Thursday, 11 November 2021

AM — From M&A and IPOs to capital gains taxes and a physical One on One, it’s a heck of a day for news

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people. We’ve nearly made it through another workweek together, and our reward is a blockbuster issue on a morning that’s simply jam-packed with news.

SOMETHING THAT DELIGHTED US this morning: EFG Hermes is hosting a PHYSICAL One on One. Save the dates went out yesterday for the sixteenth edition of the world’s largest investor conference focused on frontier emerging markets. The gathering will take place in Dubai from 28 February through 3 March. We’re looking forward to seeing many of you there.

More and more foreign investors are coming to Egypt these days to kick the tires on potential investments. Fund managers and strategics alike are arriving in numbers we haven’t seen in at least four years to talk with local management teams, according to friends on the buy- and sell-sides as well as top corporates. They’re coming individually and in quietly-organized roadshows. There’s a palpable change in sentiment taking place right now, and we really hope global sentiment holds up at what’s increasingly feeling like an inflection point. After nearly two years of isolation, there’s no better time to hear that we’re going to be meeting face to face in Dubai.

THINGS MAKING US SMILE on this fine morning: Vodafone Egypt is indeed going to be part South African-owned, it seems. ALSO: a Saudi tech company is moving its operations lock, stock and barrel to Egypt — so it can IPO on the EGX.

SMART POLICY- The government is moving to minimize the impact of the capital gains tax on the EGX ahead of the measure coming into effect on 1 January. The measures also suggest the government wants to make life a bit easier for listed companies. Interestingly, the statement outlining a wide basket of measures is couched in language that suggest policymakers understand the long-term importance to the economy of functional capital markets.

*** AND A HUGE WELCOME THIS MORNING to our friends at Abu Auf, the healthy foods brand, who join us this morning as the sponsor of our very popular My Morning Routine section. The generous support of companies including Abu Auf ensure not just that we keep the A/Cs running and team fed here at Enterprise World Headquarters, but also that your favourite morning read remains available to you free of charge every weekday around 6am CLT. Thank you, all.

WHAT’S HAPPENING TODAY-

Where do things stand with the Aldar-ADQ acquisition of SODIC? It’s now been almost two months since we have heard anything official on the mandatory tender offer that the UAE’s Aldar Properties and Abu Dhabi’s sovereign wealth fund ADQ launched to acquire 90% of upmarket real estate developer SODIC. We reached out yesterday to the parties involved for an update on what would be a landmark inbound M&A for the real estate sector.

The transaction is now on the desk of the Financial Regulatory Authority (FRA), we were told, and we reached out to the FRA to understand where things stand. An official, speaking on condition they not be named, told us there are procedural matters in the balance and that more information would be forthcoming in the form of an announcement when the regulator is ready. The official would not comment on when to expect the approval process to wrap up, nor would they specify what the FRA is looking into.

The concern is that significant further delay could pose a risk to the transaction, a source close to the matter told Enterprise.

The acquisition has been in the works now for over eight months: Aldar submitted a non-binding offer back in March to acquire at least 51% of Sodic’s shares in an offer that initially valued the company at EGP 6.6 bn.

What’s at stake? The all-cash offer saw the consortium — which is 70% controlled by Al Dar and 30% owned by ADQ — up its offer to EGP 20.00 per share from a previous range of EGP 18.00-19.00, and values SODIC at EGP 7.1 bn (USD 453 mn). Sodic’s shares on the EGX closed yesterday at EGP 17.90.

The transaction could be good news for the industry, Karim Nehma, managing partner at Act Financial, told us back when the MTO was announced. Nehma suggested there has been a view that real estate players are undervalued and that the industry has been lagging. Activist investor Act holds a 15% stake in Sodic, making it the developer’s largest effective shareholder. Olayan Saudi Investment holds 14%, while the Abanumay family has 10% and Ripplewood 9%.

And then there’s the fact that ADQ and Aldar have both telegraphed they have lots of appetite for Egypt: The SODIC transaction “is a part of Aldar’s overall expansion strategy into the attractive Egyptian real estate market, with Aldar currently assessing several opportunities,” Aldar said in a disclosure (pdf) a few months back. ADQ, meanwhile, has mounted bids for drugmaker Amoun (in partnership with the Sovereign Fund of Egypt) and food outfit Atyab, among others.

ALSO TODAY- It’s the deadline for the Anghami SPAC merger: Anghami’s deadline to pull the trigger on a merger with blank-check firm Vista Media Acquisition Company and list on the Nasdaq expires today. The company had previously extended the deadline in August and there’s been silence in the period since.

THE BIG STORIES ABROAD-

US inflation hit levels not seen for more than 30 years last month — and stocks are not happy. Scroll down to this morning’s Planet Finance for the story, which is leading the front pages in the financial press this morning: FT | Wall Street Journal | Bloomberg.

Amazon-backed EV startup Rivian could raise as much as USD 11.9 bn from its upcoming IPO after pricing its shares at USD 78.00 apiece — above the initial range of USD 72.00-74.00 it previously announced, according to the Financial Times. This would be the largest amount raised by a US company in an IPO since Facebook went public in 2012 and the seventh-largest in the history of US stock exchanges. The pricing gives Rivian a market valuation of around USD 77 bn on a fully diluted basis, the Wall Street Journal says.

Rivian isn’t in the black yet: The company’s losses widened in 1H2021 to USD 1 bn and it expects to continue posting losses over the next several years until it ramps up production.

enterprise

M&A WATCH

Give me the green light

Vodafone Group has agreed to transfer its 55% stake in Vodafone Egypt to Vodacom, its sub-Saharan African subsidiary, in a EUR 2.72 bn transaction, according to a company statement. The move will “simplify” the management of its African holdings, according to the UK-based parent company. The South Africa-based telecommunications company said it intends to settle 80% of the transaction by issuing new shares, with the remaining 20% settled in cash. Enterprise reached out to Vodafone Egypt yesterday, but was unable to reach a representative for comment before dispatch time. The transaction is expected to conclude before 31 March 2022, Vodafone Group said in its statement.

What are the next steps? A committee of Vodacom's independent non-executive directors has unanimously approved the transaction and the matter will now require approval from minority shareholders representing 39.5% of the Vodacom shares. Beyond the usual waffle words on conditions precedent, the transactions till needs regulatory approval from Egypt’s National Telecommunications Regulatory Authority (NTRA) as well as the Financial Surveillance Department of the South African Reserve Bank.

Things are already in motion here: Vodafone Egypt expects to submit a formal request to the NTRA to change the company's ownership structure by Sunday, head of the telecom company’s legal affairs, Ayman Essam, told Hapi Journal. The transaction would not entail making any changes to the Vodafone Egypt brand, Essam separately told Al Mal.

Don’t expect Telecom Egypt to get in the way: The EGX-listed telecoms giant still holds a 45% stake in Vodafone Egypt and contractually has a right of first refusal, which would allow it to make a counter-offer. However, the company doesn’t plan to invoke this right, Investor Relations head Sarah Shabayek told Enterprise. TE already signed off on the restructuring after being notified of the agreement back in June. “We sealed several rights and benefits in advance of the agreement,” Shabayek told us. Vodacom has committed to Vodafone that they will sign a deed of adherence to the shareholders' agreement with Telecom Egypt, according to a statement.

EARNINGS WATCH-

Telecom Egypt generated EGP 2.2 bn in net income during 3Q2021, up 51% from the same period a year earlier, according to the company’s earnings release (pdf). Revenues at the state-owned company rose 22% y-o-y to EGP 9.0 bn during the three-month period.

EGX

Cabinet announces basket of measures to make EGX more attractive to investors, companies

Trading on the EGX is about to get more affordable: The Madbouly government has announced a package of EGX tax cuts and fee reductions to support trading on the bourse ahead of the introduction of the capital gains tax on resident investors next year.

Investors are going to be paying less in fees: Trading and clearance fees, as well fees paid to the Financial Regulatory Authority and the Investor Protection Fund, will all be reduced, cabinet said in the statement, without disclosing figures.

And all of the fees will be tax-deductible: All fees will be classified as expenses, meaning investors paying taxes here will be allowed to use them to offset their tax bill.

A sweetener for folks (that would be just about everyone in the market) hating on the capital gains tax? The government is looking to cushion the blow for shareholders who have owned stock for a long period of time — who through investment style and good fortune would literally be buying low and selling high — by tweaking how capital gains are calculated.

Huh? Whaddya mean? A 10% capital gains tax would typically be calculated on the delta between the price at which the investor sold and the price at which she bought. But the government is planning to propose a grandfather clause that could cushion the impact of the tax on people who held shares at the time the tax comes in.

How would that work? For shares you own on the date the grandfather clause comes into effect, the capital gains tax would be calculated based on the selling price minus the price of the share when you bought it or when the measure came into effect — whichever was higher.

How does that help? Without the grandfather clause: Let’s say you bought one share of EGX-listed ZFT Co twenty years ago at EGP 1.00 — and sell it this year at EGP 15.00. Your gain is EGP 14.00, and the government wants EGP 1.40 from you, please and thank you. With the grandfather clause: If ZFT’s share price was EGP 12.00 at the time the law was enacted, then your gain is EGP 2.00 — and the government wants just EGP 0.20 from you.

The path forward is still a bit opaque: We do note that the statement doesn’t use the words “capital gains tax,” which cabinet now seems to understand is financial kryptonite. It also does not make clear whether the grandfather clause would require legislation or if it will be enacted as a regulation.

BACKGROUND- The securities industry and investors have come out in opposition to the government’s plan to introduce a 10% capital gains tax on net portfolio earnings starting 1 January 2022, and have warned that the additional tax would stunt trading volumes and further weigh on foreign investment on the bourse. Lawmakers in both the House and the Senate have been suggesting the tax needs to be reconsidered.

More tax breaks: The plans will slash tax charged on share swap transactions from 22% to 10%, while tax paid by retail traders on earnings from mutual funds will drop to 5%. There will also be measures in place to mitigate the tax implications of capital increases.

Tax incentives to promote capex: Companies will pay no tax on share price gains used to fund capital expenditure in an effort to encourage firms to expand.

Support for newly-listed companies: Investors will receive a 50% tax deduction on income derived from trading the shares of companies that have recently IPOed on the bourse, a move designed to boost liquidity for new companies on the exchange and encourage more businesses to list.

This isn’t the first time in recent period officials have amended the rules in efforts to attract investors: Back in September, the Financial Regulatory Authority (FRA) announced new new listing amendments (pdf) to reduce the amount of capital that companies need to offer to the public in efforts to encourage share sales on the Egyptian bourse.

Also in the package:

  • Opportunity cost is now tax-deductible: Policymakers will come up with a calculation to determine the equivalent of the opportunity cost taken by investors when they choose to put their money into the EGX, which will then be deducted from their taxable income.
  • A solution for dual taxation? The authorities are also working on a solution to the issue of the double taxation of the parent company and its subsidiaries if both are listed on the EGX. Currently subsidies’ bourse earnings make onto both, the subsidiary and its parent company’s tax bases.
  • More breaks and services ahead? The government will establish a unit within the General Investment Authority to resolve any issues faced by listed companies and work to encourage more companies to list on the exchange.

For more: Check out EGX boss Mohamed Farid’s appearance on the air waves last night, during which he walked us through the amendments (watch, runtime: 8:18).

IPO WATCH

Saudi’s Brmaja could debut on the EGX as it eyes a new home base in Cairo

Saudi tech firm Brmaja is looking to list 20% of its shares on the EGX next March, investment director Ahmed Said told Enterprise, confirming a story first reported by Masrawy. The digital marketing and tech firm has submitted a listing request to the Financial Regulatory Authority and has been in talks with officials on the IPO for the past six months. The company expects to raise more than EGP 400 mn through the sale, Said said.

Brmaja is making Egypt its central hub through several acquisitions: The Saudi parent company has two wholly-owned subsidiaries currently operating in Egypt, Brmaja IT and Brmaja Innovation. Brmaja IT will acquire the Saudi firm in a reverse acquisition ahead of the bourse listing, bringing the company’s issued capital to EGP 100 mn or more, and therefore make it eligible for listing on the EGX rather than the small-cap Nilex. Once it goes public, the new merged entity will acquire Brmaja Innovation before going on to acquire all remaining Brmaja subsidiaries across Dubai and Africa. The plan will see all of Brmaja’s operations run out of its Cairo headquarters by the end of the first half of 2022, according to Saeed.

Why is Brmaja choosing Egypt as its home? The company has only been active in the country for two years, but last year embarked on a strategy to “concentrate our ecosystems in Egypt as a center and main hub,” Said said. It invested more than EGP 28 mn here last year, and wants to make the local market its first priority.

ًWhat does the company do? Brmaja for IT runs five or six platforms across the education, health and e-commerce sectors, while Brmaja for Innovation has signed a number of protocols with government agencies and Egypt Post to provide them with digital systems.

More like this, please: We’ve been saying for years that Egypt’s low cost base relative to GCC, abundant human talent, huge domestic market and proximity to key export markets make us a great regional headquarters.

ECONOMY

Annual inflation cools from 20-month high

Annual urban inflation fell back from its 20-month high in October as the rate of increase in food prices dipped from the month prior, according to official figures (pdf) released yesterday by state statistics agency Capmas. Urban inflation slipped to 6.3%, down from 6.6% in September, which was the highest reading since January 2020.

Why the dip? A serious slowdown in non-food inflation, which fell to 3.7% from 4.6% in September. This is the slowest pace in more than a decade, according to Capital Economics which attributed the fall to a decrease in rents and slower clothing and education inflation.

But food prices continued to accelerate: The slowdown elsewhere offset food and beverage prices, which rose to 11.5% on an annual basis in October from 10.5% the month before, the highest level in two years, according to Capital Economics.This was primarily driven by a 4.6% increase in red meat and poultry prices.

Housing utilities and gas prices inched up 3.1% on the back of a third hike in fuel prices this year, while recreation and culture jumped by 14.7%, the biggest increase in urban inflation for the month.

But don’t let the favorable base effect fool you: Inflation continued to accelerate on a monthly basis, rising to 1.5% in October from 1.1% the month before. This was driven by a 12.7% rise in education prices and a 6% hike in the recreation segment. Unlike the annual figures, food prices rose at a slower rate, falling to 1% from 3.5% in September.

Annual core inflation rose to 5.2% during the month, up from 4.8% the previous month, central bank figures (pdf) showed. Monthly core inflation came in at 2.1%, up from 1.7% in September. Core inflation strips out volatile items from the basket of goods such as food and fuel.

Expectations were mixed ahead of the release: Al Ahly Pharos originally forecasted the annual rate to rise to 6.8%, a prediction that it said was missed to lower-than-expected education inflation. Beltone Financial, meanwhile, wrote that the figures came in line with its estimates.

Inflation is set to increase in the medium term: “We expect headline inflation to continue gaining momentum in 4Q21e as the rise in global commodity prices starts to reflect gradually in the domestic market coupled with base effect,” Beltone’s Alia Mamdouh wrote in a note following the release. Meanwhile, Capital Economics thinks inflation could stay within the 6-6.5% range over the next months and into early 2022.

The CBE is still expected to keep rates on hold till the end of year: Inflation remains within CBE’s target range of 7% (±2%), but rising global and domestic prices indicate that the Central Bank of Egypt will maintain its cautious approach and keep interest rates on hold during its final meeting this year on 16 December, according to Beltone. This would maintain our lucrative carry trade, which could be under threat following the recent Fed taper and the subsequent US interest rate hike likely to happen next year.

Looking further ahead: Inflation could drop back toward the lower end of CBE’s target 7% (+/-2%) range in 2Q2022, Capital Economics adds in its note. This could give policymakers a chance to cut the overnight deposit rate to as low as 6.75% — from 8.25% at present — by end-2023.

REGULATION WATCH

More sectors angling for exemption from private sector min wage

Business leaders want to exempt companies in eight sectors from complying with the new private sector minimum wage, which will take effect at the beginning of 2022. The Federation of Egyptian Chambers of Commerce (Fedcoc) has handed a formal request to Planning Minister Hala El Said requesting that businesses in the healthcare, building materials, construction, pharma, education, security services, and workers’ expatriation services be given a pass from paying the new wage, it said in a statement yesterday. From 1 January all private sector companies will be required to pay their employees a minimum wage of EGP 2.4k per month.

The reasoning: The federation cites these sectors’ high employee count and the nature of their employment, high production costs in some instances, and the negative impacts of covid-19 on business. Employers in these sectors are already paying wages that average 25% of production costs, higher than the global standard of 15-19%, according to the letter. Applying a minimum wage would raise the figure to some 30%, which could drive some of them out of the market. Many companies in those industries also use seasonal labor, youth workers that often need costly training, and a large number of blue collar workers.

Other proposals target partial and temporary exemptions: The federation alternatively suggested excluding 40% of the blue collar support jobs that don’t contribute directly to production lines from the minimum wage and excluding new hires for their first 12 months of employment. The commerce federation is also calling for a clearer definition of the minimum wage to differentiate between fixed and variable wages and factor in other non-cash benefits and other bonuses workers sometimes receive.

There are other sectors that already asked for exemptions: Notably, the Egyptian Tourism Federation argues that companies it represents have yet to fully recover from their covid-19 setback. The industry lobby group fielded a similar set of demands of the commerce federation to the National Council for Wages last month.

Background: Employees of private-sector companies will for the first time receive a minimum wage of at least EGP 2.4k starting January 2022 when the minimum wage comes into effect. The decision means higher labor costs and larger contributions to the nation’s Social Ins. Authority when it goes into effect. Companies have until the end of this month to submit a request to the National Wages Council if they claim they cannot afford the wage hike.

TRANSPORT

Egypt inks new transport agreements with local, foreign companies

Guess what isn’t in short supply right now: Transport agreements, yet more of which were signed yesterday on the final day of the TransMea conference, the Transport Ministry said. The agreements included a EUR 8 mn grant signed with the European Commission to upgrade the Raml tram overground line in Alexandria, an MoU with Hong Kong’s Hutchison Port to operate a multi-purpose station in Dekheila Port and revamp infrastructure at Ain Sokhna Port, and a EGP 200 mn contract between SuperJet and mass transport operator Mwasalat Misr to set up a new smart transport route in the new administrative capital. Another agreement involved the ministry’s dry ports authority contracting with Samcrete to study a new dry port project in Sohag.

Chinese company on board to maintain new capital electric rail line: A EGP 1 bn contract was signed between the Aviation Industry Corporation of China (Avic) and the National Authority for Tunnels which will see the Chinese firm carry out maintenance works on the planned electric rail line linking Salam City and Tenth of Ramadan City for 12 years, according to Al Borsa.

There’s a lot more where that came from: Get all the info on the other 21 agreements that were signed during the conference in this week’s Hardhat.

STARTUP WATCH

Grocery delivery app Rabbit raises USD 11 mn pre-seed round

Grocery delivery startup Rabbit has raised USD 11 mn in a pre-seed VC funding round, according to a company statement (pdf). Global Founders Capital, Foundation Ventures, Raed Ventures, MSA Capital and Goodwater Capital all participated in the round, which the Cairo-based company says is the largest-ever pre-seed round in the Middle East and Africa.

Never heard of Rabbit? Short for Rabbitmart, the app only launched in mid-October, just four months after the idea was conceived by Ahmad Yousry, Walid Shabana, Ismail Hafez and Tarek El Geresy. Rabbit guarantees delivery in 20 minutes or less, a promise that makes it one of the more ambitious players in our growing on-demand delivery market that includes the likes of Appetito and Goodsmart. The company currently operates in Mohandeseen, Zamalek, Maadi and Nasr City.

What’s next? Rabbit is planning an expansion push into further Cairo areas “soon” and several additional cities within the next year. The firm is targeting processing orders numbering in the six figures monthly.

The on-demand grocery market is accelerating: Among Rabbit’s competition in the ultra-fast delivery sector is Breadfast, which last week secured USD 26 mn in funding in a series A round. Breadfast currently offers an on-demand service within the hour and is also targeting bringing delivery windows down to 20 minutes. Bigger regional players Instashop and Talabat have also been vying for market share in the sector, which boomed worldwide on the back of the pandemic.

CABINET WATCH

Cabinet looking to encourage more property registrations

Are we about to see a surge in home registration? More homeowners could start notarizing their ownership contracts after legislative amendments to considerably shorten the process earned cabinet approval in its weekly meeting yesterday. The changes, which amend stipulations in the Real Estate Registry Act and the Income Tax Act, are expected to significantly trim the painstaking registration process by waiving the need to obtain pre-approval at the real estate registry office prior to obtaining the final seal and putting a time ceiling on the entire process. The pre-approval stage, as things stand, requires on-ground inspections by notaries, a documentation of provenance, and other steps that usually take months.

Registration taxes are also now easier to digest, as payment will no longer be a prerequisite of getting hold of the notarized “blue contract.” Instead, the seller will remit the taxes at a later date. As things stand, the changes don't provide a timeline or mechanism for the tax collection. The changes also set the tax rate at 2.5% in contracts signed before recently-passed amendments and a flat rate of EGP 1.5-4k in older contracts. The need to pay taxes before registering had previously discouraged property owners from notarizing their deeds.

AUTO

Tuk-tuk import ban hits GB Auto

Tuk-tuk import ban has GB Auto searching for alternatives: The Madbouly government’s decision to ban imports of tuk-tuk components is threatening to wipe out GB Auto’s three-wheeler business segment, leading the company to yesterday announce (pdf) that it is preparing backup plans to absorb the shortfall in revenues. “Management is taking proactive steps and has already begun preparing alternatives … the current headwinds are not new to GB Auto, and we are confident that we can mitigate the anticipated impact on our performance,” Marina Kamel, the company’s IR manager, told Enterprise.

How important are three-wheelers to GB Auto? The company doesn’t break out sales figures for tuk-tuks, having always included them in its larger motorcycles and three-wheelers segment. Its e2Q2021 earnings release (pdf) reported the segment brought in EGP 1.8 bn in revenues during 1H2021. This accounts for roughly 16% of its total auto-related revenues during the period. GB Auto sold almost 37k three-wheelers in the January-June period, up 47% on the same period in 2020 and higher than the 30.6k motorcycles sold.

Breathing room: GB Auto still has 3-6 months of inventory, giving it room to mitigate the effect as it looks for alternatives, board member Mansour Kabbani tells us. “We’re a very big diversified company with very big lines of businesses, whether that’s cars or non-banking financial services,” Kabbani added, noting that the company expects to absorb the loss of the tuktuk business.

A potential alternative: The company is considering making a play for the natural gas-powered mini van market, which the government is trying to stimulate through a scheme to encourage motorists to trade in their gasoline vehicles for a natgas-powered alternative. The Public Enterprises Ministry had been in talks with GB Auto to potentially work together on manufacturing the natgas microbuses, but these talks were shelved.

DIPLOMACY

Could the GERD talks be brought back from the dead? Foreign Minister Sameh Shoukry hinted at a possible resumption of negotiations between Egypt, Ethiopia and Sudan over the Grand Ethiopian Renaissance Dam (GERD), Sky News Arabia reports. "There are ongoing meetings with the African Union to push for a return to negotiations," Shoukry said on the sidelines of an event in Washington, without going into further details.

IN OTHER DIPLO NEWS-

Egypt, Jordan + Iraq sign industrial pact: Trade ministers from Egypt, Jordan and Iraq yesterday signed an industrial agreement that could pave the way for further economic intergration between the three countries, according to a Trade Ministry statement. Under the MoU, the countries will establish a committee to oversee the establishment of joint industrial zones and explore further steps to lower trade barriers. The agreement came a day after Egypt and Jordan signed two MoUs: one that will twin the cities of Luxor and Petra, and another to strengthen cooperation over SMEs.

enterprise

ENTERPRISE+: LAST NIGHT’S TALK SHOWS

Talk shows got businessy last night discussing the selling of Vodafone Group’s majority stake in Vodafone Egypt, which will be sold to Vodacom Group for some EUR 2.7 bn. We don’t have to worry about the iconic red mobile network going anywhere: Vodafone Egypt will maintain its identity post acquisition, from its name to its logo, and will continue to service its users, Mohamed Ibrahim, executive director at the National Telecom Regulatory Authority (NTRA), told Yahduth Fi Masr (watch, runtime: 2:36).

The regulator is studying the sale: Vodafone Egypt has come forward to the NTRA with its intent to sell and the authority will study the move from the legal and regulatory aspects before coming to a decision. The authority will look into Vodacom’s strategic plans in Egypt in the coming period and the acquiring company’s ability to ensure that users will continue to receive top notch service, Ibrahim told Ala Mas’ouleety (watch, runtime: 5:56), who also virtually hosted Vodafone Egypt’s external relations director, Ayman Essam (watch, runtime: 10:14).

The cabinet’s latest meeting was also a major talking point: Amendments to the Real Estate Registry Act and the Income Tax Act which were approved during yesterday’s cabinet meeting were covered and discussed all over: Masaa DMC (watch, runtime: 10:56), Al Hayah Al Youm (watch, runtime: 10:38) and Ala Mas’ouleety (watch, runtime: 6:24). Real Estate Registry and Notarization head Gamal Yaqout told Yahdoth Fi Masr (watch, runtime: 4:42) that these amendments come in line with the state’s digital transformation. The amendments separated the taxation process from the home registration process making them parallel to each other. Yaqout said that the Real Estate Registry Act will be seeing a total revamp, with a number of articles deleted, some added and some amended.

EGYPT IN THE NEWS

For the nth consecutive morning, the foreign press is focused on this week’s US-Egypt diplomatic talks: Axios and Arab News are both out with pieces reporting on the talks in Washington this week, which saw delegations headed by Foreign Minister Sameh Shoukry and Secretary of State Anthony Blinken discuss a range or regional issues, economic cooperation and Egypt’s human rights record.

On that note: Recent amendments to the anti-terrorism law are criticized as restricting civil freedoms in columnist and Middle East scholar Steven A. Cook’s latest thinkpiece in Foreign Policy.

COVID WATCH

Everything you need to know about covid-19 on 11 November 2021

The Health Ministry reported 934 new covid-19 infections yesterday, up from 921 the day before. Egypt has now disclosed a total of 340,269 confirmed cases of covid-19. The ministry also reported 63 new deaths, bringing the country’s total death toll to 19,249.

PLANET FINANCE

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Inflation worries hit stocks: US stocks experienced their biggest single-drop in a month and treasury yields rose the most since February yesterday after fresh data (pdf) showed inflation reaching a 30-year high in October. The S&P 500 fell 0.8% during trading and the Nasdaq slipped 1.4% after figures released by the Bureau of Labor Statistics showed that US consumer prices accelerated to 6.2% last month — the highest annual rate since 1990.

This is going to put more pressure on the Fed, which said earlier this month that it will begin tapering its USD 120 bn per-month asset purchase programme this month but indicted that interest rates would remain on the floor for the foreseeable future.“Now that it’s breached that 6% level, I think the Fed are going to be getting a little bit hot under the collar,” one analyst told Bloomberg. “There is no way, I think, they can ignore 6.2% on that CPI reading. It’s going to be prompting a more hawkish feel.”

The US isn’t the only one dealing with surging inflation: Factory input costs in China rose at their fastest pace in 26 years in October, the Financial Times reports, as the energy crisis turbocharged industrial input prices. The country saw factory gate prices rise 13.5% y-o-y last month, exceeding analysts’ expectations and replacing September’s 10.7% reading as the highest since 1995. The rise comes on the back of a global commodities crunch that has triggered particularly severe energy and raw materials shortages in China, where this latest reading will add to fears of a growing stagflation crisis — a double-punch of high inflation coupled with slowing growth.

The sell-off in New York is bleeding over into Asia this morning, where most indices are in the red, though China and Japan were bucking the trend in the minutes before dispatch. It’s a mixed picture in the futures market: the dip buyers look to be coming out in force in the US, where stock futures are all in the green, though the open in European markets is less certain.

Down

EGX30

11,481

-0.9% (YTD: +5.9%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,857

+0.9% (YTD: +36.5%)

Up

ADX

8,230

+0.4% (YTD: +63.1%)

Down

DFM

3,107

-0.4% (YTD: +24.7%)

Down

S&P 500

4,647

-0.8% (YTD: +23.7%)

Up

FTSE 100

7,340

+0.9% (YTD: +13.6%)

Down

Brent crude

USD 82.56

-2.6%

Down

Natural gas (Nymex)

USD 4.88

-2.0%

Up

Gold

USD 1,848

+1.0%

Down

BTC

USD 64,646

-4.0% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.9% yesterday on turnover of EGP 821.2 mn (45% below the 90-day average). Regional investors were net buyers. The index is up 5.9% YTD.

In the green: Medinet Nasr Housing (+3.1%), Mopco (+2.2%) and Abou Kir Fertilizers (+0.8%).

In the red: Gadwa for Industrial Development (-5.1%), Aspire Capital (-3.9%) and AMOC (-3.3%).

MY MORNING ROUTINE

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Heba El Gabaly, CEO and founder of Efreshli: Each week, My Morning Routine looks at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Heba El Gabaly, CEO and founder of Efreshli (LinkedIn). Edited excerpts from our conversation:

My name is Heba El Gabaly and I’m an entrepreneur, a wife, and a mother of two teenage boys. My older son Omar is 16 while Youssef is almost 14, and we all now reside in Dubai. Back in Egypt, I was a partner at Eklego Design alongside Dina El Khachab and Hedayat Islam, but I stepped back from the business after my move. I decided to start Efreshli in 2019 as I felt that the whole world was moving online and I thought that interior design could as well. Efreshli’s concept is to offer easy, accessible, and affordable online interior design services while also acting as an e-commerce platform for local brands and designers. There’s so much furniture online and most people just need a tool to visualize how it would all look together in a cohesive space.

As CEO, my job is to set the company direction and lead my team to deliver our service to the customer at a certain standard. What this translates into on a day-to-day basis is a lot of meetings with various teams, clients, suppliers, and investors. It’s a lot of people management, and each day is different depending on the priorities.

We started with just two people and now we’re a team of 26. At the beginning of 2020, I decided that I wanted to scale the business, and that meant that I would have to seek investments. My husband Ahmed, who is an investment banker, really helped me in that regard. He helped me develop the fundraising tech, the legal setup, reaching out to contacts, basically everything. I really couldn’t have done it without him.

Receiving funding allowed us to transform Efreshli to depend more on tech. We quickly hired a team of engineers and developers to build features that make our product more efficient and scalable. Once you become a tech business, there’s a lot of pressure because the pace is very different, and you’re accountable to the investors. But it’s very exciting and it allows you to dream big.

Since I live in Dubai and the team is in Egypt, I’ve always worked remotely. When I decided to launch Efreshli, I knew I needed to start in Egypt because the market was more familiar and I had many connections there. Even if I expand to the UAE, a big part of my team will likely be in Egypt.

To manage teams remotely you have to create a culture of joint accountability. We have weekly online meetings where everyone in the company gives an update on what they’re currently working on. This makes them not just accountable to their manager, but to each other as well. It’s tricky sometimes, but if you have good people and stay organized, it works really well.

When travel restrictions were lifted, I started coming to Egypt for a week every month to work from the office and get face-to-face contact with the team. I think there has to be a minimum amount of physical interaction at work, but it definitely doesn’t have to be every day.

When I’m in Dubai, I usually wake up at 6:50am with my husband and kids. Yes, 6:50am [laughs]. We spend some time together during breakfast before I take the boys to school and head to the gym. For me the gym is as much mental as it is physical. Some people get their best ideas in the shower, but for me it’s the gym. After my workout, I quickly look at what’s happening in the world. I read Enterprise every day, honestly it’s my favorite, and I also browse the New York Times.

I’m very much a morning person and the first couple hours of the day are when I’m most productive. I usually begin work at around 9:30am and I like to start by creating a mental checklist of the most important things to get done that day and the rest of the week. Since the funding, I’ve also found that it’s really important to carve out some time to think more long-term, like the next six months. It’s really easy to drown in the day-to-day operations, but as a startup you need to always be thinking of your next initiative or you won’t move forward and grow.

Work-life balance is hard when my office is currently my dining room table [laughs]. There was a time where I would work at a restaurant, but the pandemic put a stop to that. The kids come home at around 4pm and we have lunch together, but then I usually log back on afterwards. Working from home definitely blurs the lines, but I also think it has to do with the stage Efreshli is at as a startup.

After work, my husband, younger son, and I like to watch Netflix together. Youssef has to approve what we watch [laughs], and we recently saw an anime called Fullmetal Alchemist and a food reality TV show called Baking Impossible.

I get a lot of business advice from the books and podcasts I listen to. As a startup owner, I like to look at case studies and analyze how other companies grew. A great book I read recently was No Rules Rules: Netflix and the Culture of Reinvention by Erin Meyer and Reed Hastings. My main obsession is podcasts and I listen to a ton of them while driving, cooking, or multitasking in general. My top three are How I Built This with Guy Raz, Invest like The Best with Patrick O’Shaughnessy, and The Tim Ferriss Show.

The thing that stuck with me most is to make sure you’re hiring the best people and then take care of them with all you have. You won’t get far by yourself, and having a good team is what will propel you forward.

CALENDAR

November: The French-Egyptian Business Forum is set to take place in the Suez Canal Economic Zone.

November: Egypt will host another round of talks to reach a potential Egyptian-Eurasian trade agreement, which can significantly contribute to increasing the volume of Egyptian exports to the Russia-led bloc that includes Armenia, Belarus, Kazakhstan and Kyrgyzstan.

31 October – 12 November (Sunday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

11 November (Thursday): Deadline for Anghami SPAC merger.

15 November (Monday): Unvaccinated public sector workers won’t be allowed into their workplaces.

15 November (Monday): Car dealerships must comply with new consumer protection rules requiring price stickers to be attached to vehicles.

15-21 November (Monday-Sunday): Intra-African Trade Fair 2021, Durban, KwaZulu-Natal, South Africa.

16-17 November (Tuesday-Wednesday): Africa fintech summit, Cairo.

17 November (Wednesday): The International Finance Corporation hosts the Sustainable Finance Forum.

18-19 November (Thursday-Friday): British royal family members Prince Charles and the Duchess of Cornwall visit Cairo.

25 November (Thursday): Rameda Pharma’s annual general meeting (pdf), at which it will decide on the sale of a 5% stake in the company from an individual shareholder to an unnamed institutional investor.

25-27 November (Thursday-Saturday): RiseUp Summit, Cairo, Egypt.

26 November-5 December (Friday-Sunday): The 43rd Cairo International Film Festival.

29 November-2 December (Monday-Thursday): Egypt Defense Expo, Egypt International Exhibition Centre.

30 November (Tuesday): Launch of open call by KfW for green project proposals in Egypt as part of their Investing for Employment facility (pdf).

1 December (Wednesday): Unvaccinated members of the public will be banned from government buildings from this date; unvaccinated students will be prevented from accessing university campuses.

1 December (Wednesday): Government departments will begin moving to offices in the new capital.

7-8 December (Tuesday-Wednesday): North Africa Trade Finance Summit.

8-10 December (Wednesday-Thursday): Global Forum for Higher Education and Scientific Research (GFHS), Cairo, Egypt.

12-14 December (Sunday-Tuesday): Food Africa Cairo trade exhibition, Egypt International Exhibition Center, Cairo, Egypt.

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

14-19 December (Tuesday-Sunday): The Cairo International Festival for Experimental Theater.

14-15 December (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

15 December (Wednesday): Deadline for joint stock companies and investment companies in Cairo to join e-invoicing platform.

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

1Q2022: Launch of the Egyptian Commodities Exchange.

7 January 2022 (Friday): Coptic Christmas.

27 January 2022 (Tuesday): National holiday in observance of 25 January revolution anniversary / Police Day.

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

19 February 2022 (Saturday): Public universities begin the second term of the 2021-2022 academic year.

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

2 April 2022 (Saturday): First day of Ramadan (TBC).

22-24 April 2022 (Friday-Sunday): World Bank-IMF spring meeting, Washington D.C.

24 April 2022 (Sunday): Coptic Easter Sunday (holiday for Coptic Christians).

25 April 2022 (Monday): Sham El Nessim.

25 April 2022 (Monday): Sinai Liberation Day.

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

2 May 2022 (Monday): Eid El Fitr (TBC).

16 June 2022 (Thursday): End of 2021-2022 academic year for public schools.

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

30 June 2022 (Thursday): June 30 Revolution Day, national holiday.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

30 July (Saturday): Islamic New Year.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday.

18-20 October 2022 (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

**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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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