Beltone SME looks to raise EGP 1 bn fund by end of 2021

Mondays are typically the quietest news day of the week, and today is no exception. So a pro tip for those of you out there with news to break: Liven up our Mondays by feeding us a big, juicy news tip on a Thursday or Sunday, please? Pretty please?

Food for thought as this covid thing continues: “Work can feel tough for everyone right now, but the right thoughtful gestures from the boss can give employees the boost they need,” the Wall Street Journal suggests. Whether you’re a boss working from home, on some kind of hybrid system or just dealing with the covid-in-fall blues, this one is worth reading.

The IMF and World Bank’s (virtual) annual meetings kick off later today and run until Sunday 18 October. The meetings, headlined “supporting a resilient recovery,” will also focus on human capital, digital development, and poverty. Look for a coordinated response to covid-19 to be on the agenda.

World Bank boss David Malpass praised Egypt’s effort to mitigate economic fallout from covid-19, including our EGP 100 bn stimulus package, during an introductory event ahead of the meetings, reports Ahram Online.

The meetings come as the global economy’s recovery from the covid-19 shock is both frail and uneven, with emerging economies faring significantly worse than advanced economies, according to the latest Brookings-FT Tiger index. Economic data from around the world is now weaker than it has been at any previous recession since the index started tracking global economic recovery, says the Financial Times. This “precarious outlook” will likely be the predominant theme of the annual meetings.

Keep an eye out for the October update of the IMF’s World Economic Outlook, which is due to be released in full tomorrow.

On a related note: Look for corporate earnings in major western markets to be in the tank as we kick off 3Q earnings season. The Financial Times and Wall Street Journal are putting lipstick on the proverbial pig as they cheer projected earnings declines that are just slightly better than originally forecast.

And it could get worse as we gird for the return of the Zombie apocalypse in a new guise: Axios quite presciently warns that market watches should be prepared for a wave of US bankruptcies and insolvencies when the Trump administration and the Federal Reserve withdraw their covid measures. Zombie firms kept on life support by emergency fiscal and monetary policies are going to come under plenty of pressure.

TRIAL BALLOON- Egyptian citizens may be required to show proof of health insurance when applying for a passport after Financial Regulatory Authority Deputy Chairman Reda Abdel Moaty floated the idea at the Regional Forum for Medical Insurance and Healthcare that kicked off yesterday, according to Hapi Journal. Insurance would have to be proven valid for the entire period a passport is valid, under Abdel Moaty’s proposal.

The foreign ministers of Jordan and Iraq will be in town tomorrow for talks with Foreign Minister Sameh Shoukry on unspecified agreements signed in Amman last August, Iraqi state news agency Assabah reported. The Iraqi delegation will also be sitting down with Egyptian officials to organize a meeting of Egypt and Iraq’s prime ministers in Baghdad soon.

Meanwhile, rival Libyan factions are due to wrap tomorrow political consultations here in Cairo on charting a “constitutional path” towards a political settlement and presidential and parliamentary elections in the civil war-torn country, according to a local press report and a report by the State Information Service. The talks pave the way for UN-led efforts to launch a Libyan Political Dialogue Forum, which will feature virtual meetings starting 26 October, and face-to-face talks next month in Tunisia.

Three direct Alexandria-Dubai flights are now on national flag carrier EgyptAir’s weekly flight schedule, Dubai’s airport said in a statement carried by Mubasher.

The Health Ministry reported 129 new covid-19 infections yesterday, up from 125 the day before. Egypt has now disclosed a total of 104,516 confirmed cases of covid-19. The ministry also reported 11 new deaths, bringing the country’s total death toll to 6,052. We now have a total of 97,688 confirmed cases that have fully recovered.

The virus that causes covid-19 can live for weeks on banknotes, glass, and other common surfaces, according to research by the Australian Centre for Disease Preparedness picked up by Bloomberg. The virus remains infectious on these surfaces for 28 days, compared to 17 days for the virus that causes the regular flu. The research also found that warm temperatures kill the virus faster — just in time for the winter season.

Inhaled covid-19 vaccines may prove superior to injections: Researchers in the US, UK, and Hong Kong are developing inhaled vaccines as a potentially more effective covid-19 treatment than conventional jabs, according to Bloomberg. The theory is that by targeting the nose and mouth, inhaled vaccines stand a better chance of preventing infection than injections, which scientists still aren’t sure can protect people from the virus.

The year’s biggest banking M&A just happened in KSA: Saudi’s National Commercial Bank (NCB) agreed to buy out rival Samba Financial Group for USD 15 bn, according to Bloomberg. NCB will now be the Gulf’s third-largest lender with more than USD 220 bn in assets and a market capitalization of USD 46 bn.

iSheep will be looking forward to the unveiling of as many as four new iPhones at Apple’s virtual “Hi, Speed” event tomorrow, which you can stream live here. Expect it to be the “most significant iPhone event in years,” CNBC says. Meanwhile, Nikon and Fujifilm are unveiling mirrorless cameras this week: Nikon’s much-awaited ZG II and Z7 II cameras should make their debut on Wednesday and Fujifilm’s X-S10 midrange mirrorless camera — which was leaked over the weekend — will also be unveiled this week.

And for the squash geeks among you: The CIB Egyptian Squash Open, which kicked off on Saturday, runs until next Saturday at the New Giza Sporting Club and the Pyramids of Giza. It’s the first “platinum” level tournament since the PSA World Tour returned after a six-month break thanks to covid-19. Check out coverage on The Squash Site as well as the Egyptian Squash Federation’s site.

Elsewhere in racket sports: Rafael Nadal won his 20th Grand Slam men’s singles title yesterday, beating Serbian rival Novak Djokovic at Roland Garros, reports Reuters. The Spanish star — widely hailed as the king of clay courts — is now tied with Roger Federer for major tennis titles after handing a resounding defeat to Djokovic at the French Open.

Also from planet sports: The LA Lakers beat the Miami Heat yesterday to clinch the 2020 NBA Championship title — their 17th championship to date and their first NBA title since 2010. Yesterday’s win ties the Lakers with the Boston Celtics for the most NBA titles in the league’s history. LeBron James was also named the NBA Finals MVP for the fourth time in his career.

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.

In today’s issue: We look at the regulations and resources that Egypt needs for its push towards fully-online degrees to be successful.

The country’s ballooning population and its effect on development led the conversation on the airwaves last night after Prime Minister Moustafa Madbouly addressed the topic at a cultural symposium. The rate of population growth has far outpaced the rate of urban development over the past 70 years, Madbouly noted. While Egypt’s population has increased 400% between 1950 and 2020 (from 19 mn to 101 mn), the country’s inhabited area has barely doubled over the same period, which has led to soaring density in settled areas, the prime minister said (watch, runtime: 1:28).

The disparity between population growth and urban development rates is a result of a lack of strategy to handle the shifting demographics for years, which has in turn increased the strain on the country’s economic resources to keep up with the current situation, Deputy Health Minister Tarek Tawfik told Al Hayah Al Youm’s Lobna Assal. Tawfik stressed that government investments in infrastructure must be increased to keep up with population growth levels (watch, runtime: 19:49).

Also from the symposium: President Abdel Fattah El Sisi spoke about the government’s efforts to raise citizens’ standard of living, and warned viewers that Egypt has “enemies” who are trying to destabilize the country by sowing dissatisfaction among its people (watch, runtime: 4:49). Ala Mas’ouleety’s Ahmed Mousa took note of the president’s speech (watch, runtime: 2:03).

Former US Secretary of State Hillary Clinton’s emails were also a major talking point on the airwaves last night after current Secretary of State Mike Pompeo said earlier this week he would release them to the public just weeks ahead of the presidential election. Kelma Akhira’s Lamees El Hadidi noted that the move is a political maneuver to boost US President Donald Trump’s ratings (watch, runtime: 6:15). El Hekaya’s Amr Adib (watch, runtime: 14:14), and Ahmed Moussa (watch, runtime: 4:23) also took note of the saga.

Elsewhere, authorities decided to demolish an Andalusian lighthouse in Alexandria’s Agami to make way for a five-lane bridge as a means of reducing congestion, Alexandria Governor Mohamed El Sherif told Lamees. Although the decision was met with criticism, the lighthouse is not a heritage site or cultural monument, having been built just two decades ago, El Sherif stressed (watch, runtime: 5:49).

Beltone SME will launch a EGP 1 bn investment fund by the end of 2021, Beltone Financial Holding CEO Ibrahim Karam told Al Mal. The fund will spend the next year lining up commitments from investors and has already logged interest from both local and international institutions, Karam said. Beltone SME, set up in April, offers a revenue-based financing scheme for SMEs. It is currently working on financing 3-4 SMEs operating in the agricultural and industrial sectors, and aims to increase its capital to EGP 100 mn in the coming year.

Beltone SME is one of three non-banking financial services arms for which the parent company received licenses this year. These include its consumer finance arm Bel Cash, which is targeting a EGP 400 mn portfolio, and a financial leasing company eyeing a first-year portfolio of EGP 600 mn. Beltone expects non-banking financial services to contribute 30-40% of its revenue over the next three years. Beltone has been in search of new revenue streams after making losses for the past 2.5 years.

Check out our interview with Beltone SME co-founder and CEO Yehia Ashour as part of our Work From Home Routine series here.

M&A WATCH- El Saidy Tobacco has acquired Americana Egypt subsidiary International Tobacco, Prime Holding — which managed the transaction and acted as Americana’s financial advisor — said in a press release (pdf). El Saidy Tobacco’s CEO Hamada El Far said the acquisition of International and its ElHennawi Tobacco brand represented “a strong addition” to the company’s portfolio. The value of the transaction was not disclosed. El Saidy, which employs some 2.5k workers, set up shop in Mansoura 15 years ago and has a second factory in Menofia.

M&A WATCH- Six buyers are reportedly bidding for a stake in Makkasa Sport, the owner of Misr Lel Makkasa Sporting Club, the local press reports. Makkasa Sport Chairman Amr Mostafa Kamel, whose resignation last week is still under consideration, has made an offer through his company I Friends Sport to buy 100% of the company for EGP 100 mn and take on its EGP 80 mn in debt. Other bidders reportedly include an unnamed Emirati-British company and an unnamed Kuwaiti investor, each of which are believed to be making bids in the EGP 50 mn range. At least two other Egyptian groups are also said to be in the running, the report claims.

Sale within a month? Misr for Central Clearing, Depository and Registry (MCDR), which owns 71% of the company, could make a decision on the sale within a month

Background: We had previously reported that both Turki Al Shikh (the Saudi investor and former owner of Egyptian club Pyramids FC) state-owned Estadat were also in the running to acquire part or all of MCDR’s stake in Makkasa Sport. MCDR subsidiary the International Project Management Company owns 14% of Makkasa Sport, while real estate developer Cairo Capital, Al Ahli for Development and Investment and a number of individual shareholders own the remaining 15%. MCDR abandoned its plans to IPO Makkasa Sport earlier this year in a bid to focus its strategy.

Speed Medical, Prime Speed to invest EGP 150 mn opening new branches through labs joint venture: Lab and diagnostic testing company Speed Medical (SPMD) and Prime Speed Medical Services — in which SPMD holds a 30% stake — are setting up a new lab outfit, Masr Labs Company for Medical Services, SPMD said in an EGX filing (pdf). The joint venture will invest EGP 150 mn to open 100 branches over the coming year, with an eye to increase its total branch count to 200 by 2022. Prime Speed and SPMD will each hold a 30% stake in the company while the remaining 40% will be placed with outside investors. SPMD is also planning to spend EGP 200 mn to increase its branch count to 200 by the end of 2022.

REGULATION WATCH- Insurance companies will now be required to hold 1% of assets in reserve after the Financial Regulatory Authority (FRA) yesterday introduced new capital requirements designed to protect insurers against risks associated with applying the new Egyptian Accounting Standards (EAS), the regulator said in a statement yesterday. Due to come into force between January and July 2021 (depending on the company’s fiscal year), the EAS 47 standard will require insurers to set aside more capital as loan loss provisions, a move that could potentially put pressure on companies’ balance sheets. To guard against this, the FRA has instructed insurers to hold reserves equivalent to 1% of assets and net profit reported in FY2019-2020. Insurers are expected to put aside EGP 1.2 bn in reserves as a result of the changes.

New capital requirements coming for other NBFS? The regulator is looking at ways to manage the risks associated with the EAS for other non-banking financial services activities, the statement said without providing further details.

In other insurance news: State-owned Misr Insurance is in the final stretch of setting up a new financial leasing and factoring arm as it looks to expand into other non-banking financial services, Misr Insurance chairman Basil El Hini told Hapi Journal.

Annual core inflation rose to 3.3% in September from 0.8% in August, while monthly core inflation rose to 0.1% from -2.3% the previous month, the Central Bank of Egypt said yesterday (pdf). Core inflation strips out volatile items such as food and fuel. We reported in more detail yesterday the headline figures released by Capmas over the weekend.

STARTUP WATCH- Egyptian delivery startup Dreevo has secured a six-figure USD pre-seed investment from EF Logistics, allowing it to launch operations yesterday in 22 of Egypt’s 27 governorates, the company announced in a statement. The startup will use the funds to expand its services in Egypt and enter new regional markets. Dreevo provides delivery services for e-commerce businesses through its app and website.

EARNINGS WATCH- Egypt Aluminum recorded EGP 1.67 bn of losses in FY2019-20, a year after turning a EGP 571 mn profit, the company said in an EGX filing, citing increased production costs, the appreciation of the EGP, and the global price on the London Metal Exchange. This comes a few days after the US imposed a 10.42% tariff on Egyptian aluminum imports after finding that exporters were engaging in dumping.

QNB AlAhli’s net profits fell 20% y-o-y in 3Q2020 to EGP 1.8 bn, according to the company’s financial statement (pdf). The bank recently said that covid-19 has “overshadow[ed]” its operations this year, pushing down its profits.

Zooba is as Egyptian as you can get: When Chris Khalifa founded Zooba, his goal was to bring global recognition to Egyptian street food without compromising its authenticity. First he had to overcome local suspicions that associated street food with poor hygiene, but today that vision pays off with seven branches across Cairo, a franchise agreement in the GCC, and a new restaurant in the heart of New York.

You already have a podcast player on your iPhone, or you can listen to the episode through our website (no download required). We’re also on Google Podcast | Anghami | Omny. Making It is on Spotify, but only for non-MENA accounts.

It’s a rather quiet morning for Egypt in the foreign press. Al Monitor writes that Ethiopia banning flights above GERD might further exacerbate tensions with Egypt, while the National takes note of social media commentary on the recent discovery of 59 sarcophagi, which the more superstitious among us believe could hold a curse.

Wall Street is doubling down on China’s USD 47 tn financial market despite ongoing rhetoric to cut ties with Beijing: While the US and China are butting heads over technology and trade, Wall Street kingpins JPMorgan and Goldman Sachs are going long on Beijing, buying up office space and expanding their headcounts. Tempted by the largest untapped pool of capital in the world, the US financial institutions have become increasingly bullish on China since the signing of the phase one trade accord in January, which allowed foreign firms to manage funds for any investor and hold a majority stake in Chinese companies, explains WSJ Finance Jin Yang (watch, runtime: 05:16).

It’s not all smooth sailing: US firms have to compete with well-established Chinese firms, the top eight of whom have a 40% share in the domestic securities market. US firms also have to comply with restrictions such as a new cybersecurity law which requires foreign firms to keep clients data inside China, leaving them susceptible to Chinese government security checks as well as forcing them to balance a different set of data protection and ethics for clients at home versus in China. Then there’s the risk of following HSBC into the political crosshairs.