From Aldar’s SODIC bid to the World Bank’s Egypt growth projections, it’s a really busy news day

Good morning, friends. There’s not a gram of fat in this morning’s issue — it’s a heavy news day with lots of business news pushing the latest on covid-19 far down our priority list, so let’s jump right in.

Oh, and the rest of the month is looking really, really busy from where we sit right now:

We could be getting the third and final tranche of our USD 5.2 bn standby loan from the IMF later this month, Finance Minister Mohamed Maait told Kelma Akhira’s Lamees El Hadidi last night (swatch, runtime: 25:14), though Maait cautioned that the Fund has not decided on an exact release date. Egypt isn’t listed on the IMF executive board’s agenda, which has a 10-day look-ahead. The Fund reached a staff-level agreement on disbursing the USD 1.6 bn tranche last month.

French Finance Minister Bruno Le Maire is due in Cairo on Saturday 12 for meetings starting the following day, the office of French Ambassador Stéphane Romatet tells us. The visit comes as a delegation of 18 French companies conclude today a three-day visit to Cairo during which they talked investment and partnership with Egyptian private sector firms and international financial institutions in an event organized by Business France.

Investment at the top of Le Maire’s agenda, with transport, energy, water management and healthcare all looking interesting.

France has big plans to up its investment in green energy here and support our hydrogen ambitions, Romatet told us in yesterday’s Going Green. France and Egypt last month concluded a multi-bn USD arms sale that will see Egypt buy 30 Rafale fighter jets. Le Maire had been scheduled to visit Egypt in February.

Details of a new export subsidies program are due to be unveiled in days, Trade Minister Nevine Gamea told reporters yesterday. The program will have a focus on Upper Egypt and the SC Zone. Cabinet will approve a budget for the program this week and the program could come into effect as early as the start of FY2021-2022 on 1 July, Gamea said without giving further details.

Palestinian leaders arrived in Cairo yesterday as talks to maintain the Hamas-Israel ceasefire continue, Hamas spokesman Hazem Qassem said, according to Reuters. The visit is a precursor to a larger gathering in Cairo of Palestinian factions that could take place as soon as next week, Qassem added.

The Central Bank of Egypt will launch an electronic clearing system for foreign currency cheques between banks that is expected to speed up interbank clearing and settlement processes, according to a statement (pdf). The system will go live on 14 June.

The government will announce details of its new structural reform program by the end of July, Hapi Journal reports, quoting Planning Minister Hala El Saeed. Prime Minister Moustafa Madbouly and El Said first announced the three-year Economic Reform Program 2.0 designed to support private sector-led growth in April.

ALSO:

• Inflation data for May will be released this week.
• Egypt is hosting an Africa Investment Promotion Agency Network forum at the end of this week. The four-day event kicks off on Friday.
• The Egypt Green Economy Forum takes place next Monday, 14 June.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, urban development as well as social infrastructure such as health and education.

In today’s issue: Starting July 1, businesses importing goods at seaports will need to file shipping documents and cargo data digitally via the Advance Cargo Information (ACI) system. We take a deep dive into how it will work, what information you need to get started, and what fees you can expect.

Aldar Properties has until 14 July to submit a mandatory tender offer for at least 51% of upmarket real estate developer SODIC after the Financial Regulatory Authority agreed to extend the deadline by 30 working days following a request by the Emirati real estate firm, the regulator said in a statement (pdf) to the EGX yesterday. The decision will give Aldar more time to complete its due diligence, which the company said it was halfway done with in May. The initial 60-day period was set to expire on 14 June.

The story so far: Aldar submitted in March a non-binding offer for a controlling stake at EGP 18-19 apiece, valuing the company at EGP 6.41-6.76 bn. Sodic’s board later agreed to allow the firm to start due diligence.

Advisors: EFG Hermes and an undisclosed international investment bank have the mandate to advise SODIC, while CI Capital is acting as the investment bank to the buyer.

Are you providing financial or legal advice on the transaction? Let us know at editorial@enterprise.press.

Correction: 14 July 2021. A previous version of this story incorrectly stated that the FRA extended the MTO deadline by one month.

Alexandria Medical Investments subsidiary TAT Medical Services has upped its bid for 100% of Alex Medical Services and is now willing to pay EGP 49.04 per share, up from EGP 45.53 it offered in May, the Financial Regulatory Authority said in a statement (pdf). This would value the company at around EGP 700 mn.

An immediate response: The revised offer comes a few days after Yaz Holding (previously known as Emirates Advanced Investments), the parent company of the UAE’s Global One Healthcare Holding, offered EGP 47.98 per share for at least 51% of Alex Medical.

TAT is now in pole position: Abu Dhabi Commercial Bank (ADCB), which is looking to offload its 51.5% stake in the firm, said in a statement that it has committed to selling its shares to TAT, provided it remains the highest bidder and secures the required approvals. TAT still needs to get the go-ahead for the MTO from the FRA and the Health Ministry.

TAT looks to be a vehicle of Tana Africa. TAT Medical Services is a subsidiary of Alexandria Medical Investments, which is the majority shareholder of Mabaret Al Asafra Hospitals. South African investment firm Tana Africa Capital owns 49% of Alex Medical Investments. Tana was said to be bidding directly for the stake in Alex Medical alongside Mabaret Al Asafra. It is unclear to us who owns the remaining 51% of Alex Medical Investments.

Who else is in the running? Other bidders include Cleopatra Hospital, Nile Scan, healthcare investment firm Seha Capital, and a consortium made up of Saudi’s Tawasol Holdings and Sherif El Akhdar’s LimeVest.

Remind me: Why is ADCB selling? Long story short, this goes back to the collapse of BR Shetty’s Emirati health firm NMC Healthcare, which entered administration last year while engulfed in a fraud scandal. NMC owned a majority stake in Alex Medical, which was handed to creditor ADBC during the fire sale.

CORRECTED ON 9 JUNE 2020-
 A previous version of this story referred to Emirates Advanced Investments as a separate entity from Global One Healthcare. Emirates Advanced, which changed its name in 2018 to Yaz Holding, is the latter company’s parent.

IN OTHER M&A NEWS- The ambitiously named Tycoon Holding submitted a non-binding offer to buy up to 90% of brokerage house ANFI, as the Alexandria National Company for Financial Investments is better known, at EGP 5.55 per share, according to a statement (pdf). This values the company at EGP 29 mn, according to our math.

That’s a long way off the highest bid so far: A group of investors including Egyptian businessman Ahmed El Saba and Saudi Arabia’s Mostafa El Humeidan have offered to acquire 75-90% of the company for EGP 7.48 per share, and are currently doing due diligence. Offers of EGP 5.30-5.51 per share have also been submitted by Zeta Investments, Kayan Sustainable Development, and Zaldi Capital.

Who’s selling? Abu Dhabi Islamic Bank (ADIB) owns 44% of the company through its Egypt unit and ADI Lease subsidiary while El Kahera El Watania Investment owns 41%.

The World Bank has downgraded its growth projections for the Egyptian economy in the coming fiscal year, citing “sluggish” activity as the effects of the covid-19 pandemic linger. In an update to its Egypt forecast, the bank sees GDP growing at a 2.3% clip during the state’s current 2020-2021, down from 2.7% in its January forecast, and expects 4.5% growth in FY2021-2022, a downward revision from 5.8% previously.

The rationale: “High frequency indicators suggest that the economy remains sluggish in the first half of 2021, despite an easing of lockdown restrictions,” the bank said. “The slower growth expected this year reflects damage to tourism, manufacturing, and oil and gas extractives from the pandemic and the lingering impact of a decline in domestic demand, notably from a collapse in fixed investment,” it said.

Finance Minister Mohamed Maait isn’t as glum, telling Kelma Akhira host Lamees El Hadidy last night that while he hadn’t seen the report, the ministry is sticking to its forecast that the economy will grow 2.8% in the fiscal year ending this month — a figure ahead of the bank’s January forecast for Egypt. You can catch the full interview here (watch, runtime: 25:14) or skip down to Last Night’s Talk Shows for more on how Maait dominated the airwaves last night.

The FY2021-2022 figure is the more important of the two: If the World Bank is right, it would mean that we’re waiting another year to return to pre-pandemic growth levels. The bank sees economic growth coming in at 5.5% in FY2022-2023, only fractionally off the 5.6% growth we saw in FY2018-2019.

GLOBALLY- There’s good news and bad news, with the World Bank President David Malpass describing what he terms “an exceptionally strong but uneven recovery.”

The global economy is expanding at its strongest post-recession pace in 80 years: The World Bank is now predicting the global economy to grow at a 5.6% clip this year, a significant 1.5% upgrade from its January forecast, mainly thanks to successful vaccine rollouts and huge fiscal stimulus measures in a small number of wealthy economies.

But the situation in emerging markets and developing economies remains highly uncertain, with a lack of vaccine access, an inability to sustain stimulus programs and high debt levels continuing to weigh on economic recoveries. To avoid a K-shaped recovery on a global scale, Malpass calls on advanced economies to provide vaccines to developing nations, and agree new debt relief measures.

READ THE FULL REPORT: Tap / click here for the landing page or download it directly here (pdf).

ON THE BRIGHT SIDE- Remittances are looking up: Egyptian expats sent USD 23.4 bn back home between January and March this year, up almost 9% from USD 21.5 bn in 3Q FY2019-2020, Hapi Journal reports, citing a central bank statement. On a monthly basis, remittances from foreign workers increased 11% y-o-y to USD 2.9 bn, compared to USD 2.6 bn in the same month last year.

The Finance Ministry wants to go forward with a USD 2 bn sukuk issuance at the beginning of the next fiscal year in July, marking the first time ever that Egypt has issued sharia-compliant sovereign debt, Finance Minister Mohamed Maait told Al Arabiya in an interview yesterday.

The caveat: Nothing is certain here. Maait was careful to say that, cautioning that while the ministry is aiming to quickly pull the trigger on a USD 2 bn issuance, the exact size and timing is yet to be finalized. "Many issues that have not been resolved yet," Maait said, referring to the creation of a sukuk company and formation of a sharia compliance committee.

The House will likely be the next party to pull the trigger on this story: The Sovereign Sukuk Act — which will put the legal framework in place to allow the government to sell sukuk — is yet to pass the House and be signed into law. One MP said this week that a final vote on the bill should take place later this month before the start of the new fiscal year. After that, the bill will need to be ratified and the executive regulations in a maximum of three months.

ALSO FROM MAAIT-

GOOD NEWS- Foreign holdings of Egyptian debt haven’t changed much over the past three months: Holdings of bills and bonds stood at between USD 28-29 bn at the end of May, Maait revealed yesterday. This is little changed from mid-February when inflows reached a record high of USD 28.5 bn.

More green bonds on the horizon? Maait refused to rule out sovereign green bond issuance in FY2021-2022 (it would be the country’s second), but said that “the matter is not settled yet.” If it goes ahead, the issuance would be comparable in value to the maiden USD 750 mn issuance held last year, he said.

What about “sustainable development bonds”? Two UN member states have suggested Egypt begin issuing bonds linked to Sustainable Development Goals (SDGs), Maait said, according to Al Mal. The minister said the proposal was welcome and his team is lining up advisors now as it looks to possibly become the first in Africa to issue sustainable development bonds.

Egypt is now part of the FTSE Russell’s new bond index, which tracks local currency bonds issued in frontier markets, the index provider said in a statement yesterday. The Frontier Emerging Markets Government Bond Index Series contains a cap-weighted index and a 10% country-capped index and tracks the performance of bonds issued by 13 frontier and emerging market countries with a current value of USD 414.8 bn.

What weighting do EGP bonds have on the index? Out of the 588 bonds on the index, 80 local Egyptian bonds are featured, giving them a weighting of c. 13.6%. As of the end of March they carried an average yield of 14.86%. Check out the factsheet (pdf) for more information.

Who else is in the mix? Bangladesh, Costa Rica, Dominican Republic, Ghana, Kenya, Morocco, Nigeria, Pakistan, Serbia, Sri Lanka, Ukraine and Vietnam are also included. Inclusion in the index will be reviewed semi-annually in March and September.

Hopefully we’ll be saying something similar about the JPM index in a few months’ time: JPMorgan is expected to decide whether to reinclude Egypt on its EM government bond index later this year, potentially bringing USD 1.4-2.2 bn in inflows into local-currency bonds.

Expect the first batch of Egypt-made Sinovac shots to be rolled into clinics nationwide as early as August, pending final-stage testing on the locally produced doses before their official distribution, Masaa DMC’s Ramy Radwan said (watch, runtime: 2:10) last night, citing a statement by state-owned Vacsera. Health Minister Hala Zayed said earlier this week that Vacsera will produce the first batch of the Chinese vaccine on 15 June, and send them to be analysed before being dispatched to clinics.

The Health Ministry reported 773 new covid-19 infections yesterday, down from 782 the day before. Egypt has now disclosed a total of 269,527 confirmed cases of covid-19. The ministry also reported 38 new deaths, bringing the country’s total death toll to 15,437.

Ghazl El Mahalla’s IPO could go to market in the next two months as the club finalizes procedures with the Financial Regulatory Authority (FRA) ahead of the sale, according to Prime Securities, which is quarterbacking the transaction, Al Mal reports.

The football club has priced its IPO at EGP 1 per share, and is looking to reel in EGP 135 mn from the offering, Prime Holding CEO Mohamed Maher told a presser yesterday.

(Not really a) Surprise: There’s nary an institutional investor in sight. The club expects to raise EGP 120 mn from retail traders, with just EGP 15 mn coming through a private placement, Maher said.

Background: Public Enterprises Minister Hisham Tawfik said earlier this year that the football club is looking to list around two-thirds of its shares on the EGX before the season finishes in October. Ghazl El Mahalla FC belongs to state-owned El Mahalla Spinning and Weaving Company.

Palm Hills Development closed a fresh securitized bond issuance backed by a receivables portfolio of nearly EGP 1.2 bn, according to a press release (pdf). The bonds were issued in four tranches with ratings of AA+, AA, A, and A-.

The size of the sale is close to PHD’s record EGP 1.25 bn issuance that went to market last year. It includes the EGP 800 mn in securitized bonds approved for sale by PHD’s board of directors in April, as well as other bonds backed by the receivables of several other non-listed subsidiaries, IR manager Radwa Abu El Naga told us.

The securitization market has been lukewarm so far this year: PHD joins Rawaj — Arabia Investments Holding’s consumer finance subsidiary — as one of only two companies to close an issuance of asset-backed securities this year.

But the pipeline is deep: Everyone from Sodic, Misr Italia and Edge Holding to EFG Hermes, Sarwa Capital and Raya have announced plans to securitize parts of their portfolios, but all of them are yet to see the light of day.

ADVISORS- Contact Financial’s debt markets arm Sarwa Capital acted as financial advisor, lead manager, and arranger on the PHD transaction. Our friends at ALC Alieldean, Weshahi & Partners were counsel for the issuance, while Misr Capital Securities Brokerage “played for the first time the role of a trading intermediary in the secondary market with the aim of facilitating the entry of individual investors to invest in securitization bond.”

Private education outfit CIRA is planning to set up a language school in New Rashid, and is close to wrapping up its purchase of a 20k sqm piece of land from the New Urban Communities Authority, sources familiar with the project told us, confirming a local press report. The greenfield project will be located in the new city’s Bashayer El Kheir low-cost housing district, and has already received technical clearance, the sources said, adding that the land purchase price will be reviewed on Thursday. The sources declined to say how much the company may be paying for the land, how much it plans to invest in the school, or when it expects to start construction.

CIRA has been pushing heavily into new urban areas. Having recently opened the doors of the Regent British School in New Mansoura, the company’s pipeline includes an international school under construction in New Sohag, branches of two others in O West in the Sixth of October. It also plans to spend EGP 700 mn on constructing a new university in Assiut’s Nasser City that’s expected to cost a total of EGP 2.45 bn. In December 2019, CEO Mohamed El Kalla said the company had earmarked over EGP 2 bn for several ongoing and future projects.

EAEF publishes second annual impact report

The Egyptian American Enterprise Fund committed USD 67.7 mn to its investment partners in 2020, including USD 50 mn to its PE firm Lorax Capital Partners, the fund said in its annual impact report (pdf). This is in addition to providing Fawry Microfinance with USD 10 mn to help extend loans to MSMEs, while acquiring a minority stake in Al Tayseer Healthcare Group and co-investing USD 6.7 mn in the firm. Since its establishment in 2011, EAEF has invested almost USD 224 mn in 10 companies and four funds, and attracted at least USD 447 mn in foreign direct investments to Egypt, it said.

EARNINGS WATCH- Juhayna’s (JUFO) net income rose 50% y-o-y to EGP 57 mn in 4Q2020, up from EGP 38 mn in the same period a year earlier, according to unaudited financials (pdf) the dairy giant released this week. Revenues for the quarter increased 4% to EGP 1.92 bn, fuelled by a 20% rise in yoghurt sales.

Juhayna already came out with a snapshot of its earnings earlier this week, announcing that it had made EGP 440 mn in net income in 2020, up 34% on the year before, despite revenues remaining little changed. Juhayna ran afoul of the EGX after it failed to publish its full-year financials on time, being placed on the EGX’s D-List last month until it produces the figures. A company representative told Enterprise that its auditors have held up the process, suggesting that it could submit its accounts to the EGX in a matter of weeks.

Looking ahead, the company will prioritize rolling out innovative, high-margin products and launched a branded Greek yoghurt in 1Q2021 to capitalize on the “the growing popularity” of this new segment, it added. In the past year, JUFO was able to maintain market leadership in milk, as well as grow its share in the plain yoghurt, juice, and flavored milk segments.

ELSEWHERE- Transport player EgyTrans’ unaudited consolidated bottom line nosedived 98% to EGP 72k in 1Q2021, down from EGP 3.7 mn in the same quarter last year, due to an increase in general and administrative expenses, the company said in two separate EGX filings (here and here — pdfs). The drop in net income came despite a 6.3% increase in revenues to EGP 57.2 mn. EgyTrans is currently the subject of a takeover bid by HA Utilities.

Finance Minister Mohamed Maait has the Enterprise talk show section all to himself this morning after he dialled in to Kelma Akhira (watch, runtime: 25:14) and Yahduth fi Masr (watch, runtime: 2:13 | 3:08) last night to talk about the economy. Among the highlights was Maait’s suggestion that we could receive the final tranche of our IMF loan later this month — more on that at the top of this morning’s issue.

Also worth noting:

The economic reforms are not over: The government announced in April a new, three-year program of structural reforms designed to support private sector-led economic growth and capitalize on the past seven-year economic reforms. This will help the economy eke out pre-covid growth rates, create sustainable growth and help overcome repercussions due to the pandemic, Maait told Yahduth fi Masr’s Sherif Amer. Economic reforms alongside social protection policies and programs aimed at improving people’s quality of life through key sectors such as education, transport, agriculture, health and social welfare will boost Egypt’s economic performance and further enhance its position among its peers, the minister said.

No particular subject is dominating the conversation on Egypt in the foreign press this morning: Joe Biden’s “u-turn” over his stance on Egypt’s human rights situation is getting attention in the Guardian, while the AP reports that at least five people, including three engineers, a laborer and their driver have been kidnapped by Islamic State in North Sinai. Meanwhile, an Egyptian defense analyst tells Breaking Defense that Egypt’s recent multi-bn USD arms agreement with France may open the door to more similar sales from France and other European countries.

7-9 June (Monday-Wednesday): A delegation of 18 French companies will meet with international financial institutions and Egyptian private partners in an event organized by Business France The event will take place at Sofitel Gezirah.

11-14 June (Friday-Monday): Egypt is hosting the first forum of the heads of African investment promotion agencies from under the theme Integration for Growth.

14 June (Monday): Egypt Green Economy Forum.

14 June (Monday): The Central Bank of Egypt will launch an electronic clearing system for foreign currency cheques between banks.

15 June (Saturday): EGX-listed will have to complete filing their financial disclosures for the period ended 31 March.

16-22 June (Wednesday-Tuesday): Ismailia International Film Festival, National Film Center Ismailia.

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

17-20 June (Thursday-Sunday): The International Exhibition of Materials and Technologies for Finishing and Construction (Turnkey Expo), Cairo International Conference Center.

20 June (Sunday): Ismailia Economic Court to hold hearing on Ever Given compensation case.

22-27 June (Tuesday-Sunday): The CIB PSA World Tour Finals for 2020-2021 will take place in Cairo.

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

24-29 June (Thursday-Tuesday): The fifth edition of the Aswan International Women’s Film Festival.

26-29 June (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center, Cairo, Egypt. The Big 5 Egypt Impact Awards will also be taking place at the event on 27 June.

26 June – 1 July (Saturday-Thursday): Sharm El Sheikh Film Festival.

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

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: National Book Fair.

July + August: Thanaweya Amma exams take place.

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

1 July (Thursday): Large taxpayers that have not yet signed 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.

1 July (Thursday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

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

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

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

July: The government will announce details of its new structural reform program.

2-4 August (Monday-Wednesday): Egypt is hosting the Africa Food Manufacturing exhibition at the Egypt International Exhibition Center.

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.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

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.

30 September-8 October (Thursday-Friday): The Cairo International Fair, Cairo International Conference 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.

12-14 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

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.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

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

29 November-2 December (Monday-Thursday): Egypt Defense Expo.

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.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

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.