CI Capital says Banque Misr’s acquisition offer is underpriced

Good morning, ladies and gentlemen, and welcome to a pleasantly brisk news day in which no single story driving the news cycle here at home or abroad.

It’s International Women’s Day. This year’s theme for the day is “choose to challenge,” wherein individuals and organizations are encouraged to “challenge inequality, call out bias, question stereotypes, and help forge an inclusive world.”

*** CATCH UP QUICK with the top stories from yesterday’s EnterprisePM:

• Foundation Ventures is eyeing investments worth EGP 30 mn this year from its inaugural EGP 100 mn Egypt-focused fund, Managing Partner Omar Barakat told us.
• Egypt's foreign reserves grew by almost USD 100 mn last month, reaching USD 40.2 bn by the end of February.
• 16 Egyptian CEOs and business leaders have made Forbes' 2021 list of top 100 CEOs in the Middle East.

WHAT’S HAPPENING TODAY-

The Senate will resume its plenary sessions today. On the agenda: Setting up the upper chamber of parliament’s 14 committees and electing the leadership of each, according to Ahram Gate. Each of the Senate’s 300 members is required to sit on at least one committee. Among them: constitutional and legislative affairs, financial, economic and investment, foreign, Arab and African affairs, as well as defense and national security. The members have already filed their preferred assignment with Senate President Abdel Wahab Abdel Razek.

What should we expect from the Senate? Under its bylaws — which were ratified last week — the chamber is responsible for voting on bills referred to it by the House of Representatives or the president, approving government policy, and ratifying international treaties. It will also sign off on any future amendments to the constitution.

ARE YOU RUNNING A TECH STARTUP? Today is your last chance to apply for The Next Web’s Hangout with VCs, which in partnership with ITIDA is looking to match 25 Egyptian tech startups with international VCs. TNW, a Financial Times company, says the event will “bring together top investors and pre-selected ready-to-fund startups in a unique and compelling format.” You can learn more here or apply here.

Saudi Arabia is trying to transform a patch of desert into a “metropolis powered by renewable energy” as the kingdom aims to become a global hub for green hydrogen and transition into being a supplier of non-polluting fuels, according to Bloomberg Green. Saudi is planning to build a USD 5 bn solar and wind plant that will act as a less-polluting alternative to hydrocarbons while being among the world’s biggest green hydrogen makers when the plant opens in the Neom megacity in 2025. Even with Saudi’s competitive advantage of perpetual sunshine, skeptics point to Saudi Arabia’s weak track record of implementing planned projects in the renewables sector.

Demand for hydrogen has escalated in the past period, with the European Union alone committing USD 500 bn for the element to scale up its infrastructure. Meanwhile, BloombergNEF estimates the hydrogen market could be worth as much as USD 700 bn by 2050.

What do can one do with lots and lots of hydrogen? The gas can be used to make fertilizers, methanol and in refining processes — and it’s being tipped as a clean-burning energy of the future in everything from trains and planes to cars and city buses.

SIGN OF THE (CREEPY) TIMES- Passing through DXB? No need for a passport — just bring your eyes. Dubai International Airport (DXB) has officially rolled out a smart travel system that allows passengers to travel without using their identification papers, by combining databases from Emirates Airlines and the Dubai Health Authority. The system uses biometric technology that relies on a mix of facial and iris recognition, and means travelers can check in for their flight and pass through immigration — as well as present digital verification of their covid-19 medical records — without any paperwork or phone apps.

SIGN OF THE TIMES #2- “Vaxications” are now an emerging trend as the thirst for travel has people jumping on a plane for a post-vaccine vacation as the global rollout continues and after months of travel restrictions. Travel agencies are riding the pent-up demand for vaxications, which made its presence known with booking rates jumping to 80% since January after “hovering around 35 to 45%,” Ted Martens, chief marketing officer at wildlife travel operator Natural Habitat Adventures, tells Bloomberg.

Just don’t get caught jumping the queue — the head of one of the world’s biggest investors lost his job recently when it was revealed that he had flown off to Dubai to get jabbed.

CIRCLE YOUR CALENDAR-

It’s the penultimate day of the EFG Hermes Virtual Investor Conference. The conference is headlined as “Frontier Emerging Markets Regaining Momentum” and brings together executives from 197 companies and more than 700 investors from 253 global institutions to exchange insights on the current state of frontier and emerging markets.

Key data points in the coming days and weeks:

• Inflation data will drop on Wednesday, 10 March.
• The Central Bank of Egypt will discuss interest rates on Thursday, 18 March.

You have until month’s end to file your personal taxes: The Tax Authority is reminding individual taxpayers to file their income tax and property tax returns through the electronic filing system before 31 March. Property taxes can be paid online or at any tax office. Most folks with day jobs pay taxes through payroll deductions made and remitted by their employers, but everyone needs to pony up for income from side gigs and the like. D-day for corporations is the end of April.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

*** 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 some of the best recently-released documentaries about the business of education, which tackle pressing issues about education privatization, quality and accessibility at a global level. These include the US debate about whether public funds should be directed to charter schools or public schools, how tech innovations in South Korea are increasing access to quality education, soaring university debt in the US and China, and how universities throughout Africa could better prepare graduates for employment.

Egypt will get its hands on the 8.6 mn doses of the Oxford / AstraZeneca vaccine from the WHO’s Gavi/Covax initiative within the next few weeks, presidential health advisor Mohamed Awad Tag Eldin said, according to the local press. The shipment appears to be delayed, after originally being scheduled to arrive last week, Health Minister Hala Zayed previously said. We are set to receive 40 mn doses of AstraZeneca’s vaccine this year, according to Zayed.

Egypt has so far received a total of 400k vaccine doses, including 350k from China’s Sinopharm vaccine and the remainder from AstraZeneca. We’re also expecting another 300k doses of the Sinopharm jab in the near future, which China is sending over as a gift, China’s ambassador to Egypt said last week.

Other vaccines now in the pipeline for emergency use in Egypt include Russia’s Sputnik V and the Johnson & Johnson’s single-shot jab, Tag Eldin said.

The Health Ministry reported 581 new covid-19 infections yesterday, down from 588 the day before. The ministry also reported 41 new deaths, bringing the country’s total death toll to 10,995. Egypt has now disclosed a total of 186,503 confirmed cases of covid-19.

Israel is lifting most of its lockdown measures just in time for its upcoming parliamentary elections. With around 40% of the Israeli population now inoculated against covid-19, the government reopened much of the economy yesterday including diners, attractions, and hotels, and is due to hold the elections in a little under three weeks, the Associated Press reports.

CI Capital has rejected an offer by Banque Misr to acquire a 90% stake in the company. The state-owned bank last month made the offer at EGP 4.70 per share, valuing the company at some EGP 4.7 bn, but in a disclosure (pdf) submitted to the EGX yesterday, CI’s board of directors said that the offer was too far below the valuation reached by its financial advisor Baker-Tilly Wahid Abdel Ghaffar & Co.

What does the market think CI Capital is worth? CI Capital’s shares closed yesterday at EGP 4.58 per share and have been trading in that band since Banque Misr said it wanted to hike its stake in the company to 90%. Sell-side analysts have set target prices for the share in the EGP 5 range, including EGP 5.00 (Pharos), EGP 5.20 (Prime) and EGP 5.47 (HC). (Background here and here, for any of you who want to dive a bit deeper)

What does Banque Misr want? Banque Misr currently owns a 24.7% stake in the financial services firm and now wants to purchase an additional 653 mn shares, giving it 90% ownership. Banque Misr became CI Capital’s largest shareholder last August when it acquired an additional 11% stake.

What is CI Capital asking for? CI is asking that the bank raise its offer price by 19% to EGP 5.60 if it wants to acquire a 90% stake. Baker Tilly’s fair value report priced the company’s shares at EGP 5.60 apiece in case of snapping up more than 51% of shares, and at EGP 5.73 if buying up to 51%, valuing the firm anywhere between EGP 5.6-5.73 bn. Banque Misr has previously resisted market pressure to bump up its offer.

IN OTHER M&A NEWS-

Tourism developer Remco is fielding an offer from an unnamed bidder for its 99.95% stake in Orient Tours. Shareholders will be asked to vote on the offer (pdf) at a meeting to be held 10 March (this Wednesday). Remco’s stake in Orient Tours is worth around EGP 1.09 bn according to a valuation by Solid Capital Financial Advisory.

Egypt is among the countries that stand to benefit the most from an IMF proposal to earmark another USD 500 bn in Special Drawing Rights (SDRs) — the IMF’s artificial currency made up of unequal parts USD, EUR, RMB, JPY, and GBP, Barclays said in a note yesterday, according to Bloomberg. The business information service says the SDRs could help countries including Bahrain, Saudi Arabia and South Africa cushion their FX reserves. Emerging market countries would only account for USD 206 bn of the new allocations at most, according to Barclays.

Egypt’s foreign reserves are inching back up to their February 2020 peak, when they had reached USD 45.5 bn. Central bank figures released yesterday showed our reserves are currently at USD 40.2 bn.

What exactly are SDRs, again? SDRs act as a kind of international reserve currency or asset designed to act as a supplement to IMF member countries’ reserves. They were created in 1969 to create an alternative to gold and USD as the only two global reserve assets. While not currencies in themselves, SDRs are held by the fund’s member countries as a way to hedge against their reliance on costly debt to build up stocks of foreign reserves.

Background: The potential new SDR allocation was first floated by the UN a year ago, when emerging markets began running to the IMF for emergency assistance as the reality of the covid-19 economic crisis began to settle in. The Trump administration shot down a proposal for the new issuance last April, saying it would actually not be beneficial for the countries that need it most. Former US Treasury Secretary Steven Mnuchin suggested at the time that, because SDRs are allocated based on shareholding proportions, G20 countries would actually get the vast majority of the new SDRs, while the poorest developing countries would only get around 3%. Current Treasury Secretary Janet Yellen recently came out in support of the issuance, but called for new parameters to ensure the transparent use of the Fund’s reserves.

We have a smattering of debt + finance news to take note of this morning:

Non-banking financial services provider GlobalCorp plans to double its lending portfolio to EGP 6 bn this year. The Ezdehar-backed lender will ramp up its factoring and leasing services to companies in the construction, health, food and education sectors, and plans to have SMEs make up 30% of its portfolio by the end of 2021.

Payroll management company NowPay has lined up financing from Export Development Bank of Egypt for its salary advance product, the company said in a statement last night (pdf). The two parties have a memorandum of understanding that funding will also be earmarked for other, unspecified products, NowPay said. The startup has so far managed over USD 200 mn in salaries and has signed on corporate clients including SODIC, Wadi Degla, Domty and Axa. NowPay, founded in 2019 to help employees manage their finances and organize advance salary payments, raised USD 600k in a seed funding round led by Endure Capital and 500 Startups. The company also raised another USD 2.1 mn in seed funding last year from a group of Egyptian, US, UAE and Chinese investors led by Foundation Ventures and Endure Capital.

Etisalat Egypt has borrowed USD 160 mn to fund the purchase of new cellular spectrum from a syndicate of four UAE banks: Emirates NBD, Abu Dhabi Commercial Bank, Mashreq Bank, and First Abu Dhabi Bank. Etisalat bought two 10-MHz bands for USD 325 mn in an auction run in September by the National Telecommunications Regulatory Authority. Vodafone Egypt and Telecom Egypt had also snapped up new cellular frequencies in the sale, with Vodafone buying two 20-MHz bands for USD 540 mn and TE buying two 10-MHz bands for USD 305 mn.

The talking heads had real estate taxes at the top of their agendas last night, after the Egyptian Tax Authority issued a reminder yesterday that personal tax filings are due before 31 March.

Taxes themselves aren’t due yet: For now, property owners need to head to their local ma’moreya with a tax filing before the deadline, or else face a late fee, Real Estate Tax Authority spokesperson Nagi Sergani told Al Hayah Al Youm’s Mohamed Sherdy. You don’t have to go to a ma’moreya in the same governorate or neighborhood where your property is located, Sergani noted. Filings must include the property owner’s personal information, as well as the property’s total area or size, its location, and its proximity to services, all of which factor into the asset’s appraisal, according to Sergani. The authority will then inform property owners of how much they owe in early 2022 (watch, runtime: 4:44).

So how much is everyone going to pay when it’s time? Homeowners whose property is valued at less than EGP 2 mn are exempt from paying the real estate tax, Sergani told Kelma Akhira’s Lamees El Hadidi. Homeowners whose property is valued anywhere between EGP 2-2.5 mn will owe EGP 120 in taxes each year, while homes valued at EGP 2.5-3 mn will be taxed at an annual rate of EGP 700. Homes valued at EGP 3 mn or more will be taxed EGP 1,380 annually (watch, runtime: 3:56). Factories aren’t eligible for tax exemptions, but they will be able to pay in instalments to make things easier, Sergani told Lamees.

The Tax Authority needs to run advertisements on television channels — rather than newspapers — to remind taxpayers that payments are due well ahead of the deadline, argued El Hekaya’s Amr Adib. The ads should explain how and where to pay the taxes, as well as provide a breakdown of exactly how much is owed (watch, runtime: 1:24).

Elsewhere: A proposed new amendment to the Water Resources Act would impose a EGP 250k fine for disposing of garbage or any kind of polluting waste in the Nile, water canals, lakes, or other waterways in the country, undersecretary of the House Suggestions and Complaints Committee Hisham Hussein told Ala Mas’ouleety’s Ahmed Moussa (watch, runtime: 12:41). The Act is currently under discussion at the House of Representatives, and is expected to unite disparate laws on water into a single bill, and will introduce stricter penalties for water waste, while addressing pollution, dwindling resources, and climate change issues.

Also on the airwaves last night:

• Egypt and Sudan found plenty of common ground in their discussions on the Grand Ethiopian Renaissance Dam during President Abdel Fattah El Sisi’s visit to Khartoum over the weekend, Foreign Minister Sameh Shoukry said. (Eman El Hosary on Masaa DMC | watch, runtime: 16:08)
• EgyptAir has no intention to lay off any of its staff as part of the holding company’s restructuring plans, Chairman Roshdy Zakaria said. (Osama Kamal on 90 Minutes | watch, runtime 11:43)

It’s a quiet morning for Egypt in the foreign press. A couple of headlines to skim:

• Farmers in Upper Egypt are harvesting sugarcane, a job that pays little but provides a critical source of income. (Xinhua)
• Egyptian women who took part in the 25 January revolution to fight for their rights are commemorated in honor of the UK’s Month of Women. (BBC)

Winter tourism looks like it’s picking up: Emirates is operating a second daily A380 flight (pdf) between Dubai and Cairo as of yesterday due to high demand, signaling a pickup in demand for Egypt from Gulf and Asian tourists. The news comes as Avion Express operated yesterday its first-ever flight between Lithuania and Sharm El Sheikh, as part of its plans to run weekly direct flights to the Red Sea destination for six weeks during March and April, according to a Cabinet statement.

Property consultancy Savills Egypt is leasing 18.5k sqm to Iwan Developments for three of its flagship developments in Sheikh Zayed: Atrio, Nine Yards, and E-Plaza, according to a statement (pdf).

A handful of international news worth knowing this morning:

• Lebanon crisis: Lebanon’s caretaker PM Hassan Diab urged politicians to compromise and form a new government capable of securing international aid, warning that the collapsing currency will plunge the country into chaos, the Associated Press reports.
• US-China: The US is organizing the first ever “Quad” summit with Japan, India and Australia this week, a sign that the loose alliance is stepping up efforts to contain China’s rise in Asia, Nikkei Asia says.
• Yemen: Saudi Arabia has blamed the Biden administration’s decision to revoke its designation of the Houthi movement as a terrorist organization after at least eight drones were launched at the kingdom by the Iran-aligned militia, Bloomberg reports.
• Switzerland: A far-right proposal to ban face coverings is now law in Switzerland after narrowly surviving a binding referendum, Reuters reports. The proposal was ostensibly put forth to stop violent street protesters from wearing masks, but also means burqas are now illegal.

IN DIPLOMACY: Implementing the permanent ceasefire reached between Libya’s two warring factions, which mandates the withdrawal of all foreign troops and mercenaries from the country, was the main topic of discussion between Foreign Minister Sameh Shoukry and UN Special Envoy for Libya Ján Kubiš, according to a statement. Shoukry and Kubiš met yesterday in Cairo to discuss developments in our neighbors to the west.

March: Potential visit to Cairo by Russian President Vladimir Putin.

8 March (Monday): The IDC Future of Work Egypt conference will be held virtually featuring experts from Egypt and Jordan.

9-11 March (Tuesday-Thursday): EduGate 2021 – Enter The Future conference, Kempinski Royal Maxim Hotel, Cairo, Egypt.

11-12 March (Thursday-Friday): Sudan’s Prime Minister Abdalla Hamdok will arrive for a two-day visit to follow up on GERD talks.

11-13 March (Thursday-Saturday): Cairo Fashion & Tex trade show, Cairo International Convention Centre, Cairo, Egypt

11-14 March (Thursday-Sunday): First edition of Afaq Real Estate Expo, Tolip El Galaa Hotel, Cairo, Egypt.

11-15 March (Thursday – Monday): Al Bazaar fair for handicrafts and house decors, Cairo International Conference Centre, Cairo, Egypt.

11-20 March (Thursday-Saturday): Photopia’s Cairo Photo Week 2021 will take place with this year’s theme being Depth OFF Field.

18 March (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

23 March (Tuesday): The second edition of the Egypt Retail Summit takes place at the Nile Ritz Carlton hotel.

25-27 March (Thursday-Saturday): The Real Gate real estate exhibition, Egyptian International Exhibition Center, Cairo.

29-30 March (Monday-Tuesday): Arab Federation of Exchanges Annual Conference 2021.

31 March (Wednesday): Deadline to visit the moroor and get an RFID sticker affixed to your car’s windshield — or run afoul of the Traffic Police.

31 March (Wednesday): Income tax deadline for individuals. Real estate tax deadline.

1-3 April (Thursday-Saturday): HVAC-R Egypt Expo.

8-10 April (Thursday-Saturday): The TriFactory’s Endurance Festival at Somabay.

13 April (Monday): First day of Ramadan (TBC).

25 April (Sunday): Sinai Liberation Day.

29 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC),

29 April (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1 May (Saturday): Labor Day (national holiday).

2 May (Sunday): Easter Sunday.

3 May (Monday): Sham El Nessim.

13-15 May (Thursday-Saturday): Eid El Fitr (TBC).

25-28 May (Tuesday-Friday): The World Economic Forum annual meeting, Singapore.

1 June (Tuesday): The IMF will conduct a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

7 June-9 June (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

17 June (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

24 June (Thursday): End of the 2020-2021 academic year (public schools).

26-29 June (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center, Cairo, Egypt.

30 June (Wednesday): 30 June Revolution Day.

1 July: (Thursday): National holiday in observance of 30 June Revolution.

30 June- 15 July: National Book Fair.

1 July (Thursday): Large taxpayers that have not yet signed on on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

19 July (Monday): Arafat Day (national holiday).

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday)

23 July (Friday): Revolution Day (national holiday).

5 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

16 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

7 October (Thursday): National holiday in observance of Armed Forces Day.

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

28 October (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

16 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

27 June – 3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.