Egypt to give up part of Sinai to the Palestinians under Trump’s ‘Mideast’ peace plan?

It’s official: We’re on Eid break as of tomorrow morning — but you may still be fasting. Both the central bank and the EGX have confirmed that our five-day Eid El Fitr weekend begins tomorrow. Banks, capital markets (and, by extension, much of the private sector) are on holiday Tuesday through Thursday. Civil servants will also be off, Cabinet announced over the weekend.

We’ll know this evening whether today is the last day of Ramadan, but we put stock in astronomy ‘round here (not the same thing as astrology…), which suggests we are indeed in the last day of the Holy Month.

*** Enterprise will be off Tuesday through Thursday. We wish all of you a blessed and relaxing Eid with family, friends and … coffee. Lots and lots of coffee.

Data points due out this week and next:

• Foreign reserves: The CBE should announce this week Egypt’s net foreign reserves as at the end of May.
• Inflation: Monthly inflation figures are due out next week. Annual headline inflation cooled unexpectedly in April to 13% from 14.2% in March.
• The purchasing managers’ index for Egypt, Saudi Arabia, and the UAE are due out on Monday, 10 June at 6:15am CLT

The rest of the world is going to be talking about two anniversaries while we’re on vacation: The 30th anniversary of China’s crackdown on student democracy activists at Tiananmen Square (tomorrow) and the 75th commemoration of the D-Day landings in Normandy (Thursday).

In regional miscellany this morning:

• A post-revolutionary hiccup in Algeria: Algeria’s Constitutional Council has brought the interim government’s plans for a presidential election on 4 July to a screeching halt after it rejected the two registered candidates. (Bloomberg)
• Pompeo dusts off his olive branch: US Secretary of State Mike Pompeo has claimed that the Trump Administration is open to talks with Iran without preconditions. (Bloomberg)
• Violence in Sudan: At least 11 people were reportedly wounded by gunfire at the ongoing opposition sit-in in Khartoum on Saturday. (Reuters)

What We’re Tracking Today, the Ramadan edition:

A pre-iftar reading list to kill time between your post-workout shower and the breaking of the fast:

• The most powerful Arab ruler isn’t M.B.S. it’s M.B.Z., by former Cairo bureau chief David Kirkpatrick is a must-read on multiple levels, including for its de-rigeur swipe at Egypt. There’s little new here, but it’s an interesting take nonetheless.
• The sci-fi staple close to becoming a reality: ‘Air taxi’ startup Alaka’i Technologies revealed a liquid-hydrogen-powered five-passenger aircraft in LA last week. The vehicle will initially be used for emergency services and transporting cargo before the company transform it into fully-fledged flying taxi. (Wired)
• Can I wear short sleeves to work without looking like a cubicle dork? asks the WSJ. Our short answer: No.

Tetris is about to turn 35. You can read about it here or play it in your browser at work here without charge.

The Financial Times’ 2019 ranking of the broad “executive education” category is out, and top offerings include programs from Stanford, Switzerland’s IMD and Spain’s Iese. Read all about it here.

It’s the best (hopefully) last day of Ramadan ever — for iSheep, that is, as Apple unveils iOS 13 and new macOS, watchOS and tvOS features tonight at WWDC. Tune in here at around 7pm CLT to livestream. 9to5 Mac has more, as does the Financial Times with its Five things to watch at WWDC.

HAT TIP- Ramadan is like Egypt’s month-long Super Bowl, but there are some advertisements that stand out. The Magdi Yacoub campaign (watch, runtime: 2:01) is a mainstay in the Ramadan advertising season, but our readers will know that Enterprise has a soft spot for the funnies. Chief among them is the National Bank of Egypt’s campaign, produced by Tarek Nour Advertising, promoting electronic banking branch in a way funnier than we could have expected a bank ad to be (watch, runtime: 1:05).

RAMADAN PSA- Bank hours are at 9am-2pm for employees; doors are open from 9:30am until 1:30pm for customers. The trading day at the EGX runs 10:00am until 1:30pm.

So, when do we eat? Maghrib is at 6:52pm CLT today in Cairo.

Is The Donald about to ask us to give up part of Sinai to the Palestinians under his ‘Mideast’ peace plan? For two decades now, we have scoffed at conspiracy theories that claimed unnamed nefarious (usually American) forces were plotting to dismember Egypt. It’s the stuff of the tin-foil-hat brigade. But the Palestinians now claim that Trump’s plan would do just that, only on a slightly smaller scale.

Trump “envisages an expansion of Gaza into part of northern Egypt, under Egyptian control,” Reuters reports, citing an unnamed Palestinian official who claims to have been briefed on the plan. “Palestinians would be left with a smaller share of the West Bank and some areas on the outskirts of Jerusalem and no control over their borders. Western and Arab sources confirmed the outline of the plan.”

That can’t be real … right? Jason Greenblatt, “Trump’s Middle East envoy, said ‘rumours’ about an expansion into Egypt’s Sinai desert were false,” Reuters adds.

But the Palestinians are adamant that it is: “The essential part is Gaza: where 2 million Palestinians are shut into a strip between Israel and Egypt,” Reuters continues. “The idea is to expand it into the north of Egypt’s Sinai peninsula, creating an area where Palestinians can live and work under Egyptian control. ‘The plan envisions Gaza stretching from Rafah (its southern border) to El Arish and some parts of Sinai. This area will be a Palestinian expansion in which Palestinians can reside,’ the Palestinian leader said.” Reuters claims that “Western and Arab sources confirmed the outline of the plan.”

Why it’ll never happen: You thought folks kicked up a fuss about the return of a couple of specks of rock in the Red Sea to Saudi Arabia?

The timing of the leak is interesting, in that it gives 100 mn of us to the west of Gaza all of Eid to mull it over…

President Abdel Fattah El Sisi is pouring cold water on the reports, saying last night that Egypt would never do anything against the interests of the Palestinians and hinting, “You are asking what’s the story and what does Sisi have in mind, and will he give up anything to anyone. … Can you imagine that I would give something up?”

Would you trust this guy to sell you a peace plan? Axios is teasing a TV interview it has filmed with Jared Kushner (the architect of the ‘peace plan’ and The Donald’s son-in-law). Worthy excerpts: He’s uncertain the Palestinians can govern themselves and he has a really weird way of saying the facts of the plan will (eventually) speak for themselves.

When will we know more? The plan is set to be released in late June, likely at (or in the run-up to) a US conference on the ‘economic dimension’ of Trump’s Mideast peace plan in Bahrain, set to run 25-26 June.

Not enough drama for you? Go read Companies in Middle East on war footing as tension rises in the Financial Times. We hope we’re not whistling past the grave here, but … really?

Abu Qir stake sale to take place after Eid El Fitr: The government could sell as much as 20% of Abu Qir Fertilizers via an accelerated book build on the EGX shortly after the Eid El Fitr break, Al Mal reports, citing unnamed sources. The final decision of the exact size of the sale rests on the shareholders, who are yet to each decide how much they’re willing to offer.

So, who’s selling? Abu Qir is majority-owned by the National Investment Bank (24.8%), followed by the General Petroleum Corporation (19.11%), the Industrial Development Authority (12.67%) and Al Ahly Capital (8.11%) as well as other state-affiliated shareholders.

The government reportedly expects to net as much as EGP 8 bn in combined proceeds from the sale from Abu Kir and a separate offering of a chunk of Alexandria Containers and Cargo Handling Company (ACCH).

Take this with a grain of salt: The timing of the sale is contingent on how the EGX (and, by extension, global emerging markets) fare after the Eid vacation. A key factor in sentiment will be whether the government closes soon an expected EGP 2 bn tax settlement agreement with Global Telecom Holding, the sources said. While the bourse tends to pick up following Ramadan, liquidity and trading volumes are typically low throughout summer. Public Enterprise Minister Hisham Tawfik had previously told us that either Abu Qir or ACCH, which are both next in line in the first wave of the program, could go to market before the Eid El Fitr break. But Tawfik added that the sale program will definitely be on hold during the summer.

Preparations for ACCH are also underway, the sources said, adding that the timing of the transaction is still undecided. The investment banks quarterbacking the transaction have already marketed the transaction on a roadshow to the US, the UK, Dubai, and South Africa, according to Al Mal.

Background: The government successfully kicked off the program last month with Eastern Tobacco’s secondary offering of a 4.5% stake. Eastern, Abu Kir, and ACCH are part of the first wave of companies piloting the program — which will only see share sales and not IPOs. Alexandria Mineral Oils Company (AMOC) was also part of the wave, but it got sidelined earlier this year for falling profitability.

Advisors: Renaissance Capital and CI Capital are leading the accelerated book build on Abu Qir, while EFG Hermes and Citi are leading on Alexandria Containers, state-owned NI Capital announced in January.

Delek looks set to meet its end-of-June target to start gas exports to Egypt: Israel’s Delek Drilling is on track to begin commercial sales of natural gas to Egypt by the end of the month, with technical testing on the pipelines that will carry the gas currently underway, Deputy CEO Yossi Gvura tells Reuters. Trial shipments from Israel’s Tamar and Leviathan gas fields were originally supposed to come in March of this year, but capacity restrictions posed by Israel’s domestic pipeline network meant that the imports had to be delayed.

Background: Under the terms of a USD 15 bn contract signed last year, Delek and its partner Noble Energy should supply Alaa Arafa-led Dolphinus Holding with 3.5 bcm from each of the Leviathan and Tamar gas fields for a combined total of 7 bcm. Delek, Noble and Egypt’s East Gas signed a USD 518 mn agreement for a 39% stake in Ashkelon-Arish pipeline operator Eastern Mediterranean Gas (EMG), intended to pave the way for Egypt to begin importing an initial 100 mn scf/d in 1Q2019. Israel and Egypt then began talks in January over the construction of a new subsea pipeline that would enable Israeli gas to flow directly to Egypt’s Idku facility, eliminating the need to expand Israel’s onshore infrastructure. Bloomberg reported in March that Delek executives were talks with Egyptian officials over increasing exports beyond 7 bcm, although no figures were given.

*** Speaking of natural gas: This is not political satire. Officials at the US Department of Energy are referring to American LNG as “freedom gas” and “molecules of US freedom.” We [redacted] you not.

M&A WATCH- Helios, EAEF acquire 96.7% of Misr Hytech: Helios Investment Partners and the Egyptian-American Enterprise Fund (EAEF) have acquired a 96.7% stake in Misr Hytech, according to a statement. The acquisition was made through investment manager Lorax Capital Partners. “We are very excited about the great potential of this investment in contributing to the betterment of the Egyptian agricultural landscape,” James Harmon, chairman of the EAEF, said. “The achievement of the previous shareholders and excellent management team has strategically positioned Misr Hytech as a leader and pioneer in the Egyptian corn and sorghum market.” The EAEF had been looking to acquire a majority stake in the company since March 2018.

Misr Hytech is one of the largest seed suppliers in the Middle East and Africa, producing hybrid white corn, yellow corn, grain and fodder sorghum, sweet corn, and vegetable seeds. Corn is one of the most widely consumed crops in Africa.

Advisors: Matouk Bassiouny and Norton Rose Fulbright acted as the primary legal advisors, and DLA Piper was the intellectual property advisor. The selling shareholders received legal counsel from Nyemaster Law Firm and Al Tamimi & Company; Gulfstone Capital was sell-side financial advisor.

INVESTMENT WATCH- Edita lands loan worth up to USD 30 mn from IFC: Edita has signed an agreement with the International Finance Corporation (IFC) for a seven-year facility that could be worth up to USD 30 mn, according to a statement (pdf). The company will initially receive USD 20 mn as a first tranche, but has the option to call a further USD 10 mn. The funds will be used to support “expansion and growth opportunities” in Egypt and the wider region. “We are proud to be joining hands with the IFC,” Hani Berzi, chairman and MD of Edita, said. “Its financing is not just cost-effective, but an endorsement of our robust corporate and industry fundamentals, coming as it does at the end of a nearly year-long due diligence process. We are actively exploring expansion opportunities both in Egypt and in our exciting expansion markets.”

The news comes as Edita pushes ahead with its drive into Morocco, where it has already launched its Freska wafers brand and is due to break ground later this year on its first Moroccan manufacturing facility.

LEGISLATION WATCH- Mineral Resources Act gets committee-level approval at House: Committees at the House of Representatives have given a preliminary nod of approval to the bill that would create a new Mineral Resources Act, according to reports in the domestic press. The long-awaited changes were approved by the Madbouly Cabinet last month. The amendments are still pending a final general assembly vote before being signed into law by President Abdel Fattah El Sisi.

Background: If passed, the amendments would set up a new authority in charge of licensing mines and quarries. They would also lift a previous 16k sqm area limit, allowing the authority to issue licenses to areas of unlimited size and allow licenses to be renewed for more than one term. Mines and quarries licensed under the current legislation would remain valid and be subject to prior terms until renewal. The amendments have been praised by the industry for their promise to scrap the oil-and-gas-style production sharing agreement.

Cleopatra Hospitals Group reported a 4% y-o-y dip in 1Q2019 net profits to EGP 55.1 mn compared to EGP 57.2 mn a year earlier, the company said in its earnings statement (pdf). Revenues rose 20% y-o-y during the quarter to EGP 416 mn. Net income was impacted by an increase in impairments “primarily related to claims made in 2016 and 2017,” Cleopatra said. The company is “actively working to establish a more structured revenue cycle management framework” that will include moving away from weak credit profile clients and improving the group’s claims collection procedure.

Looking ahead, CHG is pushing through its expansion plans: “In the coming months we will launch our second polyclinic and will continue to explore new potential locations, in line with our plan to inaugurate two facilities per year over the coming five years. In addition, the Group is in the final agreement stages to take over operations of El Katib Hospital, which will add close to 100 beds to our existing capacity. We will also press on with the Group-wide renovation works and aim to roll out the new HIS/ERP system at Cleopatra and Queens hospitals. This will see all the Group’s East Cairo facilities operating under the new, integrated framework allowing us to further enhance efficiency and further improve the quality of care across our hospitals,” Chief Executive Officer Ahmed Ezzeldin said.

As we reach the final days of Ramadan 2019, hundreds of thousands of worshippers are shown gathered around the Kaaba in Mecca in this image gallery courtesy of The Independent.

There are tumbleweeds as far as the eye can see in the foreign press this morning, with only two articles worthy of note:

• AFP is running an interview with political activist Alaa Abdel Fattah on his time in prison and his conditional freedom.
• Lina Mowafy — curator, artist, and founder of the Arts-Mart gallery — is holding tight to her belief that the Egyptian visual arts scene is “on the cusp of worldwide recognition,” Heba El-Sherif writes for The National.

President Abdel Fattah El Sisi’s national speech to celebrate Laylat Al Qadr (Night of Decree), which usually falls on either of the last odd-numbered days of Ramadan, topped the front pages of all three government dailies this morning (Al Ahram | Al Akhbar | Al Gomhuria).

Big business is not the big bad wolf: Big business is catching heavy flak as of late over misconceptions it gives rise to morally bankrupt entities that only serve their own interests, economist Tyler Cowen says in his latest book, ‘Big Business: A Love Letter to an American Anti-Hero.’ “First, business makes most of the stuff we enjoy and consume. Second, business is what gives most of us jobs. The two words the follow most immediately from the world of business are ‘prosperity’ and ‘opportunity,” an excerpt in The Economist reads.

Large corporations are actually often several steps ahead when it comes to advancing inclusivity and progressive mindsets, and have enough weight to sway nationwide policies in that direction, Cowen points out. It may not necessarily be that way because corporations are being run by tree-huggers — the bottom line is that discriminating against any group is certain to alienate customers and eat away at profits — but the end result here is positive.

Why, then, is big business villainized? “So many of the problems with business are in fact problems with us, and they reflect the underlying and fairly universal imperfections of human nature. Yet we respond to this truth somewhat irrationally. While we suspect business of wrongdoing, at the same time we expect corporations to give us jobs and take care of us, to give us a network of friends, to solve our social problems, and to give us [no-risk] consumption experiences.” Corporations aren’t all sunshine and rainbows, and some are in fact guilty of corruption, fraud, or any other vices, but the vast majority do more good than bad. And the bad, Cowen says, can be handled with better regulation.

Tour the Giza Plateau from 4,600 years ago: A virtual video produced by Harvard University’s Digital Giza Project lets you visualize the Giza Plateau, burial place of ancient Egyptian rulers from the 4th Dynasty, and see what it could have looked like 4,600 years ago (watch, runtime: 03:05). You can take a mini-tour to see the pyramids of Khufu, Khafre and Menkaure, which were all part of a temple complex.

Research and technology to construct a picture of Ancient Egypt: This ongoing process of reconstructing the geology and landscape of the necropolis gives insight into ancient Egyptian mortuary practices, enhancing our historical and archaeological understanding of the era. The Digital Giza Project is a collection of tens of thousands of images, scholarly research and cutting-edge technology about the archaeological sites at Giza. The Washington Post has more.

The Electricity Ministry has reached a power purchase agreement with Siemens Gamesa over its planned EUR 2 bn, 2 GW wind power plant, and is now waiting on cabinet approval for the company to begin work, local press reported. Siemens will build the plant under a build-own-operate (BOO) scheme and will sell electricity at USD 0.032 KWh to USD 0.034 KWh, sources told the local press. Siemens Gamesa has selected a consortium of Elsewedy and Marubeni to launch the first phase.

The Tourism Ministry has launched a summer promotional campaign in Saudi Arabia, Kuwait and the UAE, according to a press release picked up Masrawy. The ministry’s campaign uses billboards, primetime TV ads, and online content to target GCC-based tourists.

Total vehicle sales in Egypt fell 5% y-o-y to 46,589 vehicles in 4M2019, compared to 49,062 vehicles in the same period last year, according to figures from the Automotive Information Council (AMIC) cited by Al Mal. Passenger car sales dropped 10% y-o-y to 31,349 units, while bus sales climbed 8% y-o-y to 4,504. The automotive industry had shown signs of recovery last year following a slump that was exacerbated by the EGP devaluation in 2016.

The Official Gazette has published amendments to the monitoring regulations of non-banking financial markets and instruments, which will see the Financial Regulatory Authority channel 80% of its proceeds from depository services to state coffers, Al Shorouk reports.

Officials in Hurghada are hoping that providing alternatives to plastic bags will help to enforce the plastics ban that has now come into effect, Al Masry Al Youm reports. The ban will not be enforced with a fine. Local officials instead hope to dissuade citizens from using plastic by raising awareness about its effects on the environment and human health.

Egyptian student is top reader at a US public school: An Egyptian girl attending an ESL program in New Hampshire’s Portsmouth is her school’s top reader by a mile. Noor El Said (pictured above, credits to The Portsmouth Herald) checked out 144 books from the library in a single school year. Her passion for books eclipsed the competing second and third place readers who only checked out only 26 and 22 books respectively. El Said emigrated with her family from Alexandria in 2017 after her father was diagnosed with cancer.