Egypt wants a new, non-loan IMF program.
Plus: Schools operator CIRA acquires BCCIS.

It’s a big news day with word that the Finance Ministry hopes to hit an agreement with the IMF on a non-loan program by October — and that our friends at CIRA have acquired British Columbia Canadian International School here in Cairo in what could be a harbinger of more M&A in one of the economy’s hottest sectors. We have chapter and verse on both stories in this morning’s Speed Round, below.

Meanwhile, all eyes are on Bahrain, where Arab leaders have gathered with Trump administration officials to discuss the “economic development” of Palestine for a second and final day. The bottom line so far: Not a lot of news, but a lot of posturing (much of it half-hearted). The story is all over Reuters, Bloomberg, the Financial Times and the New York Times if you like. We’re with the FT on this one: Keep your expectations low.

Also coming up:

• Democrats looking to challenge The Donald have their first debates today and tomorrow. The nationally televised events will see 10 candidates appear each night. This evening’s big names include Elizabeth Warren, Cory Booker Beto O’Rourke. Vox has a primer worth checking out.
• The G-20 summit takes place this weekend in Osaka, Japan, running 28-29 June. Among the expected highlights: Donald Trump and Xi Jinping are due to have a chat. Check the gathering’s website here.
• Our friends at AmCham will be hosting Electricity Minister Mohamed Shaker at their monthly luncheon on Tuesday, 2 July. You can register for the event here.

Oh, and we’re sliding into a long weekend, as Sunday is off in observance of 30 June. Banks and the stock exchange will be closed.

The Pharaohs face off against DR Congo tonight in their second group game of Afcon 2019. Egypt narrowly beat Zimbabwe 1-0 last Friday and currently sit second in the table behind Uganda on goal difference. The game is being broadcast on Time Sport and Bein Sports, and kick-off is at 10pm at the Cairo International Stadium. Check the standings here, or visit the Afcon website here.

We’ve apparently got some Black Mirror-esque crowd monitoring system in place at the stadium. Authorities are said to have deployed an advanced security system developed in Amreeka that can follow spectators’ movements using their mandatory fan IDs, Masrawy reports. The system is meant to help security officials spot would-be troublemakers and to close off all exits within seconds.

Powell remains ambivalent about the prospects of a July rate cut: US Federal Reserve Chairman Jay Powell has admitted that stalling economic growth is increasing the likelihood of a rate cut in the coming months, but said that Fed officials haven’t decided whether to make the move at the next FOMC meeting in July. In a speech at the Council of Foreign Relations yesterday, Powell warned that “the picture has changed” over the past two months due to “greater uncertainty” over trade and “renewed concerns” about global growth.

But that doesn’t mean the Fed will act: Powell cautioned against any knee-jerk policy responses to current conditions, throwing expectations of a July rate cut into doubt. “We are mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment,” he said.

Media reaction has been bipolar: If you’re expecting any journalistic consensus about what Powell’s speech actually meant, you’re going to be disappointed. The FT claims that his statements “reinforce market expectations of an imminent rate cut.” But MarketWatch is saying precisely the opposite, claiming that he “dampened market hopes” that easing was back on the agenda.

Wall Street evidently preferred MarketWatch’s interpretation of events: The S&P500, Dow Jones and Nasdaq all slumped following Powell’s comments, the WSJ says.

Treat EM equities with caution, Barclays suggests: Emerging-market currencies and fixed-income funds may be doing well off the back of anticipated Fed easing, but the same cannot be said for the equity markets. Emmanuel Cau, head of European equity strategy at Barclays, tells Bloomberg that trade tensions and the weakening Chinese economy are currently “constraining” EM equities — and advises investors to treat the asset class with caution (watch, runtime: 2:25).

A conversation we should be having: When is a company simply … too damn big? We’re not going to argue there should be a cap on a company’s organic growth (unless, like a certain social media player, said company starts to seriously misbehave), but AbbVie’s USD 63 bn acquisition of Allergan (maker of everything from eyecare products to Botox) has us wondering whether megamergers like this are really in the interest of the body politic. And yes, we include the wider business community in the body politic. Further reading on that notion, which isn’t just the purview of the (apparently now defunct) Socialist Worker:

• Did business get too big in 2019? (NYT Dealbook)
• When is a company too big to manage? (Financial Times)
• Are US companies too big and too powerful? (Washington Post)
• How big is too big? (Wharton @ Work)

(No, this story is not sponsored content from the ECA…)

US tech giants will lose out in Africa if The Donald’s push to isolate China continues writes former Ecobank head of research Edward George in an opinion piece for the Financial Times. While US companies hold back, Chinese companies stand ready to consolidate their foothold across the continent: Tech giants including Baidu, Alibaba and Tencent have for years provided cost-effective and accessible technology in Africa, making them much better positioned than Google, Facebook and WhatsApp to serve Africa’s consumers. The Trump administration, George says, underestimates at its own peril the strength of both China’s infrastructure and its influence in Africa.

In miscellany this morning:

• Airbnb for the 1%: Airbnb has entered the luxury travel market space after launching a new website dedicated to super high-end listings, CNBC reports. You can now rent castles, islands and entire villages through the broker.
• Learn about the private companies operating >2k satellites currently orbiting our planet in this beautiful visual piece from the Wall Street Journal.
• Don’t tell me when I’m going to die: In Egypt, MDs are notorious for not giving patients full facts about diagnoses and prognoses. In the US of A, it’s the opposite.

Prime Minister Moustafa Madbouly led a business roundtable in Berlin, during which he discussed strengthening commercial ties with blue-chip German investors, cabinet spokesman Nader Saad told Al Hayah Al Youm’s Khaled Abu Bakr (watch, runtime: 07:22). We have more on the ministerial trip to Germany in this morning’s Speed Round, below.

The return of Spanish delivery startup Glovo to Egypt was a topic of conversation: Hona Al Asema’s Lama Gebreil covered the news, which was officially announced by the Egyptian Competition Authority yesterday (watch, runtime: 09:21). We also have more on this in Speed Round, below.

Egypt is in talks with the IMF for a non-loan program and hopes to reach an agreement by October, Finance Minister Mohamed Maait told Bloomberg TV yesterday (watch, runtime: 4:59). “We started discussing with the IMF, first of all, what are the options Egypt is eligible to and after that we set up a framework for the elements and components of the program and presented it to the IMF and we are in a dialogue about that,” Maait said.

The duration of the program has yet to be determined, but will likely be around two years. Structural reforms will remain Egypt’s top priority for the program moving forward, Maait said, but developing human capital is also an important element for the country.

There still isn’t word about when the IMF will disburse the sixth and final tranche of the USD 12 bn facility: Egypt reached a staff-level agreement with the fund back in May to release the USD 2 bn installment, but as of right now we don’t know when the executive board will sign off on the payment and allow Egypt to exit the program. Egypt is not currently on the published agenda for the IMF’s board.

New eurobond issuances will depend on overall conditions: Maait confirmed that the government is planning to sell between USD 4-7 bn of eurobonds in the coming fiscal year, but cautioned that the ultimate size of the program will depend on “many factors.” Maait didn’t get into the expected maturities of the new issuances, but his ministry has been working to right-size the tenors in its portfolio of debt.

Foreign holdings of Egyptian debt have been on the rise, currently standing at USD 18.7 bn, compared to USD 12.3 bn in January. “It is a significant increase in the last six months. We love to see interest rates declining and to be honest we are seeing that and we are going to use all possible instruments in our hands to see the cost of borrowing declining,” Maait said. CBE board member Fakhry El Fekky told us last week that foreign holdings had risen to USD 17.6 bn by the end of May.

What about FDI? “We have faced challenges but now I am sure after we have done all our homework and got all those problems solved and sorted out, I am expecting that FDI will increase,” Maait said.

Background: Egypt began prioritizing long-term debt and diversifying its sources of funding as part of its new strategy to reduce its debt-to-GDP ratio to 80% by 2022. The government is keen to lower its reliance on short-term debt in FY2019-2020.

M&A WATCH- CIRA to acquire 60% of the UAE’s Starlight Education: Leading private-sector education provider Cairo for Real Estate and Investment (CIRA) is acquiring 60% of UAE-based Starlight Education, which indirectly owns British Columbia Canadian International School (BCCIS) in Shorouk City, CIRA said in a statement (pdf). The transaction will add BCCIS to CIRA’s portfolio of K-12 international school brands. “[The acquisition] doesn’t only signify CIRA’s belief in BCCIS as a school and a brand, but also our commitment to grow the K-12 portfolio in parallel with the robust expansion in higher-ed,” CEO Mohamed El Kalla said.

CIRA will set up a new arm to manage international schools in partnership with the Mostafa family, which founded BCCIS. The new company will expand its business by setting up two new German and French schools to cater to upper-middle income families, the statement adds.

Growth strategy: El Kalla said earlier this year that the company will continue focusing on a growth strategy that centers on differentiation to “cement the presence of its brand.” The company raised EGP 1.24 bn when it made its EGX debut late last year. It was planning to use the proceeds to push forward with its growth plans.

Advisors: Our friends at Arab Legal Consultants (ALC) were legal counsel to existing shareholders who together sold a substantial stake in Starlight. Zulficar and Partners acted as legal advisors to CIRA, while Tamimi were advisors to the company. Fincorp was the appointed IFA.

Gov’t talks railways, renewable energy with Siemens during ministers’ second day in Berlin: Siemens looks like it will be doing significant new business in Egypt. Already a favourite of the Sisi administration after the company’s work to rapidly build-out capacity in Egypt’s electricity generation system during a period of rolling blackouts, Siemens now looks set to get work as the Transportation Ministry upgrades its railway signaling system, minister Kamel El Wazir said during a meeting with officials from the German company yesterday, according to a cabinet statement. El Wazir also encouraged the company to bid in future tenders for railway locomotives. ٍThe talks, which came during the ongoing cabinet visit to Germany led by Prime Minister Moustafa Madbouly, centered around future cooperation in the transport sector, renewable energy, vocational training and tech-driven manufacturing.

Siemens said it was willing to begin manufacturing locomotives in Egypt within the next five years, during the meeting.

Also from the visit: Madbouly led a round table discussion with German blue-chip companies to explore ways to strengthen commercial ties.

More to come: The Arab Organization for Industrialization (AOI) is expected to ink four separate agreements today with “major German companies,” AOI boss Abdel Moneim Al Terras said, according to Youm7. The agreements will have to do with medical supplies, water and water treatment plant manufacturing, and providing technical training to workers.

Cairo-based food delivery startup Elmenus has received funding from Foodora co-founder and ex-VP of Delivery Hero Julian Dames, the company said in a statement (pdf) without disclosing the size of the investment. The funding is part of the company’s ongoing series B round. Dames is also joining the Elmenus’ board of advisors. Elmenus raised USD 1.5 mn from Algebra Ventures back in 2017, which was at the time one of the largest series A rounds ever in seen in Egypt.

STARTUP WATCH- Breadfast raises seven-figure series A funding, joins Y Combinator accelerator program: Cairo-based bakery startup Breadfast has raised a seven-figure sum in its series A round, the company told Menabytes, without revealing the size of the investment. The funding was led by California-based VC firm 500 Startups and Egyptian investor Mohamed El Sewedy, COO of El Sewedy Electric. The company has also been selected to join the Y Combinator accelerator program in the US this summer, the company said.

UAE authorities greenlight Uber-Careem merger: Emirati Minister of Economy Sultan bin Saeed Al Mansouri has given “unconditional approval” to Uber’s planned USD 3.1 bn acquisition of Careem, Uber announced yesterday (pdf), making it the first jurisdiction to sign off on the transaction.“The integration of expertise, competencies and modern technologies ultimately serve[s] the interests of consumers,” reads the ministerial decree. The Emirati ministry sees the move as beneficial to the wider economy, saying it will lead to a more efficient transportation network, improve the region’s tech ecosystem, contribute to a “more dynamic” competitive landscape, and send a “globally visible” endorsement letter to prospective investors.

Egypt’s competition watchdog hasn’t been as welcoming of the merger: The Egyptian Competition Authority (ECA) has been a critic of the merger since before Uber and Careem announced they were in talks for the transaction, threatening each company with a fine of up to EGP 500 mn at the time. The ECA said that the agreement could “lead to a significant impediment on effective competition in the markets” and said it would take a decision after 60 working days of receiving official confirmation of the merger.

Glovo’s return will go down as a win for the ECA: The authority said in a statement yesterday (pdf) that it had received an official letter from delivery app Glovo and partial owner Delivery Hero confirming that both will operate in Egypt “in accordance with the Antitrust Act.” Glovo, which reversed last week an earlier decision to exit Egypt, told the authority it will reactivate its app and advertise its return. Delivery Hero, meanwhile, pledged not to exploit the access it has through its partial ownership of Glovo or exchange classified strategic information that may run in violation of the act.

Background: Glovo’s decision to exit Egypt last May came immediately after it secured a EUR 150 mn series D funding round led by Lakestar. The app then began directing users to Otlob, the food delivery app owned and operated by Delivery Hero. The ECA then ordered the company to return, accusing it of a deliberate, anti-competitive arrangement.

EXCLUSIVE- Egypt to sign second USD 1.5 bn tranche of trade financing agreement with ITFC in July: The Egyptian General Petroleum Corporation (EGPC) and General Authority for Supply Commodities (GASC) are expected to sign contracts for the USD 1.5 bn second tranche of a USD 3 bn trade finance facility with the International Islamic Trade Finance Corporation (ITFC) in July, ITFC CEO Hany Sonbol told Enterprise on the sidelines of the Afreximbank annual meetings in Moscow. The ITFC has pledged USD 3 bn in trade finance this year, half of which Egypt has already received. The funds are used for imports of petroleum derivatives and basic commodities.

DISPUTE WATCH- Administrative court overturns regulator’s decision to ban Acumen from buying Egypt Gas shares: The Council of State’s (Maglis El Dawla) administrative court has overturned the Financial Regulatory Authority’s (FRA) decision to ban Acumen from buying Egypt Gas shares for three months, the local press reported. The court is also ordering the FRA to pay EGP 30k to Acumen as compensation.

Background: The FRA banned Acumen in October 2017 after alleging that Egypt Gas shares had been subject to stock manipulationj. Acumen had denied the allegations and challenged the FRA’s decision.

Police arrest eight accused of masterminding anti-gov’t plot: Police arrested yesterday eight individuals for allegedly conspiring with the Ikhwan on a plot to bring down the government on the anniversary of 30 June, the Interior Ministry said in a statement broadcast on national television (watch, runtime: 2:02). The ministry also said it has targeted 19 companies allegedly being run by Ikhwan leaders and supporters for providing financial support to the outlawed group and the anti-government plot.

Who got caught in the dragnet? The detainees include economist and Multiples Group Chairman Omar El Shenety, former politician and revolutionary figure Zyad Elelaimy, and journalists Hossam Monis and Hisham Fouad, the Associated Press reports. The ministry also accused former presidential candidate Ayman Nour, who has been living in self-imposed exile in Turkey, of allegedly being involved in the plot.

The story is gaining steam in the foreign press, with Reuters, Bloomberg, the Financial Times and the National among those taking note. Amnesty International also came out with a statement condemning the “arbitrary” arrests as being carried out “under the guise of counterterrorism.” Human Rights Watch meanwhile took the opportunity to publish a letter sent to US Secretary of State Mike Pompeo by a bipartisan group of academics asking him to support an international inquiry into Egypt’s prison system.

MOVES- Cleopatra Hospital Group has appointed Ahmed Badreldin (LinkedIn) as non-executive chairman of its board of directors representing CHG majority shareholder Care Healthcare Ltd, according to a company statement (pdf). Badreldin was previously vice chairman of CHG. A 10-year partner at Abraaj, Badreldin led Care Healthcare’s initial acquisition of CHG in 2014 and quarterbacked subsequent acquisitions that saw CHG become Egypt’s largest listed hospital group. A 20+ year veteran of the finance industry, we interviewed Badreldin for our CEO Week in January 2017.

MOVES– Prime Holding has appointed Khaled Rashed (LinkedIn) as CEO and vice-chairman of Sameem Capital Activist Investor and Mohamed Maher (LinkedIn) as the executive vice chairman, the local press reported.

MOVES- The Egyptian International Tourism Projects Company (Americana Egypt) has tapped Harun Sadiki as its new non-executive chairman, the company said in an EGX disclosure (pdf).Sadiki succeeds Mohamed Farouk, who resigned from his post, according to a local press report.

The 2019 Astronomy Photographer of the Year shortlist is stunning: This photo of Iran’s Sharafkhaneh port and Lake Urmia by astrophotographer Masoud Ghadiri is one of several featured in this year’s shortlistfor the Royal Observatory’s Insight Investment Astronomy Photographer of the Year. It shows the Milky Way, and in the background, the light pollution coming from the city of Urmia. The competition, now in its eleventh year, saw over 4.6k photographs submitted by amateur and professional photographers. The winners will be announced during a ceremony at London’s National Maritime Museum on 12 September, with an exhibition of winning and shortlisted images beginning the following day.

Want to learn how to photograph the sun, moon and stars? These astrophotography tips will have you ready to enter next year’s competition yourself.

The arrest of eight individuals in connection with an Ikhwani plot yesterday is dominating the conversation in the foreign press. We have more on this in this morning’s Speed Round, above.

El Sisi discusses bilateral and regional issues with Ghanaian president: Both Al Ahram and Al Gomhuria were still down this morning, but yesterday’s meeting between President Abdel Fattah El Sisi and Ghanaian President Nana Akufo-Addo made the front page of Al Akhbar, one of the country’s three state-run dailies.

Have the anticipated economic benefits of Afcon been overhyped? USD 250 mn in sponsorship from Total. Some half a bn TV viewers for advertisers to target. Thousands of overseas fans spending money on travel, food, hotels and merchandise. Afcon is generating considerable inflows, and the expectation that Egypt’s economy will see a USD 1 bn boost as a result comes as welcome news after many years of subdued tourism revenues. But capitalizing on the hype to create long-term economic benefits may be easier said than done, according to this episode of the BBC’s World Business Report (listen, starting 16:16). Economic boons can come to nothing, and streams of overseas visitors can disappear overnight — a sad fact that former host countries Gabon and Ghana can attest.

Round two of Egyptian-European talks on illegal immigration will take place next month, EU Commissioner for Migration Dimitris Avramopoulos said during a sit-down with President Abdel Fattah El Sisi yesterday, according to an Ittihadiya statement. The first round of talks was held back in 2017.

President Abdel Fattah El Sisi talked trade and investment with Ghanaian counterpart Nana Akufo-Addo, who was in town yesterday, according to an Ittihadiya statement. Akufo-Addo expressed his interest in bringing more Egyptian construction, energy, and mining companies to work in Ghana.

Renewable energy company Empower is set to begin directly selling electricity generated from recycling waste for the first time to a local farm in September for around EGP 2/kWh, Chairman Hatem El Gamal said, according to Mubasher. The company is seeking to sell electricity to 36 farms in the coming period.

Nigeria’s Rungas Industries is working with the National Organization for Military Production on a USD 30 mn project to manufacture and export liquefied petroleum gas (LPG) and compressed natural gas (CNG) composite cylinders in a facility in Alexandria, according to Nigerian press reports. The project will reportedly be initiated in September, with production of LPG cylinders due to start nine months later, and production of CNG composite cylinders within 18 months.

Cleopatra Hospitals Group (CHG) will sign an agreement with Al Taaleem Management Services to set up a joint venture that will rebuild, develop, operate, and manage Al Nahda Hospital, CHG said in a statement to the bourse yesterday (pdf). The JV will be 90% owned by CHG, with the remaining 10% held by Al Taaleem, the owner and operator Nahda University in Beni Suef.

Etihad Airways will launch four weekly flights between Abu Dhabi and Alexandria, running from 2 July to 31 August, the airline said in a statement. The addition of these seasonal flights will extend Etihad’s flights to Egypt to 32 per week: 28 to Cairo and four to Alexandria.

EFG Hermes’ mobile app valU is planning to expand into Upper Egypt next quarter, starting with Minya and Assiut, CEO Walid Hassouna told Mubasher. The fintech solutions arm is targeting growing twofold in the volume of payment-on-instalment services provided this year.

The General Organization for Export and Import Control (GOEIC) is planning to remove 10k companies from its importers database, which will prevent these companies from importing goods, GOEIC head Ismail Gaber said, according to the local press. Gaber did not disclose the names of any of the companies, or the reason for their removal.

The Military Production Ministry signed yesterday an MoU with the UK’s BlueMAC Manufacturing to cooperate on setting up recycling factories across Egypt, the ministry said in a statement. The ministry didn’t explicitly state whether the factories will manufacture waste recycling equipment, which is a specialty of BlueMAC, or use recycled waste as a raw material for other products. The British company will soon visit one of the ministry’s factories to produce a plan for its renovation. This came following a meeting between minister Mohamed El Assar and British Ambassador Sir Geoffrey Adams, in which they discussed waste management partnerships.

The Administrative Control Authority (ACA) has arrested a banker and a former journalist accused of embezzling EGP 25 mn from an unnamed bank, Youm7 reports. The two are alleged to have forged an ID card to access a client’s bank account, from which they embezzled money to purchase property on the Zamalek and Alexandria corniches, and cars worth at least EGP 5 mn.

Assets worth EGP 17.5 bn have been transferred to Egypt’s sovereign wealth fund (SWF), including a conference hall in Nasr City and the Bibliotheca Alexandrina, Planning Minister Hala El Said said, according to Al Mal. The government has hired legal and financial advisory firms to help it draft short- and medium-term strategies for the fund, a government official said, according to Youm7. The government has yet to choose between three candidates nominated for the position of executive director.

IBM is due to open an Innovation and Industry Client Center and a Marketing Services Center in Cairo, designed to provide clients with access to high-level technical expertise, Egypt Today reports. The two centers will support Egypt’s push for increased digitization in the public and private sectors, as well as giving IBM strategic positioning within the region.