Monday, 9 December 2019

Privatization program picks up steam as e-Finance could IPO as early as 1Q2020, BdC eyes January roadshow

TL;DR

What We’re Tracking Today

The House of Representatives had a busy first day back in session yesterday, with a pile of legislation receiving general assembly and committee-level approval. We have the full roundup in this morning’s Speed Round, below.

Today could be just as eventful, as proposed amendments to the 2005 Income Tax Act and the draft Customs Act will be under discussion in the House Planning and Budgeting Committee, committee secretary Essam El Feky says.

Talk of a cabinet shuffle has new momentum after House Speaker Ali Abdel Aal slammed the Justice Minister for allegedly failing to clamp down on corruption and poor service at his ministry’s notary public offices. State-owned Ahram Online says Abdel Aal threatened to call the minister in for a public hearing “unless the government moves quickly to address this situation.” Too many members of the current cabinet, Abdel Aal said, are “exporting problems to the public and the president” rather than working on solutions and the Madbouly government needs to “live up to its responsibilities in line with the constitution [and] improve its performance.” Al Masry Al Youm also has the story.

GERD talks resume today: The Egyptian, Ethiopian, and Sudanese foreign ministers will meet in Washington today for the third round of US/World Bank-sponsored talks over the Grand Ethiopian Renaissance Dam, the Irrigation Ministry said in a statement yesterday. The three countries have committed to reaching an agreement by the end of the fourth round of talks, scheduled to take place in Washington on 13 January.

Inflation figures for November are out tomorrow. Headline inflation fell to new multi-year lows of 2.4% in October due to cooling food and beverage inflation and a favorable base effect.

Rameda Pharma shares start trading on Wednesday under the ticker RMDA.

The US Federal Reserve will hold its final meeting of 2019 tomorrow and Wednesday: The central bank held fire on making further cuts to interest rates at its last meeting at the end of October, having made three consecutive 25 bps rate cuts in what Fed Chair Jay Powell termed a “mid cycle adjustment.” Last week’s solid jobs figures mean that rates probably aren’t going anywhere this week — and according to a Bloomberg poll of economists may well go unchanged through to the end of 2021.

enterprise

International news worth knowing about:

  • Lawmakers could vote this week on impeachment charges against The Donald, the House Judiciary Committee’s chairman said yesterday. The White House has suggested that Trump won’t mount a defense to the charges. (New York Times | Wall Street Journal)
  • Tighter climate policies could erase USD 2.3 tn in corporate value in industries “ranging from fossil fuel producers to agriculture and car makers,” the UN-backed group Principles of Responsible Investing said in a report. (Reuters)
  • Goldman Sachs’ asset management division will now show you (robotic) love if you have as little as USD 5k to invest as the investment bank plans to launch a robo-advisor. (Financial Times)

MUST READ #1- Are central bankers out of tools? That’s the argument in a Bloomberg piece this morning that suggests that after more than 10 years of “crisis fighting” including “this year’s rush to support global growth,” the world’s central bankers are facing the 2020s with “few good options to fight the next downturn.”

MUST READ #2- How to take back control from the Big Tech barons, by Rana Foroohar in the Financial Times. It’s not a Luddite screed, but a thoughtful look at the defining problem of our age: surveillance capitalism. The bottom line: “Splitting up Facebook will not be enough to solve the problem of surveillance capitalism.” Only prohibition, she says, can do that — and save “trust in liberal democracy throughout the world” in the process.


PSA- You might need an umbrella today as the capital city could see some light rainfall to accompany the cooler weather. Expect daytime highs of 22°C and lows of 14°C over the next three days, according to Ahram Online.

enterprise

*** It’s Blackboard day: Our every Monday look at the business of education in Egypt, from pre-K through the highest reaches of higher ed, focuses this week on an interview with Ahmed Wahby, the new CEO of GEMS Egypt, to discuss GEMS and the Egyptian Education Fund’s investments in Egypt, the investment case for Egypt’s education sector, what GEMS hopes to achieve in Egypt, and the elephant in the room: the 20% cap on foreign investment.

Enterprise+: Last Night’s Talk Shows

Our daily roundup of last night’s talk shows is on a two-day hiatus, and will be back on Wednesday morning.

Speed Round

Speed Round is presented in association with

PRIVATIZATION WATCH- e-Finance could make its EGX debut as early as 1Q2020, chairman says: State-owned payments platform e-Finance is putting the final touches on its planned initial public offering (IPO), which could take place as early as the first quarter of 2020, Chairman and Managing Director Ibrahim Sarhan tells Hapi Journal. Sarhan did not disclose the size of the offering, but last we heard the company was wrapping up its business plans and expansion strategy with the aim of helping the government committee in charge of the state privatization program size the transaction.

Advisors: Pharos Holding and Renaissance Capital are joint global coordinators. Zaki Hashem & Partners were previously reported to have been retained as legal advisors, while Baker Tilly was tapped to prepare the fair value report. Inktank is investor relations advisor.

New momentum for privatization program as Banque du Caire said to eye January IPO roadshow? The government is planning to begin next month a roadshow for the sale of a 30-40% stake in Banque du Caire (BdC) as part of the state privatization program, Banque Misr Chairman Mohamed El Etreby said at a conference yesterday, according to Al Masry Al Youm. Banque Misr is BdC’s majority shareholder. The IPO is still slated for 1Q2020, as was previously announced, and has received approval from the government committee overseeing the privatization program to expedite the process, BdC Chairman Tarek Fayed said, according to Masrawy. Fayed did not provide any further details on when the exact size and timing of the transaction would be determined. The transaction is expected to include a primary offering and to see the state sell-down its sale in a secondary sale.

Background: BdC and e-Finance are the first two companies in line to IPO under the state privatization program. The offerings were originally expected to take place this year, but Public Enterprises Minister Hisham Tawfik told us in September that the wave will kick off in the new year. Sources said in August that the government will choose between the two companies for which will go first.

IPO WATCH- EGX needs larger companies to attract more foreign investment -EFG Hermes CEO: The Egyptian bourse needs to attract larger companies to list on the index if it is going to increase foreign inflows into Egyptian equities, EFG Hermes CEO Karim Awad said at a conference yesterday, Al Mal reports. Awad pointed out that the largest company currently listed on the EGX is valued at just USD 5.5 bn, asking: “Where are the companies to invest in?” He also suggested that lowering interest rates will not necessarily push investors to exit government debt and enter equities, given that interest rates are not the only factor that attract capital to the bond market. The right company and the right transaction, however, will attract investor interest.

Volumes and liquidity on the EGX will improve as more IPOs to go to market and as the CBE pushes through more interest rate cuts, Compass Capital Managing Partner Tarek Abdel Rahman said on the same panel, according to an emailed statement (pdf). Abdel Rahman also noted that pension funds account for only a fraction of total investment in the EGX at 2%, “well below the global rate of 20% and the US rate of 49%.” Private equity will play an important role in bringing new offerings to market, he suggested, saying that the last two IPOs executed on the EGX, Fawry and Rameda, both involved companies backed by private equity players.”

M&A WATCH- Endeavour’s bid to merge with Centamin faces hurdle as report suggests CEO De Montessus is target of corruption probe: Endeavour Mining’s USD 1.9 bn bid to acquire gold miner Centamin has run headlong into a report that the company has been the target of a corruption probe by French officials since 2018. British newspaper the Mail on Sunday reported yesterday that the French government has been investigating allegations that Sébastien de Montessus allegedly made fraudulent financial declarations while he was deputy CEO of state-owned French nuclear firm Areva and bribed a foreign public official. De Montessus denies all allegations. The story, broken by the Mail’s business section, has since been picked up by the Times of London.

Endeavour has previously disclosed the investigation, writing in its annual report that “De Montessus’s status in the French inquiry changed in March 2018 to ‘mis en examen’ or ‘under judicial inquiry’, adding: ‘This is an investigative stage of the inquiry and does not equate to being “charged” in the UK and North America.”’ Endeavour’s board “did not consider that the ongoing inquiry would impede De Montessus’s ability to carry out his responsibilities and effectively execute his duties as chief executive officer.”

There are also questions over Endeavour’s attempted merger with Centamin: Officials are also investigating why Endeavour denied Centamin access to company information necessary for it to conduct due diligence after the bid was announced. The London-listed operator of Egypt’s Sukari gold mine last week unanimously rejected Endeavour’s all-share merger proposal on the grounds that it would disproportionately benefit the Canadian firm’s shareholders. Under the plans, Endeavour would have acquired a 52.9% stake in the joint company, while Centamin would control the remaining 47.1%. We noted yesterday that Endeavour was “reaching out to Centamin shareholders” in the hope they would reconsider their rejection of the all-share merger proposal. Both companies declined to comment on the investigation.

M&A WATCH- Adeptio wants Sahar Nasr to intervene in Americana dispute: Adeptio has appealed to Investment Minister Sahar Nasr to intervene in its ongoing dispute with the Egyptian International Tourism Projects Company’s (Americana Egypt) minority shareholders, Al Mal reports. The Gulf-based investment consortium wants Nasr to overturn the Financial Regulatory Authority’s (FRA) decision to block its mandatory tender offer (MTO) for the 9.563% of Americana shares that remain in the hands of minority shareholders. The FRA claimed that Adeptio’s valuation — which priced the shares at EGP 3.9 each — did not represent fair value and was not based on an objective assessment.

Background: Adeptio completed in 2016 the acquisition of a 67% stake in Americana Egypt’s parent company, Kuwait Food Company (Americana), handing them indirect ownership of more than 90% of the subsidiary’s shares. The FRA then ordered Adeptio to submit an MTO to buy the remaining 9.563% shares, which it contested in an economic court only to have the court reject the appeal. A 15-day grace period was set for Adeptio to submit the MTO after Adeptio had requested a 30-day extension on the initial deadline that expired on 21 October on the grounds that it has yet to complete its fair share evaluation on Americana, which the FRA approved.

M&A WATCH- Greek cement company Titan Group will launch a mandatory tender offer (MTO) for 100% of Alexandria Portland Cement “within days,” Alexandria Cement said in a bourse disclosure (pdf). Titan had acquired Alexandria Cement’s parent company, Alexandria Development, which made it an indirect majority owner through a related party and therefore triggered an MTO requirement. The Financial Regulatory Authority had ordered the Greek company last month to present an MTO.

INVESTMENT WATCH- CIRA plans EGP 2 bn in new investment, fresh securitization program: EGX-listed education business CIRA will invest more than EGP 2 bn to develop several ongoing and future projects and will turn to a securitized bond issuance as part of its financing plans, CEO Mohamed El Kalla tells Mubasher. The fresh investment will be used to establish an international university, at least two schools, and a commercial project on recently-acquired land next to its Badr University. El Kalla provided no further details on the bond issuance.

CIRA also signed yesterday a EGP 130 mn loan agreement with QNB to finalize construction work as it adds seven new colleges to Badr University and breaks ground on a planned “Regent School” in Mansoura, according to an emailed statement. The agreement is part two of a EGP 230 mn loan agreed with the bank last May.

Other ongoing investment plans: CIRA has recently made a 10% down payment to NUCA for a EGP 479 mn 76.5 feddan land plot for further EGP 1 bn-worth of expansions to its Badr University, and is separately working on a EGP 2.45 bn private university in west Assiut. The company is also acquiring 60% of UAE-based Starlight Education, which indirectly owns British Columbia Canadian International School (BCCIS).

Growth strategy: CIRA is eyeing bottom line growth of 15% during 2020, and to increase its revenues by 25-30%. The publicly-traded company reported net profits of EGP 221.1 mn in its fiscal year, which ran from 1 September 2018 to 31 August 2019, rising 75% y-o-y. Revenues were up 36% to EGP 704.7 mn.

Looking ahead: The company will continue to focus its growth strategy on differentiation to “cement the presence of its brand,” El Kalla said earlier this year. The company raised EGP 1.24 bn when it made its EGX debut late last year.

INVESTMENT WATCH- Raya Holding to invest EGP 1 bn in home appliance production lines: Raya Holding is planning to set up several new home appliance production lines, an investment that could cost as much as EGP 1 bn, Chairman Medhat Khalil tells Al Mal. The group is in talks with two manufacturers based in East Asia to produce their brands domestically, sourcing at least 60% of the components from local companies, Khalil said. The first production line will produce air conditioners and will begin operating at the beginning of next year. The second, which we took note of last month, will produce Samsung washing machines, and is slated to come online follow shortly after. The company will also begin manufacturing refrigerators and televisions in 2020.

INVESTMENT WATCH- Sphinx to launch USD 100-120 mn private equity fund: Sphinx Private Equity Management will officially launch a USD 100-120 mn private equity fund by the end of 2020 or the beginning of 2021, Chairman and Managing Director Marianne Ghali told Al Mal. The fund will invest primarily in medium-sized enterprises in the industrial sector, but will consider investments in the health and education sectors, with an average ticket size of USD 10-15 mn, Ghali added.

Potential limited partners include development finance institutions, among them the International Finance Corporation, the European Investment Bank, and the German Development Bank, Ghali said.

INVESTMENT WATCH- Spain’s Mediterrania Capital Partners will invest in Egypt through its MC III fund, which is currently looking to raise EUR 100 mn in a second closing planned to wrap up this month, the Africa-focused PE firm’s Egypt advisor Khaled El Saba said, according to Al Mal. Part of the proceeds will be allocated to Egypt, with the fund also planning to put money into projects in the Maghreb (Tunisia, Algeria, and Morocco), Senegal, Ivory Coast, and Cameroon.

Mediterrania targets education, health, B2C firms: MC III is interested in Egypt’s education, healthcare, B2C services, food processing, distribution, and export-bound manufacturing industries, El Saba said. We noted back in January 2018 that the fund carved out a 40% stake in Cairo Scan for a reported EGP 103 mn.

DISPUTE WATCH- Orascom Investment pays EGP 6 mn settlement to SLCC: Orascom Investment Holding (OIH) has paid a EGP 6 mn settlement to the Sound and Light Cinema Company (SLCC) after it failed to carry out contracted work for the EGP 10 mn development project at the Giza Plateau, according to Al Mal. SLCC does not intend to reissue the tender for the development unless it either reaches an agreement with the Antiquities Ministry to renew its concession contract (which expires in 2023) or the ownership of the company is transferred from the Public Enterprises Ministry to the Antiquities Ministry, SLCC Chairman Mohamed Abdel Aziz said. Negotiations between the two ministries are ongoing after the Public Enterprises Ministry suggested passing ownership following a dispute over the share of SLCC’s revenues. Background on the dispute is here.

Speaking of Orascom and the pyramids: Orascom Group’s Gemini Enterprises Africa signed a three-year agreement to hold the annual RiseUp Summit and Pitch by the Pyramids competition at the Giza Plateau until December 2022, according to a company statement (pdf).

BUDGET WATCH- Fuel subsidy spending plunges in 1Q2019-2020: Government spending on fuel subsidies fell 69% y-o-y in 1Q2019-2020 to EGP 7.25 bn from EGP 23.25 bn in 1Q2018-2019, Oil Minister Tarek El Molla said yesterday, according to Reuters. Egypt has moved to gradually reduce fuel subsidy spending over the past three years under the USD 12 bn IMF-backed economic reform program. The latest round of cuts saw prices rise between 16% and 30% in July. The government aims to reduce its fuel subsidies expenditure to EGP 52.96 bn over the course of the current fiscal year, down from EGP 89.75 bn in FY2018-2019.

LEGISLATION WATCH- House planning committee approves PPP Act amendments in principle: The House Planning and Budget Committee gave a preliminary nod yesterday to proposed amendments to the PPP Act that would streamline public-private partnership (PPP) contracts and is set to continue discussing the bill today, according to Al Shorouk. The draft was finalized back in June after receiving cabinet approval late last year.The amendments would cut the time to issue tenders for PPP projects and introduce new mechanisms for private sector contracting, including allowing private sector players to submit unsolicited proposals. The government would also be allowed to negotiate directly with a sole bidder without needing to take the project through the competitive bidding process.

Draft law on dispute resolution gets committee-level parliament approval: The House Legislative Committee also signed off yesterday on draft legislation that would regulate procedures relating to special judicial mediation for out-of-court trade and civil dispute settlements, the local press reports. The legislation applies to all disputes, with the exception of those where ministers or public figures are involved, collective labor disputes, economic or family court cases, disputes resulting from the Investment Act, and cases under the judicial authority of the Council of State. The draft law will now be referred to the House of Representatives’ general assembly for review and a final vote. The Madbouly Cabinet had approved the bill earlier this year.

House preliminarily approves renewing legislation to channel 5-15% of slush funds to state coffers: Parliament’s general assembly also approved in principle a draft law earmarking 5-15% of the annual surplus generated by ministerial “private funds” for state coffers, Ahram Gate reports. The bill would see the state lay claim to the surplus generated by the so-called private accounts (also widely referred to as government slush funds) as of 30 June, 2019. The legislation, a replica of which was also approved last year, sunsets each year and requires renewal.

Special funds are better off remaining separate from state coffers, says Maait: Special funds under the control of individual ministries and other government bodies are best left as they are, rather than merge them with the state budget, Finance Minister Mohamed Maait told the House Economic Committee yesterday, according to the local press. By keeping these funds distinctly separate from the state budget, they are “more effective” and “enjoy greater flexibility” in disbursing their wealth than if they were brought under the umbrella of the national budget, Maait said. These funds are typically maintained outside the budget system and have for years been the subject of scrutiny by both the domestic press and corruption watchdogs.

STARTUP WATCH- Winch eyes USD 1 mn finance for expansion: Cairo-based logistics app Winch is looking to secure USD 1 mn in financing in the coming months to support its expansion plans, CEO and co-founder Ayman Ismail said, according to the local press. The company’s mobile app provides goods and furniture moving services, and has moved EGP 40 mn in goods each month since launching last September. The startup aims to bring that figure up to EGP 600 mn by mid-2020.

EFG Hermes Group CEO Karim Awad — whose firm cracked the top 20 in Bloomberg’s Europe, Middle East, and Africa IPO league table — is our guest on the latest episode of Making It. EFG has transformed under group Awad from a home-grown champion into a true multinational — without destroying the culture that made it special in the first place. Karim joined us in the studio to talk culture, growth and parking your ego at the door.

*** Listen to the episode on: Our website | Apple Podcast | Google Podcast.

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Egypt in the News

Rejoice: There’s nothing new on Egypt in the foreign press to report this morning.

Worth Watching

Expect the USD to stay strong through 2020: The USD — currently at two-year highs against the currencies of the US’ major trading partners — is unlikely to weaken in 2020 as the Federal Reserve ends its easing cycle, global growth remains anemic, and trade tensions persist, the Financial Times says (watch, runtime: 4:18).

Diplomacy + Foreign Trade

The Egyptian ceramic industry is facing continued uncertainty after the Libyan Cabinet postponed implementing its decision to ban ceramics imports via land crossings until the end of the year, the local press reported. Companies would need to find alternative ways of exporting their products if the government follows through on the restrictions. Shipping via sea would raise costs by 10-20% for exporters, which could force them to pass on the costs to Libyan customers, said Emad Afifi, director of export at Ceramica Granito. Libya is the largest importer of Egyptian ceramics, accounting for around 30% of the industry’s total exports.

black board

Blackboard sits down with Ahmed Wahby, CEO of GEMS Egypt: It’s an interesting time to be in the education business in Egypt, with the arrival of a new public education system, the launch of public-private partnership programs, a new regulatory environment, and rising interest from foreign education providers and private equity — not to mention a changing macro climate and regulatory change. Into this changing landscape steps GEMS Education — a leading Dubai-based education services provider with 54 K-12 schools operating in the UAE, Qatar, and Egypt. The company made headlines here in Egypt back in 2018, when it partnered with EFG Hermes to form the Egypt Education Fund, a platform to invest in K-12 education here in Egypt. The platform, which will invest USD 300 mn over a five-year period, announced its first major investment last year, a EGP 1 bn transaction that saw it acquire four schools, with reports of a possible acquisition coming later in the year.

Who is Ahmed Wahby? Prior to coming joining GEMs in Egypt three months ago, Ahmed Wahby spent 14 years working for Procter and Gamble North Africa. He was P&G North Africa and the Levant’s CFO from 2014 until June of this year.

The investment case for Egypt remains strong, despite the Education Ministry’s decision to cap foreign investment in the sector, Wahby tells us. He recenty spoke with us about what GEMS hopes to achieve in Egypt, including the launch of its flagship school, why the company invested in the country, as well as the fund’s vision for the future. Edited excerpts from our discussion:

A full-fledged platform in Egypt: What the Egyptian Education Fund plans to achieve in Egypt is building a full-fledged education platform that not only offers a variety of curriculums for our K-12 schools, but would also provide all the complementary services that come with the school, including catering, providing uniforms, and transportation.

With that in mind, our activities will serve the purpose of providing quality education across all income segments that we’re not currently serving as much, and tapping into opportunities outside of Cairo. All the fund’s investments will land on assets and products that will serve this strategy. We’re not reinventing the wheel here. We’re simply taking a tried and true model of GEMS in other markets and adapting it to the needs of the Egyptian market.

We’ve so far deployed over USD 70 mn and looking at a very active pipeline. Our current assets include the four schools we acquired in Madinaty and Rehab — two providing the British curriculum, and two providing the national curriculum. We are planning to close three new investments before the end of the current academic year, one of which will significantly complement our service offering range and will be announced soon.

We’re also building our greenfield school in Rehab, which will be our flagship school here in Egypt and will bring our total capacity to almost 10k students. We’ve acquired the land for the school, and the development is in the post-design phase. The school will be operated along the Dubai model of GEMS schools. We have not yet finalized the curriculum design, but it will be an international school catering to the demands of the demographics in that area. So we’re considering everything from the British curriculum, to an American high school curriculum and the International Baccalaureate.

Egypt is an important market for GEMS’ global strategy and at the moment is a very important player within the GEMS portfolio. We see it as an engine for growth and an important value generator for the entire group. That’s why GEMS is backing both our current assets and greenfield investments, whether that support is funding or with the design of the program. Our plan is to have GEMS Egypt be one of the biggest contributors to business growth in the near future.

Diversification across income segments: Our growth strategy in Egypt is to diversify in terms of our service offerings, our target segments, and geographic presence, with the target of serving more than 25k students within the next three years. On the segments, we’re definitely looking at building a portfolio of assets that target the low-, middle-, and high-income brackets. We are now focused on expanding assets that target the middle- and higher middle-income segments where we believe there is a significant market gap.

As for expanding outside of Cairo, we see a lot of activity happening in the Delta region, Alexandria, Mansoura, and Upper Egypt. This trend has definitely been supported by the government’s urbanization efforts in those regions and its plans to build new urban centers. That hasn’t only helped concentrate and develop the market of students in those areas, but has also provided infrastructure needed for the development of schools.

The other important element of our strategy here in Egypt is adapting the GEMS model to the needs of the Egyptian market, primarily by ensuring that learning is personalized and catered to the needs and ambitions of the individual students. While curriculum and teacher quality is the core of our service offerings and keeping in line with international standards, GEMS has also developed a series of enrichment programs that aims to develop key skills that will serve them in later life. For instance, we will be offering our secondary students opportunities to get internships in top companies in Egypt. Our Egypt schools will tap into a network of around 300 schools globally offering a variety of programs, including study abroad programs, sports and other activities. Our enrichment programs will also see us bring some of our 60 afterschool activities.

On the academic front, we are piloting our STEM (science, technology, engineering and math) education programs, which will see our students working on projects such as robotics, digital media, and video game programming. We also want to bring in new technologies to our classrooms here, including virtual reality and augmented reality.

In effect, we are trying to leverage the growth potential in the Egyptian education market. First and foremost, it is a defensive sector, where the Egyptian consumer cares heavily for the quality of their children’s education and priorities spending on education, regardless of the economic conditions. The key here is to provide the right quality education at the right perceived value. Where we don’t see that happening very often in Egypt is in places outside of Cairo, so we see a lot of opportunities there, especially in light of the urbanization program.

It’s these opportunities that gives Egypt’s education sector a great investment case, even when compared to other markets in the region, including the GCC. Egypt has the demographics and population factor playing in its favor, with room for growth on the demand side as long as you can offer needed quality. I strongly believe that the recovery of the Egyptian economy will afford households greater expenditure on education over the coming few years.

That’s why I believe the IPO outlook for the sector is very positive and we should see more listings going forward. This was evident in the recent listing of CIRA, which clearly indicated the significant demand that exists for education focused companies in Egypt or across the region. We are seeing a lot of activity on the M&A front with new financial and strategic players entering the sector. The market is huge and will definitely benefit from increasing competition between different service providers.

The elephant in the room: Our optimism is not dulled by the Education Ministry’s decision to cap foreign investment in the sector at 20%. We appreciate the ministry’s decision to open room for discussions with investors about the decree, which indicates that the ministry views foreign direct investments (FDI) as an important factor in advancing education in Egypt. In principle, we understand the spirit of the law and its objectives to ensure the quality of investors operating in such a sensitive sector. We (as a sector) have been holding talks with the ministry on how we can bring some amendments to the existing legislation to strike a balance between controlling the quality of investors entering the sector, while giving the private sector and foreign investors room to grow.

I want to also stress that the decision did not impact our strategy nor our business plans, because at the end of the day, the ministry is supportive of what we're here to do, which is to grow and improve the quality of education services being provided.

What is the biggest issue facing the education industry here? The most important aspect in the education industry in general is being able to match the quality of the teacher (your key asset) with the curriculum and the right cost model. I wouldn’t describe it as an issue, so much as an opportunity, because when done right, you would have cracked the quality problem. If you get to the right cost model, this will allow you to offer that service within a decent price point and then reinvest that into teacher development, more enrichment programs and building up tech capacity to support the education experience.

As for us, there is no compromise on the quality of our teaching staff. We introduced our quality monitoring program for our teachers along with structured professional development plan led by our well experienced educational senior leadership team. We will keep improving and focusing on that area. Foreign teachers are the majority of our staff at the international schools, because when it comes to certain subjects and diplomas, foreign teachers help to ensure that the student has the right language base and foundation. Having said that, highly qualified Egyptian teachers are important assets for us and add a lot of value to our teaching staff.

So far, our biggest challenge in 2019 has post-acquisition integration, which is normally challenging because you need to transition the mindset of the entire set of stakeholders into what we're embarking on. That means changing the mindset of parents and teachers. But again, I think once people realize what we're doing and the end point we're trying to achieve, it will turn into an opportunity rather than a challenge.

Our challenge for 2020 is to achieve our growth targets and to get our assets to where they need to be as per the growth plan, whether that involves expanding the portfolio, getting our flagship school up and running or improving our services.

Your top education news stories in Egypt this week:

  • The Financial Regulatory Authority (FRA) is requesting clarification from the Education Ministry on its decision to place a 20% cap on foreign ownership in private and international schools, FRA Deputy Chairman Khaled El Nashar said, according to Al Mal.
  • The Education Ministry is looking to incorporate early childhood skill development into its reform program, ministry official Reda Hegazy told Lobna Assal on Al Hayah Al Youm.
  • The US Agency for International Development (USAID) has inaugurated an energy research center at Ain Shams University last week.
  • Egypt’s vocational education gets a boost: Three newly-opened technology universities in New Cairo, Quesna, and Beni Suef form part of government efforts to develop the country’s vocational education system, offering higher academic qualifications, better training, and a closer match with the needs of the labor market, reports Al Fanar.
  • Education Minister Tarek Shawky discussed possibly teaching a Chinese language in Egypt’s primary schools with Beijing’s ambassador to Cairo, El Watan reports. It is unclear if this would be Mandarin or Cantonese.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.07 | Sell 16.19
EGP / USD at CIB: Buy 16.07 | Sell 16.17
EGP / USD at NBE: Buy 16.06 | Sell 16.16

EGX30 (Sunday): 13,494 (-0.9%)
Turnover: EGP 238 mn (67% below the 90-day average)
EGX 30 year-to-date: +3.5%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session down 0.9%. CIB, the index’s heaviest constituent, ended down 1.2%. EGX30’s top performing constituents were Pioneers Holding up 1.8%, Eastern Co up 1.2%, and Orascom Development Egypt up 1.0%. Yesterday’s worst performing stocks were Credit Agricole down 4.3%, Sidi Kerir Petrochemicals down 3.3% and Qalaa Holdings down 2.3%. The market turnover was EGP 238 mn, and foreign investors were the sole net sellers.

Foreigners: Net Short | EGP -877.0 mn
Regional: Net Long | EGP +238.0 mn
Domestic: Net Long | EGP +638.9 mn

Retail: 18.2% of total trades | 28.6% of buyers | 7.8% of sellers
Institutions: 81.8% of total trades | 71.4% of buyers | 92.2% of sellers

WTI: USD 58.94 (-0.44%)
Brent: USD 64.12 (-0.42%)

Natural Gas (Nymex, futures prices) USD 2.22 MMBtu (-5.06%, January 2020 contract)
Gold: USD 1,463.80 / troy ounce (-0.09%)

TASI: 8,098.74 (+2.44%) (YTD: +3.48%)
ADX: 5,043.39 (-0.06%) (YTD: +2.61%)
DFM: 2,693.89 (-0.03%) (YTD: +6.49%)
KSE Premier Market: 6,707.46 (+0.78%)
QE: 10,377.26 (+0.18%) (YTD: +0.76%)
MSM: 4,026.04 (-0.07%) (YTD: -6.89%)
BB: 1,549.43 (+0.14%) (YTD: +15.87%)

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December: Belarus Industry Minister Pavel Utiupin will visit Egypt to discuss means of cooperation in the SCZone and plan for the seventh Egypt-Belarus Trade Meeting.

December: A Chinese automotive company delegation will visit Egypt to sign an agreement with El Nasr Automotive Manufacturing Company.

December: Indian automotive delegation to visit Egypt.

2-13 December (Monday- Friday) The COP25 Climate Change Conference, Madrid

8-9 December (Sunday-Monday): The 6th CEOs Thoughts 2019.

9 December (Monday): Officials from Egypt, Sudan and Ethiopia will convene in Washington to assess progress made during two subsequent round of technical talks on the rules of filling and operating the Grand Ethiopian Renaissance Dam.

9 December (Monday): Egypt’s exports councils will be sitting down with Export Subsidy Fund boss Amany El Wassal to discuss the fine points of implementing the new export subsidies framework, and the fund’s plans to settle away bns in accrued overdues.

9-11 December (Monday-Wednesday): Pacprocess Middle East Africa, Egypt International Exhibition Center, Nasr City, Cairo.

9-11 December (Monday-Wednesday): Food Africa 2019 Expo, Egypt International Exhibition Center, Nasr City, Cairo.

10 December (Tuesday): Egypt Automotive summit, Nile Ritz Carlton, Cairo.

10-11 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

11 December (Wednesday): First day of trading on the Aramco IPO (expected).

11-12 December (Wednesday-Thursday): “Forum on peace and sustainability in Africa,” venue TBD, Aswan.

12-14 December (Thursday-Saturday): 16 Egyptian real estate development companies will showcase their products at IPS Riyadh, Riyadh, Saudi Arabia.

12-14 December (Thursday-Saturday): AEEDC Education Cairo dentistry conference and exhibition, Royal Maxim Palace Kempinski Cairo.

14-17 December (Saturday-Tuesday): World Youth Forum 2019, Sharm El Sheikh.

17-21 December (Tuesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

21-22 December (Saturday-Sunday): The irrigation ministers of Egypt, Sudan, and Ethiopia will hold the third round of Grand Ethiopian Renaissance Dam negotiations in Khartoum, Sudan.

26 December (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

January 2020: 2019 Confederation of African Football (CAF) Awards, Albatros Citadel Resort, Hurghada, Egypt.

January 2020: UK-Africa Investment summit, London, United Kingdom.

5 January (Sunday): Postponed lawsuit hearing against Peugeot Automobile filed by Cairo for Development and Cars Manufacturing.

9-12 January 2020 (Tuesday-Sunday): PLASTEX, Egypt International Exhibition Center, Nasr City, Cairo.

13 January 2020 (Monday): The irrigation ministers of Egypt, Sudan, and Ethiopia will hold the fourth and final round of Grand Ethiopian Renaissance Dam negotiations in Washington, DC.

25 January 2020 (Saturday): 25 January revolution anniversary / Police Day, national holiday.

25 January 2020 (Saturday): Midterm break for public schools and universities. Also known as: Two weeks of good commute.

February 2020: An Italian business delegation will visit Egypt to discuss investments in the Port Said industrial zone.

February 2020: A delegation of Swiss businesses will visit Egypt to discuss investment.

February 2020: Higher Education Minister Khaled Abdel-Ghaffar will visit Minsk, Belarus.

1 February 2020 (Saturday): The administrative court will look into an appeal by Adeptio AD Investments against a Financial Regulatory Authority to submit a mandatory tender offer (MTO) for Americana Egypt.

8 February 2020 (Saturday): Midterm break ends. Traffic in Cairo stinks once more.

11-13 February 2020 (Tuesday-Thursday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

March 2020: The Middle East and North Africa Financial Action Task Force (MENAFATF) will visit Egypt to assess the progress of actions taken to combat money laundering and terrorist sponsoring activities.

1 March 2020: A conference on “logistics and its impact on the movement of goods and industry,” venue TBD, Alexandria.

4-5 March 2020 (Wednesday-Thursday): Women Economic Forum, Cairo.

25-26 March 2020 (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

23 April 2020 (Thursday): First day of Ramadan (TBC).

23-26 May 2020 (Saturday-Tuesday): Eid El Fitr (TBC).

5-7 May 2020 (Tuesday-Thursday): AFSIC – Investing in Africa, London, United Kingdom.

30 June 2020 (Sunday): June 2013 protests anniversary, national holiday.

November 2020: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

30 July 2020-3 August 2020 (Thursday-Monday): Eid El Adha (TBC), national holiday.

19-20 August 2020 (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

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