, prices will not increase next year. He noted to Adib that many of the commodities provided by the ministry have seen their prices fall recently as the government has been working to increase supply and strategic reserves, which he says are currently enough to cover 4-5 months of consumption (watch, runtime: 2:26).

Persistent bureaucracy is to blame for the delays in distributing new ration cards to subsidy recipients, El Moselhy said. He noted that the process of updating subsidy card holders’ database took far longer than expected due to the sheer volume of individuals in the system, but many cards that have been printed were not distributed because of a bureaucratic glitch (watch, runtime: 4:08).

Over on Masaa DMC, Supreme Anti-Terrorism Council member Khaled Okasha told host Eman El Hosary that security forces preemptively raided terrorist hideouts in Alexandria, Qalyubiya, and the New Valley. The terrorists killed and arrested during the raids were allegedly planning fresh attacks. The raids are part of the Interior Ministry’s preparations for the holiday season, which often sees a spike in terror attacks (watch, runtime: 6:44).

Security sources also told Yahduth fi Masr’s Sherif Amer that the Interior Ministry is working on securing churches across Egypt during the holiday season by dispatching a large number of personnel to stand guard.

Speed Round

Speed Round is presented in association with

IPO WATCH- Is the CBE reconsidering the IPOs of BdC, United Bank? The Central Bank of Egypt could scrap planned IPOs of state-owned Banque du Caire and United Bank and instead move ahead with stake sales to strategic investors, a senior CBE official said yesterday. CBE Deputy Governor Gamal Negm said “a number of factors” will play in deciding how the central bank will proceed with the sales, Negm told Al Mal without offering additional detail. The statement could cast doubt on the long-awaited IPO of Banque du Caire, which CBE Governor Tarek Amer had said as recently as last week would take place in 3Q2018.

Sales going ahead, the question is how: In either case, the banks will be partially privatized in 2018, Negm said, noting that the size of the stakes on offer and timing of the transactions have yet to be determined.

Moreover, the CBE hasn’t yet received official notice that the National Bank of Greece plans to exit Egypt, Negm said. Al Borsa had reported last month that National Bank of Greece was seeking for advisors on the potential sale of its 17 branches in Egypt as part of the bank’s restructuring plan mandated by the European Commission in the wake of Greece’s debt crisis.

Background: The EGX had approved in February BdC’s request to list 562.5 mn shares at par value of EGP 4 per share. Industry types had later said the government was considering selling up to 49% of Banque du Caire as part of the IPO process, including 5% which would trade a global depositary receipts on the London Stock Exchange. EFG Hermes and HSBC were tapped to lead the transaction; Baker McKenzie is serving as legal advisor.

LEGISLATION WATCH- The House of Representatives passed yesterday the Universal Healthcare Act, the government’s EGP 600 bn health coverage plan and a key piece of social policy for the Ismail cabinet. A plenary session of the House on Monday completed voting on the bill, which largely remained intact. Debate had centered on Article 40, which outlines how the state health insurance scheme would be financed, Al Borsa reports.

MPs also shortened the timeline for rolling out the system nationwide to 11-13 years from 15 year, starting with the Canal cities and Sinai, said Finance Minister Amr El Garhy, who attended the debates in the House along with Vice Minister of Finance Mohamed Maait. The bill is expected to be signed into law and published on the Official Gazette early in 2018, El Garhy added. The minister hinted the implementation phase would begin in July, at the start of the 2018-19 fiscal year.

In addition to setting up three regulators to manage and monitor the new system, key highlights of the bill include:

  • Cost to business, part I: The bill will set premiums for employers of 4% of each employee’s monthly salary. Employees will pay premiums of only 1% of their salary into the system. An employee will have to pay a premium of 3% of his or her salary to cover an unemployed spouse and 1% for each child.
  • Cost to business, part II: All companies, whether private or public and regardless of size, will have to pay a 0.25% tax on their sales revenues to help fund the system. This had been lowered from 0.5% and from what hearing from the press, it would appear that this tax would replace reported tithes on construction materials.
  • Healthcare industry tax: Hospitals and clinics will pay a tax of EGP 1,000 for every bed they have. Healthcare sector operators will also have to pay between EGP 1,000 and EGP 15,000 in fees to become part of the health system, Al Mal reports.
  • Exemptions: The state will pay EGP 200 bn to cover those exempt for paying premiums based on their income levels. The state will pay the equivalent of 5% of the standard minimum wage to cover healthcare for each person who cannot afford to pay a premium into the system. The government will decide criteria for exemption, Al Mal reports.
  • Additional fees and taxes: The law imposes fees on issuing and renewing drivers licenses ranging from EGP 20 to EGP 300. The law also sets a toll fee on highways. An EGP 0.75% sin tax all cigarette packs sold and a 10% tax on all other tobacco products has been mandated. A 5% fee on hospital stay will also be imposed.

What to watch for:

  • A constitutional challenge to the law’s governorate-by-governorate rollout, which was openly questioned during debate earlier this year on the bill.
  • We’re also not sure how the debate on what seems to be an EGP 10 bn annual deficit in the proposed system was resolved.


Corrected on 11 July 2019- The tithe paid by businesses towards the new system was corrected to 0.25% of revenues from 0.0025%. 

In other major legislative news, the House Economics Committee began discussion of amendments to the Capital Markets Act on Monday with an appearance before the committee by Financial Regulatory Authority head Mohamed Omran, Al Mal reports. The amendments will permit the introduction of financial instruments including futures trading and the setting-up of a commodities exchange. The amendments also cover penalties for financial crimes and the taxing of the sector, said committee chair Amr Ghallab. The committee will be meeting with industry insiders and representatives, including the Egyptian Capital Markets Association, to get the private sector’s pulse on the proposed regulations, added Ghallab.

Meanwhile, a plenary session also passed a law that criminalizes the possession of drones without permits from the relevant authorities, Al Masry Al Youm reports.

Kuwait’s largest bank to expand in Egypt: National Bank of Kuwait (NBK) “plans to hire hundreds of people and open more branches in Saudi Arabia and Egypt as it targets growth in the Middle East’s biggest markets,” Mirette Magdy writes for Bloomberg. In Egypt, NBK plans to have 60 branches by 2020, up from 43 currently. “We started focusing our regional growth on more stable markets in the Middle East, namely GCC countries — Saudi Arabia and the U.A.E. — in addition to Egypt,” Group CEO Isam Al Sager said. “Egypt is among the largest Middle Eastern markets, with a well-diversified economic base and the largest population in the region … That offers us a great opportunity, especially with the very low banking penetration rate,” he added. Magdy writes that NBK Egypt expects 20% growth in loans in 2018, with a big part of that growth coming from SMEs, “because of a widely-expected decline in interest rates and a recovery in economic growth, according to Yasser Hassan, the bank’s managing director.”

M&A WATCH- Eagle Capital announced yesterday it has acquired Ahmed Abou H ashima’s stake in Egyptian Media Group, Al Masry Al Youm reports. EMG is the parent company of high-profile media assets including Synergy and OnTV. The value of the transaction was not disclosed. The transaction is Eagle Capital’s first, said chairperson and former investment minister Dalia Khorshid, noting that the sector “reflects our interest in a strategic sector that touches the live of consumers on a daily basis.”

M&A WATCH- Longreen Capital Advisors announced that it has completed the acquisition of Egyptian International Restaurants Company, operator of El Omda chain of restaurants. “The founders and current management of the company will retain significant equity position and continue to drive the business in the coming period, assisted by new additions recruited from Longreen’s network into key operating and advisory roles,” the company said in a statement (pdf). The value of the acquisition was not disclosed. Hit the link and scroll down for bios of Longreen founders Heba Ayad and Ahmed Farouk, who bill their firm — a new entrant in the field — as a “middle-market private equity management firm that … aims to collaborate with businesses well positioned for profitable growth and that can benefit from Egypt’s demographic dividends.”

INVESTMENT WATCH- Majid Al Futtaim plans to increase its investments in Egypt to EGP 23 bn by 2020, according to Al Mal. The company’s priority for 2018 is getting more retailers to open shop at Mall of Egypt. The company will also be working towards completing the 300-store City Centre Almaza in 2019, the company said in a statement (pdf).

Egypt will allow foreign companies to “freely” export natural gas not needed for domestic use in five years, Oil Minister Tarek El Molla announced on Monday during Al Ahram’s energy conference, according to Reuters. New exploration contracts contains a clause that allows companies to export a part of their share of extracted gas abroad in the event it is not needed by Egypt, El Molla told a news conference. The move, which comes as part of Egypt’s strategy to become a regional hub for exporting gas next year, comes after the Zohr gas field began production on Saturday, raising Egypt’s production to 5.5 bcf/d by next year.

El Molla also said that the government was looking to buy “the foreign partner’s stake” in Zohr, Al Masry Al Youm reports. He was not clear if the state was looking at all or part of Eni’s stake alone, or whether he was referring to Rosneft and BP.

The executive regulations for the new Natural Gas Act are expected to come out in the coming weeks, El Molla reportedly said. The new deadline delays the coming of the law — which allows the private sector to import and distribute natural gas and sees the state reduce its role to that of a market regulator. El Molla had said the regs would be out this month.

Egypt plans to generate 42% of its electricity from renewable energy by 2025, Electricity Minister Mohamed Shaker tells Bloomberg. That represents an ambitious expansion of the target initially set out by the government, which mandated that 20% of Egypt’s power needs will be met by renewable resources by 2022 — and to 65% by 2050. The increase likely follows the interest international institutions have shown in the Benban solar park after the launch of Phase 2 of the feed-in tariff (FiT) program and investing USD 1.8 bn in the project. The full lineup of companies in Phase 2 will be announced in mid-January, Electricity Ministry sources tell Al Borsa.

It’s looking good for Benban solar companies: The committee reviewing financial and technical offers appears to be leaning towards accepting all comers, especially considering that the overwhelming majority of companies have reached financial close on their projects. Separately, the New and Renewable Energy Authority (NREA) is looking for a EGP 1 bn revolving loan to help fund rooftop solar installations with a combined capacity of 500 KW, NREA sources tell Al Borsa, NREA sources tell Al Borsa. The authority has entered into talks with five banks for the loan, including Banque Misr, the National Bank of Egypt, and CIB.

In other news from the sector: Contracts for the interconnection of the Egyptian and Saudi electricity grids will be signed in March or April 2018, Shaker said, according to Bloomberg. The project will carry a total cost of USD 1.6 bn, of which Egypt will pay USD 600 mn, Shaker says. Construction will take two years and the link with Saudi Arabia should have a capacity of 3,000 MW. Egypt already has a 450 MW link with Jordan and a 200 MW one with Libya. The link will allow Egypt to export electricity in times of surplus and then import power during shortages.

An Orascom Construction consortium with Engie and Toyota Tsusho Corporation / Eurus Energy Holdings Corp. has reached financial close for a 250 MW build-own-operate (BOO) wind farm in Ras Ghareb. Orascom Construction has a 20% stake in the project. Orascom says “non-recourse project financing is provided by The Japan Bank for International Corporation (JBIC) in coordination with Sumitomo Mitsui Banking Corporation and Société Générale under a Nippon Export and Investment Insurance (NEXI) cover. Commercial International Bank (CIB) Egypt will act as working capital bank and Attijariwafa Bank will provide an equity bridge loan.” Once construction is completed, the consortium will manage the wind farm under a 20-year power purchase agreement. Clifford Chance acted as international counsel to the consortium, with Zaki Hashem & Partners as local counsel.


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Image of the Day

Egypt as you’ve never seen it before: We’re dating ourselves here, but coming up in journalism, we were told, “Everything looks better in black and white.” In an era of super-saturated color and HDR photography, it’s taken our friend, the artist Romany Hafez (Instagram), to remind us that that adage is nowhere more true than here in Omm El Donia. Witness Hafez’s first solo exhibition, the evocatively titled In Spaces, Beginnings and Memories. A white-collar professional by day and noted lecturer on Coptic language and art, Hafez is deeply steeped in Egyptian culture and lore, and it shows in every print on display — each a work of black and white magic. The exhibition is open daily through 31 December 2017 from noon until 11pm at Designers Boulevard, Galleria 40, in Six of October. Tap here for a photo of Hafez with his wife Nermin Adly and curator Khaled Hafez.

Egypt in the News

Egypt will continue to maintain an aggressive stance toward Ethiopia on the Grand Ethiopian Renaissance Dam (GERD) in an attempt to force Ethiopia to capitulate to Cairo’s demands, but the dam will be completed, according to a Stratfor Worldview report (paywall). Upstream countries have shifted the balance of power among Nile basin countries and are “beginning to challenge Egypt’s leverage over the use of the river’s resources.” This, according to Stratfor, leaves Egypt backed into a corner in negotiations and its ability to get Ethiopia to grant concessions increasingly limited. This will force Egypt back to “the negotiating table with Ethiopia because once the dam is built, Egypt must coordinate its dam operations with Ethiopia’s as the new reservoir is filled.” The report concludes that “in any case, Cairo’s lack of options, its reduced ability to unite with Sudan against upstream countries and the dam’s continuing construction have shown Egypt that its old tactics are declining and that upstream countries are gaining leverage in Nile Basin water politics.”

Egypt is a “terrible ally” to the US, Andrew Miller and Richard Sokolsky write in a guest editorial for The New York Times, calling for a cut in the military aid package. “American and Egyptian interests are increasingly divergent and the relationship now has far less common purpose than it once did.” Miller and Sokolsky say that Egypt has showed “profoundly unfriendly behavior” when it signed an airbase usage agreement with Russia and for its support of General Khalifa Haftar in Libya. They add: “For too long, the United States has allowed the Egyptian government to treat security assistance as an entitlement owed for making peace with Israel. The United States has not held Egypt accountable for how this money is spent” and that this give Egypt “a free ride on American generosity.”

…Egypt and Russia are deepening their economic ties and are being driven closer because of geopolitical considerations, He Wenping and Hisham Metwally write for Global Times. They point to the agreement between President Abdel Fattah El Sisi and Russian President Vladimir Putin over Jerusalem, the signing of the nuclear power plant agreement, and the potential return of Russian tourists to Egypt.

In Hong Kong and craving some Egyptian food? Apparently there is an Egyptian family-run restaurant there called Aziza in Kennedy Town, Marc Rubinstein reviews for Coconuts. Rubinstein says the food there is “skillful and delicious and demonstrates the care of a family that wants to show customers the best of homemade Egyptian cuisine without cutting corners. On top of that, it comes at a price that is reasonable and in a location that is easy to get to.”

Also worth noting in brief this morning:

  • Twitter has drawn criticism after suspending the account of activist Wael Abbas, The Guardian reports. The company has yet to give a reason for the suspension.
  • The families of American citizens imprisoned in Egypt have been lobbying US Vice President Mike Pence to broach the topic of their release during his visit to the region, says the Huffington Post’s Akbar Shahid Ahmed.
  • Emancipation of women in Egypt can “only come from the Egyptian feminists and the Egyptian women who fight for their rights on a daily basis,” Mona Eltahawy tells France 24.

On Deadline

President Abdel Fattah El Sisi agreeing to meet US Vice President Mike Pence would reaffirm Egypt’s weak position on both external and internal issues, say Al Shorouk’s Emad El Din Hussein and El Watan’s Hazem Mounir. In light of the ongoing troubles over Jerusalem, El Sisi’s planned meeting with Pence would be a continuation of decades of allowing the US and Israel to maintain the upper hand in the Palestinian issue, Hussein says. On the domestic front, Pence has publicly announced that his trip is aimed at lobbying for Christian rights in the region, and El Sisi meeting with him under that subject header could be perceived as Egypt agreeing to allow the US to meddle in our internal affairs, Mounir claims. Cairo needs to tell Washington to back off on both files, the two say.

Diplomacy + Foreign Trade

The US vetoed yesterday an Egypt-sponsored UN Security Council resolution condemning the US’ unilateral move to recognize Jerusalem as Israel’s capital, Reuters reports. The remaining 14 members of the council voted in favor of the motion, which also called on other countries to refrain from moving their embassies in Israel to Jerusalem. US Ambassador to the UN Nikki Haley justified the US’ use of its veto power for the first time in six years in the council as being “in defense of American sovereignty and in defense of America’s role in the Middle East peace process.” Arab states will convene soon to assess the situation and decide on further steps to defend Jerusalem, Egypt’s Foreign Ministry said in a statement following the council vote. Palestinian Foreign Minister Riyad Al-Maliki also said that Palestine will call for an emergency special session of the UN General Assembly, whose outcomes are non-binding “but carry political weight,” the newswire notes.

Egypt gets JPY 993 mn grant from Japan for Egypt-Japan science university: Investment and International Cooperation Minister Sahar Nasr signed yesterday a JPY 993 mn (USD 8.8 mn) grant agreement with the Japanese International Cooperation Agreement (JICA) for the Egypt-Japan University of Science and Technology, according to a ministry statement.

Nasr is currently in Tokyo for a three-day roadshow with the Egypt-Japan Business Council. She met yesterday with the Japanese trade and foreign ministers, as well as the head of Nippon Export and Investment Insurance. Nasr also sat down with officials from 20 major Japanese companies, including Nissan and Hitachi, to discuss increasing their investments in Egypt.


Shell in talks with Oil Ministry to increase its share of gas produced at Phase 9B

Shell has apparently entered talks with the Oil Ministry to increase its share of gas produced to offset their investment costs from Phase 9B of the West Delta Deep Marine Concession, government sources tell Al Borsa. The company is looking to recoup the investment costs of developing the concession sooner, they added. The company plans to complete developing two test wells in Phase 9B in 1Q2018. BG Egypt, before being acquired by Shell, had suspended work on Phase 9A+ and 9B in March 2016 after the government rejected paying USD 7.00 per mmBtu for Phase 9B.

Maersk sells its 50% stake in Egyptian Drilling Company to EGPC

Maersk Drilling agreed to sell its 50% stake in Egyptian Drilling Company to the EGPC for USD 100 mn, Reuters reports. The cash transaction leaves the EGPC as the sole shareholder of Egyptian Drilling Company.


Red Sea Ports Authority to sign agreement with China’s CRBC for three projects

The Red Sea Ports Authority is scheduled to sign today an MoU with the China Road and Bridge Corporation (CRBC) for three port projects, authority head Hisham Abou Senna tells Al Borsa. Chief among the projects is a USD 250 mn multipurpose terminal with the capacity to handle 1.2 mn containers per year at the Safaga Port. CRBC will also construct another 137 sqm multipurpose terminal at the Nuweiba Port. The agreement will also include developing the Sharm El Sheikh Port, and the construction of its business and entertainment centers. Abu Senna had previously said the Sharm El Sheikh developments would entail the establishment of a terminal for tourist ships and a marina for yachts.

Banking + Finance

First EGP 10 bn phase of CBE’s Mortgage Finance Fund handed out

Local banks have handed out 100% of the first EGP 10 bn phase of the CBE’s Mortgage Finance Fund, CBE Sub-Governor Gamal Negm announced, Al Mal reports. The second EGP 10 bn tranche, which the CBE had decided to allocate in October, will now be distributed, according to Negm. The fund seeks to boost financing for the middle- and low-income segments by providing favorable lending rates of 7% and 8% over longer time periods. The program is funded by the World Bank and other local institutions, including CIB.

Beltone increases assets under management by 50% in 2017

Beltone Financial Holding raised its assets under management this year 50% to EGP 27 bn, Head of Brokerage Mustafa Abdel Aziz said to Al Mal. The company is looking to acquire a European asset management house next year although nothing concrete has materialised, he also said.

Banque Misr sells EGP 275 mn worth of shares in MNHD

Banque Misr has sold 25 mn shares in Medinet Nasr for Housing and Development (MNHD) for a total value of EGP 275 mn, according to a bourse disclosure. The sale reduces the bank’s stake in MNHD to 3.47% from 5.97%.

Cleopatra capital increase now 100% subscribed

Cleopatra Hospital Group’s second round of subscriptions for their capital increase closed out the entire amount, according to a regulatory filing. The EGP 700 mn capital increase was 99.8% subscribed in the initial phase announced on 10 December and now the full 1.4 bn shares have been picked up. Proceeds will be used to fund the acquisition of an EGP 600 mn hospital and to repay a EGP 100 mn loan.

Other Business News of Note

Dice Sport and Casual Wear to export to Levi’s in the US

Dice Sport and Casual Wear reached an agreement with Levi Strauss & Co (Levi’s) to export kids wear to the US market in 2018, according to a bourse statement. The agreement is expected to increase Dice’s sales by USD 10.8 mn. Dice says its agreement with Levi’s allows for the export orders to be canceled in the future without any penalties.

Egypt Politics + Economics

National Elections Commission denies issuing schedule for presidential elections

The National Elections Commission denied yesterday it had set a timeline for next year’s presidential elections, Ahram Online reports. Under the constitution, election proceedings must begin no later than 120 days before the current presidential term expires. The commission, which is headed by the chief justice of the Court of Cassation, was formed in August under the National Elections Commissions Act.

Legislation + Policy

Council of State completes review of amendments to Nationality Act

The Council of State’s legislative division has completed its review of proposed amendments to the Nationality Act and will send the legislation back to Cabinet for approval, Al Shorouk reports. The amendments would strip citizenship from those found guilty of belonging to or affiliated with a terrorist organization or any other group whose aim is to damage the state, a Council judge says. The amendments would increase the statute of limitations for these offenses to 10 years, from five years previously.


Hegazi signs permanent transfer to West Brom

West Bromwich Albion has activated a clause to sign Ahmed Hegazi on a permanent agreement, according to Sky Sports. The Egypt international was on loan from Al Ahly since July and he has signed a four-and-a-half-year agreement for an undisclosed fee.

On Your Way Out

AUC okay with niqab — for now. The American University in Cairo (AUC) has agreed to allow currently enrolled students who wear the niqab to enter campus until they complete their education, AUC President Francis Ricciardone said in a Sunday statement. Several students complained to the administration about the niqab ban, which cites “security concerns.” “The identity of all persons on campus and AUC-operated transportation must be immediately apparent … the Provost and Dean of Students are meeting with [affected students] to arrange reasonable accommodations that will permit them to complete their courses of study at AUC,” the statement reads. The decision is a partial backtrack on an update to the university’s campus access policy (pdf) stipulating that all individuals seeking access to AUC or using its transportation service must have their faces visible at all times. The ban could be reimposed at the start of the new academic year, AUC Communications Officer Rehab Saad said, Egypt Independent reports.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.7662 | Sell 17.8662
EGP / USD at CIB: Buy 17.77 | Sell 17.87
EGP / USD at NBE: Buy 17.69 | Sell 17.79

EGX30 (Monday): 14,721 (+0.03%)
Turnover: EGP 1 bn (6% below the 90-day average)
EGX 30 year-to-date: +19.3%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session up 0.03%. CIB, the index heaviest constituent closed down 1.0%. EGX30’s top performing constituents were Sidi Kerir Petrochemicals up 7.8%; AMOC up 3.4%; and Domty up 2.2%. Yesterday’s worst performing stocks were Heliopolis Housing down 3.0%; Madinet Nasr Housing down 3.0%; and Telecom Egypt down 2.6%. The market turnover was EGP 1.0 bn, and regional investors were the sole net sellers.

Foreigners: Net Long | EGP +3.2 mn
Regional: Net Short | EGP -15.2 mn
Domestic: Net Long | EGP +12.0 mn

Retail: 65.0% of total trades | 62.3% of buyers | 67.6% of sellers
Institutions: 35.0% of total trades | 37.7% of buyers | 32.4% of sellers

Foreign: 17.5% of total | 17.6% of buyers | 17.3% of sellers
Regional: 10.2% of total | 9.5% of buyers | 10.9% of sellers
Domestic: 72.3% of total | 72.9% of buyers | 71.8% of sellers

WTI: USD 57.19 (-0.19%)
Brent: USD 63.38 (+0.24%)
Natural Gas (Nymex, futures prices) USD 2.74 MMBtu, (+4.86%, January 2018 contract)
Gold: USD 1,264.7 / troy ounce (+0.57%)

TASI: 7,191.58 (+1.39%) (YTD: -0.26%)
ADX: 4,397.38 (+1.12%) (YTD: -3.28%)
DFM: 3,371.78 (+0.17%) (YTD: -4.51%)
KSE Weighted Index: 399.77 (-0.14%) (YTD: +5.18%)
QE: 8,211.94 (+0.06%) (YTD: -21.32%)
MSM: 5,087.54 (+0.24%) (YTD: -12.02%)
BB: 1,265.59 (+0.12%) (YTD: +3.7%)

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19 December (Tuesday): Village Capital’s Financial Health Competition: Middle East and Egypt (applications close 3 November)

28 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee to review policy rates.

29-30 January (Monday-Tuesday): Seamless North Africa, The Nile Ritz-Carlton, Cairo

12-14 February 2018 (Monday-Wednesday): Egypt Petroleum Show 2018 (EGYPS), New Cairo Exhibition Center.

19-20 February 2018 (Monday-Tuesday): The Banking Tech North Africa, The Nile Ritz-Carlton, Cairo

17-21 February 2018 (Saturday-Wednesday): Women For Success – Women SME’s "World of Possibilities" Conference, Cairo/Luxor.

28-31 March 2018 (Thursday-Sunday): Cityscape Egypt, Cairo International Convention Centre, Cairo

4-6 May 2018 (Friday-Sunday): International Conference on Network Technology (ICNT 2018), venue TBD, Cairo

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