EGX to get two IPOs in two months

The EFG Hermes One on One conference wraps today. Yesterday saw a full lineup of one on one investor meetings. We had the pleasure of sitting down with our friends Mohamed Ebeid, Co-CEO of Investment Banking at EFG Hermes, and Ali Khalpey, CEO of EFG Hermes Frontier. They had some very interesting things to say about the state of Egypt, EMs, and frontiers. Look for our exclusive in tomorrow’s issue. We also would like to thank all that took the time to meet with us when we were there. Your comments and praises fuel our all-nighters.

Egypt will select investment banks to manage its April EUR 1-1.5 bn eurobond issuance within two weeks, Finance Minister Amr El Garhy tells Reuters’ Arabic service. The roadshow for the issuance will take place in “several European countries” during the same month, according to El Garhy. The minister did not mention whether the ministry plans to focus once again on attracting interest from Asian investors, who showed strong appetite during the last issuance. HSBC, Citigroup, JPMorgan Chase & Co, Morgan Stanley, and National Bank of Abu Dhabi had managed the USD 4 bn issuance that Egypt successfully closed last month.

This comes as Senegal attracted almost USD 10 bn of bids in a USD 2.2 bn eurobond issuance as African governments continue to attract a lot of demand for their debt, a person familiar with the matter told Bloomberg on Tuesday. Senegal is planning to buy back as much as USD 200 mn in 2021 securities.

Separately, El Garhy said that the FY2018-19 budget should be out by the end of the month and with the House of Representatives. We have more on that and a plethora of interesting economic news in Last Night’s Talk Shows.

Does this mean winter is over for us? Temperatures will keep rising through the rest of the week before cooling on Friday, the Meteorological Authority’s spokesman tells Ahram Online. Expect a high of 34º and a low of 18º in the capital today, along with low visibility in the morning and dusty winds.

Reducing the gender pay gap across Organization for Economic Cooperation and Development (OECD) countries could boost GDP by USD 6 tn, according to new PricewaterhouseCoopers research carried by Bloomberg. The gains would come from increased female participation in the labor market, entrepreneurship and women moving into higher-paid and skilled jobs.

How to avoid annoying web cookies and ads? Use your phone. If you, like some of us here, are annoyed by incessant ads that pop up on your computer browser after an online shopping spree, then you might want to consider switching over to your phone. Axios says that web cookies (the culprit behind the ads) are entirely unable to function on mobile apps — which is where people spend the majority of their screen time. In fact, cookies are now slowly on their way to becoming an outmoded marketing tool, as users are rely more on mobiles and less on desktops. “The big picture: Cookies are a good example of how traditional web infrastructure is becoming obsolete with the rise of mobile.”

Egypt is participating in the ITB Berlin Convention, which runs from 7-11 March in Germany. A number of Egyptian tour companies and hotel operators are participating in the exhibition. Full details are available here.

Infinity Solar is scheduled to inaugurate its 50 MW solar power plant in Benban, Aswan next week, Al Borsa reports. Infinity has already conducted trial operations and connected the plant to the national grid, making it the first company to complete a solar power plant under the feed-in tariff program, according to CFO Mohamed Shehata. Electricity Minister Mohamed Shaker is expected to attend the inauguration.

Verdict coming in anti-Uber, Careem lawsuit: The Administrative Court will issue a verdict on 20 March in the case filed by 42 taxi drivers demanding that local operations for ride-hailing services Uber and Careem be shut down.

Economy was the order of the day on the airwaves last night, with Finance Minister Amr El Garhy and EGX head Mohamed Farid both phoning into Hona Al Asema for a chat with Lamees Al Hadidi.

The government has not yet settled on the FX rate it will be using for the FY2018-19 budget, El Garhy told Lamees, denying a Reuters report claiming the rate has been set at EGP 17.5 per greenback. El Garhy confirmed that the House of Representatives will receive the state budget for the next fiscal year before the end of March, once it’s passed through Cabinet and Ittihadiya. He also told Lamees that he expects GDP growth this year to stand between 5.35-5.5% and climb to 6% the year after.

The next tranche of Egypt’s USD 12 bn loan from the IMF should be disbursed by the end of the fiscal year in June, El Garhy also said. An IMF delegation is expected to land in Cairo in May for its next review of the economic reform program before it signs off on the USD 2 bn tranche.

El Garhy also told Lamees about Egypt’s plans to issue EUR 1-1.5 bn in eurobonds in April (watch, runtime: 57:46). While economic expert Sherif Delawar told Kol Youm’s Amr Adib that Ittihadiya should form a committee to manage Egypt’s foreign debt (watch, runtime: 30:13)

The EGX is expecting at least two IPOs between March and April, as investors are now viewing Egypt in a more positive lights thanks to “tough reforms,” bourse chief Farid told Lamees (watch, runtime: 5:52).

Private sector participation in the development and management of the railway sector is now an “urgent necessity,” Egyptian Center for Economic Studies head Abdel Moneim Al Sayed told Al Hayah Al Youm’s Nahawand Serry. Not only is it suffering from overly worn out infrastructure, but the railway network is also not being utilized efficiently or to its full potential, Al Sayed said, explaining that Egypt should consider introducing railway cargo transport to ease some of the pressure on its roads (watch, runtime: 7:16).

Legislative amendments were also on the talking heads’ radars, after the House of Representatives approved penal code amendments that set the death penalty as punishment for use for use of explosives in terror attacks. Adib was all in favor and particularly pleased by clauses that impose the same penalty on manufacturers of explosive devices created to commit an act of terrorism (watch, runtime: 10:11). DMC’s Osama Kamal also nodded along (watch, runtime: 2:34).

The challenges facing university students in Sinai due to the military’s anti-terror campaign had Lamees Al Hadidi call up Higher Education Minister Khaled Abdel Ghaffar, who said the ministry was studying different options for students to resume their studies (watch, runtime: 6:23). Among those options is an online tutoring platform, according to Al Monitor. Vice also shines the spot on “What It’s Like to Go to College in a War Zone.”

As for the supply of food commodities to the restive region, Food Industries Holding Company head Alaa Fahmy reassured Lamees that the government is doing its best to meet residents’ needs (watch, runtime: 1:43). North Sinai Medical Syndicate head Salah Sallam, however complained to Lamees about a surge in prices and deficiency in supply, claiming that a carton of eggs is going for as much as EGP 100 (watch, runtime: 2:21).

Saudi Crown Prince Mohammed bin Salman caused less of a buzz on his last day in Cairo. Lamees did a brief recap of the visit and asked the government to provide more details on Egypt’s recent agreement with Saudi to develop a stretch of NEOM in South Sinai (watch, runtime: 5:39). While Masaa DMC’s Osama Kamal had a chat with Cabinet spokesperson Ashraf about MbS’ meeting with Prime Minister Sherif Ismail, which mainly tackled economic cooperation, he said (watch, runtime: 5:21).

Meanwhile, fears of a low voter turnout at the upcoming presidential elections plagued Adib, who boisterously “urged” his audience to participate (watch, runtime: 6:32).

Naguib Sawiris’ Pakistani real estate business Ora Developers will begin constructing a USD 2 bn residential project on the outskirts of Islamabad next month, project CEO Tarek Hamdy tells Bloomberg in an interview. “The ‘Eighteen Islamabad’ development will feature more than 1,000 homes, a golf course and a mall on 2.25 mn sqm of land. It will take six years to complete,” according to Hamdy. He added that the company will invest USD 400 mn in the project in the first two years and expects to see “very reasonable margins” of 10-40%. Three-bedroom units at Eighteen Islamabad will start retailing at USD 275.4k.

Ora Developers expects to announce new real estate projects by year’s end. The company — a joint venture in which Sawiris owns 60% with Pakistan’s Kohistan Builders and Developers and Saif Group holding the balance — hopes to tap into the country’s booming real estate sector, which has seen substantial growth “in recent years as militant violence receded.” Hamdy says that “overseas Pakistanis particularly in the US, UK, and Middle East [are] major buyers.” BMI Research finds that “a shortage of housing units will boost construction activity in Pakistan as the urban population grows by nearly 30 mn by 2027,” according to Bloomberg.

INVESTMENT WATCH- A BPE Partners-led consortium is planning to invest USD 30 mn in a private university outside Cairo, BPE Partners’ Omar El Labban tells Al Mal. The consortium includes local and foreign investors, and is expected to sign an initial MoU for the project within one month after receiving the necessary government approval, according to El Labban. The project comes as part of BPE Partners’ plan to invest USD 100-120 mn in Egypt’s education, renewable energy, food, and health sectors this year. BPE Partners had abandoned plans to participate in an Education Ministry tender to build 200 schools under a PPP framework back in August of last year.

MOVES- Pharos Holding announced appointing Aladdin El Afifi as Managing Director and Co-CEO. El Afifi joins Pharos with more than 18 years of financial investments and direct investments experience and has worked with Qalaa Holdings as Head of the company’s investments in the Mining, Mining Industries and Solid Waste sectors. He was also part of the UK Mergers and Acquisitions and the Industrials and Natural Resources teams at Goldman Sachs & Co in London.

EGAS is planning to issue a tender for an unspecified amount of LNG in 2Q2018, an unnamed EGAS source tells Reuters’ Arabic service. The shipments would be delivered the following quarter. Oil Minister Tarek El Molla had said last month that Egypt will stop importing LNG by the end of the year, by which time the country expects to reach self-sufficiency.

Meanwhile, the East Mediterranean looks to be heating up, as the world reacts to Turkey’s bullying. The US has upped its naval presence in the Mediterranean as ExxonMobil dispatched drilling ships to Cyprus’ Exclusive Economic Zone (EEZ), Sputnik reports. ExxonMobil is operating on a contract with Cyprus and Qatar Petroleum to explore for energy reserves off the Cypriot coast. The US “bolstering its presence in the region” comes after the Turkish military blocked drilling efforts in Cyprus’ portion of the EEZ twice last month. Cyprus lodged a formal protest with the UN against Turkey for its “repeated violations” and attempts at “undermining [Cypriot] sovereignty.” Turkey’s aggression came just as reports emerged that Egypt and Cyprus are nearing an agreement on establishing a natural gas pipeline, which could well turn Egypt into the export hub for East Mediterranean gas.

EETC inks contracts for USD 400 mn Gulf of Suez wind farm: The Egyptian Electricity Transmission Company (EETC) signed contracts yesterday for the 250 MW Gulf of Suez wind farm being developed by a consortium of Orascom Construction, Engie, and Toyota Tsusho Corporation, according to a Cabinet statement. The USD 400 mn will be established under a build-own-operate framework. Trial operations should begin by mid-2019 and the project should be fully online by the end of the same year. The consortium had announced in December last year that it has reached financial close on the project, which is being funded by the Japan Bank for International Corporation, Nippon Export and Investment Insurance, and commercial lenders SMBC and Societe Generale. Shalakany law firm is acting as local legal counsel for the financiers.

Arabian Cement, LafargeHolcim plan to up cement exports amid market oversupply: Arabian Cement is planning to increase its exports this year to 550k tonnes, from 400k tonnes in 2017, CEO Sergio Alcantarilla tells Al Borsa. The company is eyeing more exports to countries including the US, Kenya, Yemen, and Madagascar, given the Egyptian market’s state of oversupply, Alcantarilla says. Lafarge is also following a similar strategy by focusing on exporting its products to African and Arab countries, Al Borsa reports. The company does not have any current expansion plans since the entry of new players has saturated the domestic cement market, says country CEO Hussein Mansi.

Despite the surplus in local supply, the Industrial Development Authority is still gearing up to re-issue tender for 11 cement licenses, according to the newspaper. The IDA had tendered 14 licenses at the end of 2016, but only awarded three to Egyptian Cement, South Valley Cement, and El Sewedy Cement.

Gov’t expected to raise local wheat buying price EGP 15-20 per ardib: The government will set the price of buying local wheat for the upcoming harvest season based on the average local and global prices, an unnamed government source tells Arabic Reuters. The formula will likely see the buying price increase EGP 15-20 per ardib from last season. Supply Minister Ali El Moselhy had confirmed in November that the government would peg wheat prices to the global market as of the upcoming season, which runs from mid-April until July. The final price is expected to be announced this month.

Meanwhile, the General Authority for Supply Commodities (GASC) purchased yesterday 175k tonnes of Russian wheat, according to the newswire. The lowest offer received in the tender was from Russia’s GTCS at USD 213 per tonne free-on-board, traders told Reuters. The wheat is scheduled for delivery between 5-15 April.

EARNINGS WATCH- Telecom Egypt reported an 18% y-o-y rise in net profit after tax in 2017 to EGP 3.2 bn, up from EGP 2.7 bn during the previous year, according to an EGX filing (pdf). Consolidated revenues recorded EGP 18.6 bn, marking a 33% y-o-y increase.

Dahab is on its way back to becoming a popular beach resort, after the past few years yielded “circumstances [that] certainly affected a pause in tourism development,” Nick Redmayne writes for The Independent. However, there are many who remain wary about the town’s rising popularity and are concerned that there are efforts to shape it to become akin to Sharm El Sheikh. “This place is never going to be like Sharm El Sheikh, though they’re trying. But the beach here is Bedouin ownership … [the Bedouins] will never agree,” one dive shop owner says.

Etisalat shares popped around 4.1% yesterday as the UAE-based telecom company announced its plans for a USD 2 bn stock buyback, Bloomberg reports (paywall). The company’s board had recommended purchasing some around 5% of its paid-up capital. “The buyback is intended for canceling or reselling the shares, it said, without providing the terms.”

A group of British MPs have petitioned the Egyptian government to allow them to visit ex-Islamist president Mohammed Morsi in Tora prison “to review conditions of [his] detention” and look into claims that he was denied adequate medical care, The Associated Press reports. The bipartisan group said they made the request on Morsi’s family’s behalf. The story is making top headlines on Egypt in the foreign press this morning with coverage from The Guardian and The Wall Street Journal (paywall), among others. Middle East Monitor also says that ex-Ikhwan leader Mohamed Badie’s family is also concerned for his health.

A close second was Saudi Crown Prince Mohammed bin Salman, who wrapped up his three-day visit to Egypt yesterday with a trip to Al Azhar mosque, notes The Associated Press. Meanwhile, Xinhua and the Saudi Gazette both picked up the joint statement issued by Ittihadiya yesterday on MbS’ meetings with President Abdel Fattah El Sisi. The Saudi royal had also presided over the signing of various cooperation agreements, including one that establishes a USD 16 bn joint investment fund that would finance the development of 1,000 sq km of land in South Sinai for Saudi’s NEOM project.

The elections stories continue to make the rounds in the foreign press as well, with USA Today arguing that Coptic Christians’ support is essential for President Abdel Fattah El Sisi’s presidential bid, while JCPA wonders what can be expected from the election with little or no opposition. The Washington Post then says that the only interesting thing about the election will be the rate of abstention.

Also worth a brief note this morning:

• The natural gas agreement between Israeli producers and Dolphinus Holdings in Egypt is a sign that diplomatic ties have never been better, Sharyn Mittelman writes for AIJAC.
• Hotel Business reports on the opening of the Hilton Cairo Heliopolis under global hospitality company’s expansion in the country.
• A self-proclaimed economic expert accuses the CBE of overblowing its FX reserve figures, in an interview with the Islamist-leaning Middle East Eye.
•  Egypt’s fencing team has won six new medals in the 8th Cadet and Junior African Fencing Championship in Lagos, according to SIS.
• An Egyptian Imam delivered a Friday sermon calling to wage “defensive Jihad” against the infidels in their own lands until Islam “reigns supreme”, the Jewish News Syndicate reports.

The Tourism Ministry has completely ignored the implications of the new umrah fee on thousands of Egyptian families whose incomes depend on religious tourism, Mohamed Salah El Badry writes for El Watan. He argues that the move could force many small companies out of business and add to their existing financial strain, especially since a large portion of umrah-goers are not particularly wealthy.

A technology called “digital twins” is making manufacturers’ dreams come true by creating a 3D simulation of a product using real-time data. The idea behind digital twins is that it allows manufacturers to conduct virtual tests to see how the product would perform, and simulate various conditions to determine the product’s responses to these variables — all from a computer. “By building virtual models to test in reconstructed ‘real world’ operating environments, companies can get an accurate picture of how their products will behave in the field, explains Goldman Sachs Research’s Joe Ritchie, ultimately enabling better performance through predictive maintenance and enhanced design” (watch, runtime 2:13).

Agriculture Minister Abdel Moneim El Banna met yesterday with his Saudi counterpart to discuss the kingdom’s bans on Egyptian agricultural products, Al Mal reports. The two ministers did not seem to make much headway on the issue beyond reviewing Egypt’s newly imposed quality control measures and reaffirming their commitment to cooperating with each other. Saudi Arabia had banned imports of Egyptian strawberries and peppers over concerns of residual pesticides, prompting several other GCC countries to follow suit. The Agriculture Ministry later moved to impose stricter regulations on agricultural exports to the GCC after the successive bans.

President Abdel Fattah El Sisi spoke to Palestinian counterpart Mahmoud Abbas on the phone yesterday to discuss the latest on Egypt-mediated reconciliation efforts with Hamas and other regional issues, according to an Ittihadiya statement.

It looks as though the Suez Canal Economic Zone’s agreement with France’s CMA CGM has faltered, as the authority has tapped the Port Said Container & Cargo Handling Company to construct, manage, and operate the USD 300 mn East Port Said Port container terminal, Land and Maritime Transport Holding Company Chairman Mohamed Youssef tells Al Borsa. The French shipping group had signed an MoU with the authority in December to manage the terminal, the investment value of which had initially been set at USD 765 mn. CMA CGM was awarded the contract after talks with Singapore’s PSA International floundered last year.

Juhayna subsidiary Tiba for Trade and Distribution has signed a contract to distribute the Egyptian Saudi Company for Water and Food Industries’ FLO water, Juhayna CEO Saif Thabet tells Al Mal. Tiba, which signed a similar partnership agreement with Denmark-based Arla Foods in 2015, will distribute the bottled water products through 28 centers in 27 governorates.

ICT Minister Yasser El Kady inaugurated yesterday the first phase of HitekNofal Solutions and Hengtong Group’s USD 30 mn fiber optics factory in Badr City, according to an ICT Ministry statement. The new factory, which has an annual production capacity of 8,000 km, is expected to cover domestic demand for fiber cables and begin exporting to African markets by mid-2019. The company aims to source 80% of its materials for the manufacturing process from Egypt by 2021.

The government is planning to establish a complex in Port Said for industries serving the governorate’s petrochemicals factories, the head of Port Said’s Small and Medium Industries Development Association, Fouad Thabet, tells Ahram Gate. Thabet did not specify the total cost of the project, but said that construction costs of the buildings alone would tally up to around EGP 300 mn. Tenders for construction will be issued in two-months’ time, he said.

SODIC was awarded a tender for a 500-feddan land plot in Sheikh Zayed, the company said in a bourse statement carried by Al Mal. The plot is one of four the company had bid for in the Sheikh Zayed and Six October City areas. The New Urban Communities Authority is currently finalizing the contracts.

Palm Hills Developments (PHD) is planning to break ground on the EGP 400 bn October Oasis residential and commercial project in mid-April, Chairman Yasseen Mansour tells Al Borsa. The 3,000-feddan project in Six October City will be co-developed by the New Urban Communities Authority (NUCA) as per an EGP 150 bn agreement signed in September. Under the agreement, NUCA will take 26% of the revenues from the project. PHD expects to sell the 3,000 units of phase one before the end of the year.

The government has re-issued its tender to develop an airport and adjacent tourism resort in Ras Sudr with amended stipulations after failing to drum up investor interest in the project last year, Al Mal reports. The new tender will allow companies to own the land on which the resort will be built, rather than have the land allocated under a usufruct license, and extends the coastline for the resort to 1.6 km. Meanwhile, the airport will be developed under a build-operate-transfer framework. The government also agreed to allow investors to purchase the tender’s booklet of conditions for EGP 10k, after having demanded a USD 10k fee in the initial tender. Four unnamed companies have already purchased the booklet, and the government expects to announce the qualifying companies by 16 July at the latest. Orascom Construction, Hassan Allam, Misr Italia, and Haddad Group had all initially expressed interest in the project but did not make bids once last year’s tender was launched.

The Financial Regulatory Authority (FRA) is planning to announce the launch a movable collateral assets registry at a press conference on Sunday, Al Mal reports. The FRA had signed an agreement with The Egyptian Credit Bureau (I-Score) last year to establish the registry, which is expected to facilitate SME funding and aid the government’s financial inclusion efforts by allowing machines, patents, and engineering designs to be used as collateral.

The Abu Dhabi Investment Authority (ADIA) has sold an EGP 30.89 mn stake in CIB, according to an EGX release. The sale of the 400k shares at EGP 77.2418 per share brings ADIA’s holding to 4.9661% of the company’s shares.

The House of Representatives granted preliminary approval on Monday to legislation that wouldexempt higher education and scientific research bodies from taxes and customs tariffs on imported equipment and materials used for research, Ahram Gate reports. The law is meant to incentivize innovation and scientific research. Parliament postponed holding a final vote on the law due to (you guessed it) lack of quorum.

Military prosecutors are investigating six individuals arrested last week for their involvement in a play “seen as insulting to police forces,” The Associated Press reports. The play is named after Suleiman Khater, a police conscript who killed seven Israeli tourists in 1985. The arrests come after President Abdel Fattah El Sisi issued a stern warning to media outlets that insulting the army or police is tantamount to treason in his eyes.

A passenger induced panic on a Muscat-Cairo EgyptAir flight yesterday when he assaulted crew members and demanded entry to the cockpit while shouting ‘Allahu Akbar,’ Egyptian aviation officials tell The Associated Press. The chief cabin steward received a slight head injury before two air marshals and other crew members tackled the unarmed passenger. The plane returned to Muscat and the individual was handed over to Omani authorities.

Antiquities Minister Khaled El Anany is in talks with representatives of Egypt’s Jewish community to re-open Alexandria’s 160-year-old synagogue, Al Mal reports. The Ministry had announced in September that it was adding the Menasche Synagogue to its national heritage list of religious monuments.