Tuesday, 19 June 2018

Mo Salah says he’s ready to play tonight against Russia

TL;DR

What We’re Tracking Today

Aaaaand … we’re back: We returned from our four-day furlough to find a new cabinet, fuel prices up 50%, Abraaj filing to restructure, heightened prospects of a global trade war, and a World Cup full of surprises. It’s not at a bad way to welcome the long, hot days of summer — and our return to caffeinated mornings.

Speaking of our new cabinet: As a community, we owe a debt of gratitude to Amr El Garhy and Tarek Kabil for having stepped up and served the nation when they did. They agreed to serve at a time when the path forward for our economy was more than murky — and leave office having maneuvered us into the best position we have enjoyed in at least a generation.

Joy: It’s game day. Egypt plays Russia tonight at 8:00 pm CLT in its second outing in the group stage. National team coach Hector Cuper and the football press aren’t sure Mo Salah will take to the pitch, but the man himself promised he was ready in a short video posted to his Facebook page yesterday (watch, runtime: 1:00). We have the full details in today’s Spotlight, below.

Pain: We’re inching toward a global trade war as the Trump administration threatened yesterday to slap a 10% tariff on some USD 200 bn worth of Chinese goods, Reuters reports. The move came after China said it would impose tariffs on some USD 50 bn worth of American goods — itself a retaliation for the White House’s Friday decision to hit USD 50 bn worth of Chinese products and services with a tariff of 25%. The story is getting front-page play globally: Check out offerings from Politico, the Wall Street Journal and the Guardian.

Okay, but what does this mean? “As the conflict broadens, shipments are slowing at ports and airfreight terminals around the world. Prices for crucial raw materials are rising. At factories from Germany to Mexico, orders are being cut and investments delayed. American farmers are losing sales as trading partners hit back with duties of their own,” the New York Times writes. The story is a must-read, bringing to life IMF boss Christine Lagarde’s warning last week that a trade war isn’t going to be good for global growth, saying, “the global economic outlook is darkening by the day.”

(Western) stock markets aren’t exactly sweating it: Wall Street has (so far) largely shrugged off the prospect of a trade war, the Times’ Peter Eavis writes in a solid piece for Dealbook. But that doesn’t mean it can’t turn on a dime: Emerging Asia shares have been hit by the “biggest foreign investor exodus since 2008,” Bloomberg reports: “Overseas funds are pulling out of six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 — withdrawing $19 billion from India, Indonesia, the Philippines, South Korea, Taiwan and Thailand so far this year.”

Back on our continent: Ethiopia is looking really interesting right now. The UAE is extending a USD 3 bn lifeline to Addis Ababa in the form of aid and investment, Reuters reports, drawing a direct line from a meeting between new Ethiopian PM Abiy Ahmed and Abu Dhabi Crown Prince Mohammed Bin Zayed to the aid package and Abiy’s pledge to end his country’s dispute with Egypt over the Grand Ethiopian Renaissance Dam. The news comes as Addis, Cairo and Khartoum are reportedly in talks to set a date for the next round of GERD talks, an unnamed Sudanese diplomat in Khartoum tells Al Shorouk.

An opportunity for Telecom Egypt? Ethiopian business reporter Aaron Maasho took to Twitter to note that, “Ethiopia will offer a 30-40% stake in state-run telecoms monopoly Ethio Telecom to ‘large corporations,’ will split firm in two to spur competition, PM Abiy Ahmed told parliament. Shares will not be available for a year or two until an ‘intensive study’ is undertaken.”

Here at home: Madbouly to unveil his cabinet’s plan of action this coming Saturday. Look for health and education to be high on the agenda when Prime Minister Mostafa Madbouly appears before the House on Saturday to present his government’s policy priorities, Rep. Hisham Omara tells Al Shorouk. We may get a sneak peek today when the ministers of health and higher education are set to unveil a new joint development plan at a press conference, according to Ahram Gate.

The second round of elections start today at 13 official trade unions, Al Mal reports. The final results will be announced tomorrow evening. The first round of elections kicked off last month, marking the first trade union elections in 12 years. The voting comes six months after the contentious Labor Unions Act — which has been widely criticized by international organizations — made its way through Parliament.

In miscellany today:

  • Should you be freaked out that global investment banks have got their “mojo” back? The FT wonders whether “being back to pre-crisis levels of profit signals a cyclical top.”
  • For media nerds: Norm Pearlstine, the former editor-in-chief of Time Inc and former leader of the WSJ and Bloomberg, has agreed to take over as EiC of the Los Angeles Times. (NYT)
  • For space nerds: The Donald has ordered the creation of a space-focused branch of the US military. The Space Force will be on par with the US Air Force and become the sixth branch of the US armed forces. (Reuters)

Struggling with how to be a better parent to your teen? We can think of no better place to start than Sue Shellenbarger’s piece for the Wall Street Journal from a couple of years back, which we stumbled upon this weekend. It the teen years down into two-year chunks starting with ages 11-12. Read “What teens need most from their parents.”

Enterprise is off this Thursday. We’ll be taking a one-day break from publishing on Thursday to allow our English and Arabic editorial teams from both the night and day shifts to spend some quality time together and talk about what’s next for Enterprise.

What We’re Tracking This Week

White House special adviser Jared Kushner and US Middle East envoy Jason Greenblatt are expected to visit Egypt as part of a Middle East tour kicking off this week. The two will also visit Israel and Saudi Arabia to discuss a new plan for Palestinian-Israeli peace that could roll out later this summer.

It’s OPEC week, and Goldman Sachs still sees oil climbing back north of USD 80 in the coming months “despite growing concerns over higher OPEC crude production, escalating trade wars and rising inventories,” CNBC reports. OPEC will meet in Vienna on Thursday amid reports that Saudi Arabia is running into opposition to its bid to relax production caps.

On The Horizon

IMF board to decide on disbursement of USD 2 bn ad tranche next week: The IMF’s executive board will meet on 27 June to review progress on Egypt’s economic reform program ahead of voting to disburse the fourth USD 2 bn tranche of Egypt’s USD 12 bn Extended Fund Facility. An IMF delegation that was in town last month reached a staff-level agreement to disburse the tranche following a positive review of progress on reforms. Former Finance Minister Amr El Garhy had said the tranche should be disbursed by the end of the month. The disbursement will bring the total amount Egypt has received under the facility to USD 8 bn.

The central bank’s Monetary Policy Committee meets on Thursday, 28 June to decide on interest rates.

Spotlight on the 2018 World Cup

This is (hopefully) not a drill: Mohamed Salah is ready to play in Egypt’s World Cup match against Russia tonight at 8pm CLT. The star striker promised he would take to the pitch in a short video posted to his Facebook page yesterday (watch, runtime: 1:00). National team coach Hector Cuper was less confident, saying at a presser yesterday that he “cannot guarantee” that Salah will be fit to play, according to an Egyptian Football Association statement. The striker reportedly “showed signs of discomfort” and avoided moving his injured left shoulder during the team’s training session yesterday, according to the AP. Salah was scheduled to undergo a final physical test yesterday to determine his readiness, which Cuper said is standard procedure before announcing the final lineup for a match, Reuters reports.

Is Russia bluffing? The Russian national team is “ready to stop” Salah, head coach Stanislav Cherchesov claimed yesterday, according to Sports Mole. His statements came amid unconfirmed reports that Russia’s playmaker Alan Dzagoev will not be participating in tonight’s game, after sustaining a hamstring injury during a previous match, AOL reports. Russia’s goalie, Igor Akinfeev, is also not terribly excited about Salah’s return to the field, or so claims the AP. “With or without Mohamed Salah in the lineup, Egypt should give Russia an indication if it has any shot at making a mark in this year’s World Cup,” the newswire also notes.

Even without Salah, Egypt exceeded expectations in its opening World Cup match against Uruguay on Friday, despite suffering a heartbreaking last-minute defeat. We finally got to see how the national team would fare without Salah and we were frankly (and pleasantly) shocked by the tightness of the performance. Goalkeeper Mohamed El Shenawy stole the show in his international debut, protecting Egypt from a much more painful defeat with several jaw-dropping saves, including one in which he quite literally scooped up the ball from between FC Barcelona striker Luis Suarez’s feet. He earned the much-deserved “Man of the Match” title, but declined to accept the actual trophy on account of it being sponsored by ethanolic beverage producer Budweiser, RT reports.

Other notable mentions from the Egyptian team: Amr Warda and Mahmoud Trezeguet, each of whom worked tirelessly to penetrate Uruguay’s defense line, and defender Aly Gabr, who spared no effort — including using his face to block a powerful shot by Edinson Cavani — to keep Uruguay from scoring.

Did you miss Friday’s match? Watch FIFA’s highlight reel here (watch, runtime: 4:09).

The championship has so far delivered a host of unexpected results, including:

  • Russia’s domination of the World Cup’s opening match against KSA on Thursday with a final score of 5-0;
  • Argentina’s humiliating 1-1 draw with Iceland on Saturday;
  • Spain’s 3-3 draw with Cristiano Ronaldo (the rest of the team is not even worth mentioning);
  • Defending champion Germany’s 1-0 loss to Mexico.

Egypt meets Saudi Arabia on the field on 25 June at 4:00pm CLT for our last group-stage match.

Enterprise+: Last Night’s Talk Shows

The entire country is back in full swing, but the talking heads apparently couldn’t resist hitting the snooze button one more time.

Yahduth fi Masr featured a quick rundown of the most prominent economic news from the Eid break, including the latest fuel subsidy cuts (which we explain in full in Speed Round, below), but otherwise focused squarely on the World Cup.

The fate of OnTV’s Kol Youm also remains unclear after Amr Adib suddenly resigned from hosting the show in May only to re-emerge one month later after signing a two-year contract with Saudi Arabia’s MBC satellite network.

Speed Round

Speed Round is presented in association with

Meet your new government: The cabinet of newly-appointed Prime Minister Mostafa Madbouly was announced and sworn into office on Thursday in what stands as the largest cabinet shuffle since Prime Minister Sherif Ismail’s cabinet was appointed back in March 2016. In all, 12 new ministers entered cabinet.

Don’t mistake the breadth of the shuffle as signaling a new policy direction: This is a cabinet of continuity, and three themes will continue to dominate: economic reform, national security and investment in health and education. We got the first sign it would be “business as usual” on the economic front with the unveiling of fuel subsidy cuts on Saturday.

Key ministries get new bosses: The shuffle sees two new faces leading the national security apparatus and three key members of the economic team leaving government service. The ministers of interior and defense were both replaced, while our friends Amr El Garhy (finance) Tarek Kabil (trade and industry) both left, as did Khaled Badawy, who stepped down as minister of public enterprises, whose portfolio grew in importance with the rebirth of the privatization program.

Still in office: Supply Minister Ali El Moselhy and Investment and International Cooperation Minister Sahar Nasr will continue in office, and we won’t have a new housing minister: Madbouly retains that post while serving as PM.

Largest ever number of women in cabinet: As Bloomberg notes, the shuffle also beat the record for the largest number of women ministers in Egypt’s history with the addition of two new women ministers.

Old guard will stick around as presidential advisers: Outgoing Prime Minister Sherif Ismail was appointed as President Abdel Fattah El Sisi’s right hand man on national projects development, a position previously held by former Prime Minister Ibrahim Mahlab. Former Interior Minister Magdy Abdel Ghaffar and former Defense Minister Sedki Sobhi were appointed as advisors to the president on anti-terrorism and defense, respectively, according to Al Shorouk.

And now, without further ado, we present the Madbouly Cabinet:

Finance: Mohamed Maait: Amr El Garhy’s lead on treasury affairs steps up to become minister. The longtime civil servant has a storied history of government service (pdf), including serving as acting head and then deputy chairman of the Financial Regulatory Authority back when it was still known as EFSA.

Deputies: Former World Bank economist and longtime friend of Enterprise Ahmed Kouchouk will continue to serve as Vice Minister of Finance for Fiscal Policy, according to El Dostor. Notable academic Ehab Abouaish (pdf) has replaced Maait as Vice Minister of Finance for Treasury Affairs, according to Youm7. Abouaish has served as the dean of the Faculty of Commerce at Cairo University since 2015.

Trade and Industry: Amr Nassar: Business executive and management expert Amr Nassar has served as a consultant and held policy development roles at industry groups. He is a former Secretary General of the Engineering Industries Export Council and a board member of the Automotive Division of the Federation of Egyptian Industries. Most significantly, Nassar was among the architects of the Automotive Directive, one of the key outstanding legislation of the ministry, according to a ministry statement. Nassar’s top priority as minister will be to drive sustainable industrial growth, he said in a statement. He will also continue to expand Egypt’s exports with a focus on key sectors while looking to expand SME industrial growth at home as per targets set out by the ministry’s 2020 strategy, he added.

Public Enterprise: Hisham Tawfik: We have another private sector appointment for the ministry with longtime business executive Hisham Tawfik, founder and CEO of solar energy and solar panel installation firm Cairo Solar. Prior to founding the company — which became the first private sector company in Egypt to sell solar power to the national grid — the finance industry veteran was the Chairman of Arabeya Online For Securities Brokerage and was a board member at Naeem Holding.

Defense: Lt. Gen. Mohamed Zaky: Zaky most recently served as head of the presidential guard following a career as a paratroop commander, according to the Defense Ministry. Zaky replaces Sedki Sobhi.

Interior: Gen. Mahmoud Kandil: Kandil headed up the homeland security branch of the Interior Ministry prior to his appointment, according to the ministry. Kandil replaces longtime minister Magdy Abdel Ghaffar.

Health: Hala Zayed: Prior to her appointment, Zayed headed up the education program at the 57357 Children’s Cancer Hospital. She also served as a board member of Al Azhar Specialist Hospital and a member of the Armed Forces College of Medicine’s education council, according to a statement from the Health Ministry. Zayed replaces outgoing minister Ahmed Rady. Her priority as minister is to drive implementation of the Universal Healthcare Act, according to Ahram Gate. Zayed made several key appointments at the ministry and state hospitals on Sunday, Al Masry Al Youm reports.

Agriculture: Ezzedin Abu Setit: The veteran academic has led numerous research projects, including on the deployment of sustainable and arid agriculture methods — a project funded through the Japan International Cooperation Agency (JICA), according to Al Shorouk.

CIT: Amr Talaat: Industry veteran and business executive Talaat rose through the ranks at IBM Egypt since joining the company in 1988 to become IBM Egypt’s General Manager in 2010, according to a ministry statement. He replaces Yasser El Kady. Talaat’s priorities going forward include improving quality of telecom and internet services in Egypt (thank God), and fostering entrepreneurship and human capital development, he said in a statement.

Civil Aviation: Younes El Masry: El Masry commanded Egypt’s Air Force prior to his appointment as minister, according to Al Shorouk. His priorities going forward would be to press on with the ministry’s program to expand airport capacity and EgyptAir’s fleets, he said during an inspection of Sharm El Sheikh Airport on Sunday.

Local Development: Mahmoud Shaarawi: Shaarawi joins the ministry following a career in the Interior Ministry, where her was most recently deputy minister for financial crimes, according to a ministry bio. The local press claims his most pressing priority is to ensure that the new taxi fares comply with last weekend’s directives nationwide, but…

Environment: Yasmine Abdel Aziz: Abdel Aziz has held numerous positions within the ministry, most recently as an adviser and assistant to outgoing minister Khaled Fahmy on international agreements, particularly those pertaining to the Paris Climate Change Accord. She also served as an international expert on the Nile Basin Initiative, according to a ministry statement. Her priorities moving forward include pressing on with developing the state’s waste management program.

Youth and Sports: Sobhi served as assistant Youth and Sports Minister following a stint as the marketing director for Zamalek football club, according to Ahram Gate.

Fuel price hikes came into effect over the long weekend: The government raised the price of fuel products by c. 50%, according to a detailed price list put out by the Oil Ministry. The subsidy cuts were necessary to save the FY2018-19 budget around EGP 90 bn in fuel subsidy costs, said Finance Minister Mohamed Maait following the hikes. Next year’s budget allocates EGP 89.1 bn for fuel subsidy spending, down from EGP 110.2 bn in FY2017-18. Maait noted that the savings from the subsidy cuts will allow the government to allocate funds towards social welfare spending and other subsidy benefits, which total EGP 334 bn, including EGP 100 bn for bread subsidy spending. It will also allow the government to health and education spending targets, Maait added in a statement.

Background: This would be the third time the government has hiked fuel prices since signing the USD 12 bn IMF Extended Fund Facility in 2016. The price hike came just days after the government raised electricity prices by an average of 26% last week, following a 46.5% increase in water prices and the threefold increase in Metro ticket prices. Fuel prices as of Saturday are as follows:

  • 95 octane petrol at the pumps will now cost EGP 7.75 per liter, up from EGP 6.60;
  • 92 octane petrol rose to EGP 6.75 per liter, from EGP 5.00;
  • 80 octane petrol increased to EGP 5.50 per liter from EGP 3.65;
  • Diesel fuel will also sell for EGP 5.50 per liter from EGP 3.65;
  • Kerosene as well rose to EGP 5.50 per liter from EGP 3.65;
  • Cooking gas cylinders now cost EGP 50 from EGP 30;
  • Gas cylinders for commercial ventures jumped to EGP 100 from EGP 60;
  • Compressed natural gas for automobiles rose to EGP 2.75 per cubic meter from EGP 2;
  • The price of fuel oil (mazot) to factories has not changed and remains at EGP 3,500 per tonne.

Expect inflation to rise only temporarily as the economy absorbs the shock from the recent hike, Maait told Enterprise yesterday. The headline inflation rate for June could rise to an average 13-14%, according to economic advisor Reham El Desoki, who tells Al Shorouk that monthly inflation will hover around 2-3%. The investment bank expects inflation to hit 12.4% in July as electricity prices also increase at the start of the month with the beginning of the new fiscal year.

The government also raised cab fares 10-20% on Saturday following the hikes. The Madbouly Cabinet left it up to the governorates to decide on the exact fare hike, according to a cabinet statement on Saturday. The statement said that authorities were coordinating to ensure compliance with the new prices, which will be posted at taxi stands. Microbuses have also been issued a strict set of standard fares by the Consumer Protection Authority, as Prime Minister Mostafa Madbouly warned there would be no tolerance for price gouging.

That means Uber and Careem as well: Ride-hailing apps Uber and Careem will also raise their fares. Careem Egypt Managing Director Ramy Kato reportedly told Al Mal that the company was considering raising prices by an average 35% “to meet operating costs.” Uber, meanwhile, announced that it had raised prices and put out an updated price sheet.

Traveling by bus may also get more expensive. The Holding Company for Maritime and Land Transport is studying whether to raise bus fares for travel across the country using the Upper Egypt or East and West Delta companies, according to Al Mal. This comes as government sources tell the newspaper that higher fuel prices will cost the National Railway Authority some EGP 1 bn in annual losses. They add that the Transport Ministry is working on developing the sector’s infrastructure to encourage more cargo transport via rail as a way of widening its revenue stream.

No impact on bread subsidies: The increase in fuel prices will not impact the price of subsidized bread, as the Supply Ministry will take on the burden and reimburse bakers for additional costs incurred, according to a statement carried by Ahram Gate. Minister Ali El Moselhy had also confirmed as much during an interview on Saturday (watch, runtime: 13:47).

The price of a range of food products will rise 3-7% over the coming period, said Mohamed Shoukry, the deputy head of the Federation of Egyptian Industries’ (FEI) food producers division, who explained that the increase will come on the back of higher transport costs. Other commodities, such as construction and building materials and electronic appliances are also expected to see price increases over the coming weeks and months.

Telecoms are angling to raise prices, but the gov’t isn’t having it: A source from a telecoms company tells Al Mal that the fuel price hike will force mobile network operators to consider raising the price of services by as much as 50%. Sources from the National Telecommunications Authority were quick to throw cold water on the notion, telling AMAY that there will be no price increases in phone services.

Pharma is also trying to ride the wave. Members of the FEI’s pharma division, who have been trying to push for higher med prices since their last hike was approved in January, will meet next week to discuss the impact of higher fuel and power prices on their production costs, according to member Hisham Hagar. The FEI is also planning to meet with newly-appointed Health Minister Hala Zayed to discuss the possibility of another increase in med prices.

FEI pushes for minor wage increase for private sector industrial workers: Meanwhile, the FEI appears to be lobbying for private sector industrial workers to receive a minor wage increase of EGP 100-200 per month to offset the rising prices of fuel and electricity, FEI head Mohamed Elsewedy said yesterday. The federation is also in talks with the government to allow the increase to be tax-exempt, according to Elsewedy. The push comes a few weeks after Parliament signed off on an exceptional raise for civil servants.

Trouble in parliament: Members of the small House opposition bloc, the 25-30 Alliance, sent an urgent note to President Abdel Fattah El Sisi, asking that he reverse what they described as “errant economic decisions,” Reuters reports.

Also good for the nation’s finances: Record Suez Canal revenues. Suez Canal revenues rose 11.5% y-o-y during FY2017-18 to USD 5.585 bn, up from USD 5.008 bn in FY2016-17, according to the Suez Canal Authority. The canal’s revenues during the current fiscal year mark an all-time high, authority chief Mohab Mamish said.

Delek, Noble, Egyptian partner in talks to acquire stake in EMG, which could quash outstanding arbitration ruling: The stars appear to be aligning in favor of an agreement that could see Egypt become a hub for East Mediterranean gas and end a long-standing arbitration case. Israel’s Delek, its Texas-based partner on the Leviathan gas field in Israel Noble Energy, and an unnamed Egyptian partner are in advanced talks to close on the acquisition of a 37% stake in the East Mediterranean Gas Company (EMG), which owns a pipeline that had once been used to transport Egyptian LNG to Israel, people familiar with the matter tell Bloomberg.

Clearing the way for gas imports from Israel: The stakes under discussion include those currently owned by businessmen Sam Zell and Yossi Maiman, who along with Israel Electric Corporation, successfully won arbitration cases against Egypt for cutting off natural gas exports to Israel in favor of domestic consumption back in 2012. If completed, the transaction would make the consortium the largest voting bloc in EGM, and potentially clearing the biggest legal hurdle standing against Egypt importing gas from Israel. As we noted last week, Delek shareholders will meet on 1 July to vote on investing USD 200 mn to buy EMG.

What’s at stake? A 10-year, USD 15 bn agreement signed in February to export gas from Israel’s Tamar and Leviathan fields to Egypt via Alaa Arafa’s Dolphinus Holdings. While the then-Ismail Cabinet had signed off on the agreement, it had for years held up plans to import gas from Israel on account of the USD 1.76 bn international arbitration ruling. Prime Minister Sherif Ismail had hinted at the time of the signing that there was some compromise in the works, which the Israeli government denied. February’s agreement is the first of many that Egypt is hoping to sign as it presses ahead with plans to turn the country into a regional energy export hub.

On a related note, production at the Zohr gas field will reach 1.75 bcf/d by August following the completion of the third unit of the field’s gas treatment plant, Oil Minister Tarek Molla said in a statement on Thursday. He added that recent production increases have pushed Egypt’s total natural gas production to about 6 bcf/d.

Which is good news as we’re relying more on cheaper gas and less on expensive oil: This comes as BP says Egypt grew its market share of global gas consumption by 4.4% y-o-y in 2017, according to a breakdown of the report on Bloomberg. Egypt’s reliance oil as a market share of global consumption fell by almost similar 4.3% y-o-y.

This came as EGAS purchased an unspecified quantity of LNG in a tender yesterday at reportedly more than USD 11 per MMBTU, traders tell Reuters’ Arabic service. The shipment is scheduled for a July-August delivery.

Abraaj submits application for court-supervised restructuring: The once high-flying emerging markets private equity firm filed last week an application for a court-supervised restructuring in the Cayman Islands, it said in a statement last Thursday (pdf). “The Company has made this application so that the rights of all stakeholders can be protected while the Company and the [joint liquidators] promote a consensual restructuring of the Company’s obligations,” the firm added. The move comes as investors and creditors have been howling to get their money out of the firm, which once managed USD 14 bn in assets. Among them is the UAE’s Jafar family, a one-time Naqvi ally and founders of Dana Gas, who are looking to recoup a USD 100 mn loan from Abraaj, according to Bloomberg. You can catch the timeline of the unravelling, courtesy of Bloomberg.

Can’t get enough? The business information service has a tic-toc on what went wrong headlined “The Downfall of Dubai’s Star Investor.”

Seeking liquidity, Abraaj has sold its full 5.4% stake in Orascom Construction, according to a regulatory filing from OC on the Nasdaq Dubai on Thursday. Abraaj sold at a price of USD 8.30 per share, valuing the stake at USD 52 mn.

Cleopatra Hospitals Group has put out a statement reassuring investors that troubles at Abraaj won’t impact the nation’s largest private-sector hospital group. Abraaj’s stake in Cleopatra is in the single digits, it said. “Abraaj Capital does not own any direct stake and indirectly owns less than 5% of Cleopatra through its investment as a limited partner in the private equity funds it manages,” the company said in a statement on Thursday (pdf). The statement notes that private equity funds managed by Abraaj, together with development finance institutions, own a combined c.69% of Cleopatra.

Meanwhile, Cleo is still on the hunt for acquisition targets, the company said in a bourse filing on Thursday (pdf). Among the companies Cleopatra is considering is El Katib Hospital in Dokki, the firm added. Cleopatra noted, however, that it has yet to take any actionable steps to acquire a hospital, including seeking regulatory approval. The statement in response to what the company said was an erroneous reports in Al Mal that claimed Cleo was close to completing an acquisition. The statement also came a day after the Financial Regulatory Authority blocked (pdf) its attempted acquisition of El Nozha International Hospital.

M&A WATCH- Dr. Oetker acquires 100% of Cook’s parent company Tag El Melouk. Tag El Melouk Food Industries is about to become a Dr. Oetker company after singing “definitive agreements” for the full sale of the company to the German multinational known for its cake mixes, frozen pizzas and other food products. Tag El Melouk is a market leader in the production of baking powder, vanilla and salt, among other products, having been founded in 1954 by the Paraskevas family, who were selling shareholders in the transaction. The sale was confirmed in a statement this weekend from Arqaam Capital (pdf) quoting Suleiman-Sebastien Paraskevas as a representative of the selling shareholders. Neither party has confirmed a price tag for the sale. We had previously noted domestic press reports that pegged the transaction value at about EGP 1 bn.

Advisors: Arqaam capital was sole sell-side advisor, while Matouk Bassiouny was legal counsel to the selling shareholders. Dr. Oetker had reportedly tapped CI Capital as buy-side advisor.

M&A WATCH- Thailand’s Indorama to acquire for 50% stake in EIPET from India’s Dhunseri: Indorama Netherlands BV, an indirect subsidiary of Thailand’s Indorama Ventures, signed on Thursday an agreement with India’s Dhunseri Petrochem to acquire a chunk of the Egyptian Indian Polyester Company’s (EIPET) polyethylene terephthalate (PET) plant in Ain Sokhna. The facility has an annual manufacturing capacity of 540k tonnes, according to a release (pdf). The value of the transaction was not disclosed.

The agreement, which came into immediate effect, also saw Indorama acquire 50% of EIPET’s equity and enter a 50% JV partnership with Dhunseri, Indorama said in a statement to the Thai stock exchange (pdf). The JV will focus on the domestic “consumer beverage industry and increase[d] demand for sustainable packaging,” and will be the biggest such project in the EMEA region, according to Indorama.

Background: Dhunseri had bought out the Egyptian Petrochemicals Holding Company’s (ECHEM) 23% share in EIPET last month. The Indian company is planning to invest USD 225 mn in EIPET and begin operating one production line in August of this year.

IPO WATCH- Ebtikar planning EGX debut in two years: Ebtikar, the SME finance outfit owned by B Investments and MM Group, could list shares on the EGX in two years’ time, Investors Relations Head Omar El Labban tells Al Mal. The company is also in the process of applying for a EGP 100 mn capital increase to EGP 375 mn, the proceeds from which it intends to use to continue growing within the non-banking financial services sector, which should see it begin to offer new services such as factoring, according to El Labban. The initial public offering and capital increase are part of the company’s plan to expand its activities, which recently saw it acquire an 87% stake in Tamweel Group from Orascom Development Egypt in a transaction valued at EGP 360 mn.

EFG Hermes lands first frontier markets IPO: ASA International, which bills itself as “of the world’s largest and most profitable international microfinance institutions” has announced its intention to proceed with an initial public offering on the London Stock Exchange. The group, which claims a 12-country footprint spanning Africa and Asia, expects its shares to be admitted to trading on the LSE in July, it said in its intention to float. ASA bills itself as a Bangladeshi-Dutch lender. The company operates in 12 countries, with the biggest branch networks in the Philippines, Pakistan and Nigeria. The company had pre-tax profits of USD 43.3 mn last year, up 23% on the previous year. EFG Hermes is bookrunner for the transaction alongside Investec. Citigroup Global Markets are sole sponsor, sole global coordinator and joint bookrunner, while Keefe, Bruyette & Woods (acting through Stifel Nicolaus Europe Limited) is acting as lead manager. You can read the intention to float here (pdf) or catch full coverage in the Financial Times.

CIB, Elsewedy Electric, Orascom Construction among top 100 listed companies in Arab world: Our friends at CIB, Elsewedy Electric, Orascom Construction as well as Global Telecom Holding were the only four Egyptian companies to get a nod in Forbes’ list of the top 100 listed companies in the Arab world for 2018. Based on the list’s four metrics — revenues, profits, market value, and total assets — CIB landed in the 38th spot, while Elsewedy Electric is ranked 69th, Orascom Construction 82nd, and Global Telecom 95th.

MOVES- IBM announced the appointment of Wael Abdoush as Country General Manager to IBM Egypt, Al Mal reports. Abdoush, who was the director of server solution sales team for the Middle East and Africa at the company, succeeds Amr Talaat who now heads the ICT Ministry.

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Water levels in Egypt’s freshwater “Pharaonic Sea” have been steadily falling over the past several decades, worrying fishermen who rely on the sea for their work, says Phys.Org. “The thin 10,000-square kilometer stretch of water just north of the capital was once part of the Nile River, but shriveling shorelines have left its separated from the country’s main water source for nearly 50 years.” The dipping water levels are already alarming, and a certain upstream dam currently being constructed would exacerbate the situation, the website notes.

Egypt in the News

Fuel subsidy cuts and a new cabinet took a back row seat to the World Cup in the foreign press’ coverage of Egypt. Between the rising cost of electricity and petrol, Egyptians are desperately counting on some reprieve during the World Cup, according to the Associated Press. Egypt’s 1-0 defeat at the hands of Uruguay was largely blamed on the absence of the Egyptian team’s star player, Mohamed Salah. The Egyptian forward’s magic both on and off the pitch has managed to unite all of Egypt, an apparently impossible feat, according to this Salma Islam piece for the Guardian. The New York Times and Live Mint also paid tribute to the footballer, while the Chicago Tribune pointed out that goalkeeper Essam El Hadary’s era might be coming to an end, after Mohamed El Shenawy’s performance against Uruguay earned him “an outpouring of admiration.”

We can find solace in the fact that Egypt was voted the best tourist holiday destination among Group A competitors by the Telegraph’s Travel poll.

Are World Cup games being illegally broadcast in the region? NBCUniversal claims that a pirate streaming service in the MENA region that goes by BeoutQ has been stealing its broadcast, according to Bloomberg. The service, which is said to be backed by investors from the Middle East, Colombia, and Cuba, was also under fire before by Qatari sports network beIN, which holds exclusive rights to air the games in the Middle East. Meanwhile, VOA notes how cheap it is to buy a subscription to watch the World Cup in Egypt.

Barring World Cup coverage, the foreign press had a spotlight on the new Madbouly Cabinet. Most of the coverage, including in the Wall Street Journal (paywall) and Haaretz, particularly focused on the ministers of finance, defense and the interior as these changes reflect the priorities of the El Sisi administration going forward.

Arab News also took note of Fifi Abdou taking to the screen to defend the government’s latest decision to raise fuel and energy prices.

On Deadline

Columnists seem to approve of the new Madbouly Cabinet: The large number of new ministers who had previously served as deputies in their respective ministries is reassuring, since they have a solid background on how everything is run and will therefore be able to hit the ground running from day one, Soliman Gouda writes for AMAY. The ministers have their work cut out for them, but the three top priorities should remain pressing ahead with national projects, fighting corruption, and tightening the government’s purse strings for the general populace and the government itself, says Abbas El Tarabily. Meanwhile, the pseudonymous Newton wonders out loud why the defense and interior ministers were replaced, noting that these positions are rarely changed unless absolutely necessary.

Our coverage of industry news returns tomorrow.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.81 | Sell 17.91
EGP / USD at CIB:
Buy 17.78 | Sell 17.88
EGP / USD at NBE: Buy 17.78 | Sell 17.88

EGX30 (Thursday): 16,221 (+0.3%)
Turnover: EGP 1.0 bn (91% BELOW the 90-day average)
EGX 30 year-to-date: +8.0%

THE MARKET ON THURSDAY: The Egyptian benchmark index ended Thursday’s session 0.3% up. CIB, the index heaviest constituent ended 1.2% up. EGX30’s top performing constituents were Qalaa Holdings 6.6% up, Abu Qir Fertilizers 3.6% up and Egyptian Resorts 2.1%. Today’s worst performing stocks were Arab Cotton Ginning 40.7% down, Global Telecom 2.8% down, and Egypt Aluminum 2.2% down. The market turnover was EGP 1.0 billion, and foreign investors were the sole net sellers.

Foreigners: Net Short | EGP -157.8 mn
Regional: Net Long | EGP +34.4 mn
Domestic: Net Long | EGP +123.4 mn

Retail: 41.3% of total trades | 42.4% of buyers | 40.1% of sellers
Institutions: 58.7% of total trades | 57.6% of buyers | 59.9% of sellers

Foreign: 39.7% of total | 32.9% of buyers | 46.4% of sellers
Regional: 6.9% of total | 8.3% of buyers | 5.4% of sellers
Domestic: 53.5% of total | 58.8% of buyers | 48.2% of sellers

WTI: USD 65.72 (-0.20%)
Brent: USD 75.12 (-0.29%)

Natural Gas (Nymex, futures prices) USD 2.95 MMBtu, (-0.10%, July 2018 contract)
Gold: USD 1,283.90 / troy ounce (+0.30%)

TASI: 8,270.46 (+0.32%) (YTD: +14.45%)
ADX: 4,588.27 (-2.68%) (YTD: +4.32%)
DFM: 2,982.58 (-1.83%) (YTD: -11.50%)
KSE Premier Market: 4,822.65 (+0.26%)
QE: 9,097.91 (+0.19%) (YTD: +6.74%)
MSM: 4,596.05 (-0.05%) (YTD: -9.87%)
BB: 1,307.33 (+0.89%) (YTD: -1.83%)

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Calendar

19 June (Tuesday): Egypt plays against Russia at 2018 World Cup, St. Petersburg, Russia.

25 June (Monday): Egypt plays against Saudi Arabia at 2018 World Cup, Volgograd, Russia.

28 June (Thursday): CBE’s Monetary Policy Committee meeting.

1 July (Sunday): Application deadline for the DigitalAG4Egypt Challenge.

23 July (Monday): Revolution Day, national holiday.

16 August (Thursday): CBE’s Monetary Policy Committee meeting.

21-25 August (Tuesday-Saturday): Eid Al Adha (TBC), national holiday.

04-05 September (Tuesday-Wednesday): Euromoney Egypt Conference 2018, Cairo.

10-13 September (Monday-Thursday): EFG Hermes’ 8th Annual London Conference, Emirates Arsenal Stadium, London.

11 September (Tuesday): Islamic New Year (TBC), national holiday.

24-25 September (Monday-Tuesday): Arqaam Capital MENA Investors Conference 2018, Four Seasons Resorts, Dubai.

24-25 September (Monday-Tuesday): Egypt Water Desalination Forum, venue TBD.

27 September (Thursday): CBE’s Monetary Policy Committee meeting.

06 October (Saturday): Armed Forces Day, national holiday.

23-24 October (Tuesday-Wednesday): Intelligent Cities Exhibition & Conference 2018, Fairmont Towers Heliopolis, Cairo.

15 November (Thursday): CBE’s Monetary Policy Committee meeting.

20 November (Tuesday): Prophet’s Birthday (TBC), national holiday.

22 November (Thursday): US Thanksgiving.

25-28 November (Sunday-Wednesday): 22nd Cairo ICT, Cairo Convention Center, Nasr City, Cairo.

03-05 December (Monday-Wednesday): First Egypt Defense Expo, Egyptian International Exhibition Center, Cairo.

25 December (Tuesday): Western Christmas.

27 December (Thursday): CBE’s Monetary Policy Committee meeting.

01 January 2019 (Tuesday): New Year’s Day, national holiday.

07 January 2019 (Monday): Coptic Christmas.

25 January 2019 (Friday): Police Day, national holiday.

25 April 2019 (Thursday): Sinai Liberation day, national holiday.

28 April 2019 (Sunday): Easter Sunday, national holiday.

29 April 2019 (Monday): Easter Monday, national holiday.

01 May 2019 (Wednesday): Labor Day, national holiday.

06 May 2019 (Monday): First day of Ramadan (TBC).

05-06 June 2019 (Wednesday-Thursday): Eid El Fitr (TBC).

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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