Tuesday, 23 November 2021

AM — Aldar + ADQ’s bid to acquire SODIC gets regulatory approval

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, everyone, and happy hump day. It’s a great day for capital markets after the FRA gave its long-awaited blessing to the UAE’s Aldar and ADQ to go ahead with their bid to acquire upmarket developer SODIC. Also a must-read this morning is our Going Green piece on the future of Egypt’s plans to roll out electric vehicles nationwide after the breakup with China’s Dongfeng — see it as a chance to bring in a more compelling partner. Oh, and did we mention your next iPhone is going to cost a bit more?

Further afield: The leader of Ethiopia says he’s literally going to the front lines to take on rebels who are advancing on his capital — and Elon Musk has fired a broadside at JPMorgan’s Jamie Dimon … likely from his toilet.

All of this and more below.

PSA: School’s off again in Alexandria. Alexandria has given public and private schools the day off today and has told non-essential public sector workers to stay home as authorities work to clear the streets following the deluge of rain yesterday. We have more in Last Night’s Talk Shows, below.

THE BIG STORY IN THE GLOBAL BUSINESS PRESS- Jay Powell looks set to stay on at the helm of the Federal Reserve for another four years after President Joe Biden opted for continuity and nominated him for a second term yesterday. Lael Brainard, Powell’s main rival for the top spot at the central bank, has been appointed vice-chair and will replace Richard Clarida when the new term starts in February.

A safer pair of hands? The decision to stick with Powell sends a message to the market that a) the Biden administration recognizes the importance of policy continuity in uncertain times and b) the world’s most powerful central bank will remain unafraid to confront inflation and tighten policy if necessary. Powell has overseen a historic monetary policy response to the pandemic and guided the economy through one of the swiftest and deepest recessions on record. He was the market’s preferred candidate to steer the ship as inflation reaches multi-decade highs and supply chain snarls show no sign of ending. Under his leadership, the central bank has begun to do just that, reducing its huge asset-purchase programme this month and signalling that more could be done if the problems persist.

The new vice-chair: Brainard, the pick of liberals and progressives in the Democratic Party, is to the left of Powell on issues including regulation and climate change, and though she talked of the importance of reining in inflation, market sentiment had her as a dove: more tolerant of higher inflation and more hesitant to dial back monetary stimulus.

There was a positive reception from the markets, with US stocks rising following the announcement and Wall Street execs praising the decision. “Of course everybody was relieved,” bn’aire hedge fund manager Marc Lasry said. “The markets believe that he will do what is necessary to keep the markets calm and have them move forward.”

But there was still time for a late-day reversal: While US stocks rose initially after the announcement, indexes turned negative in the final hour of trading and bonds sold off. The Nasdaq fell more than 1% while the S&P 500 dropped 0.3%. The yield on 10-year treasuries climbed seven basis points and the greenback strengthened.

The story is everywhere this morning: Bloomberg | FT | Reuters | CNBC | Washington Post | New York Times.

MEANWHILE- The 2019 Nobel Prize winner is going full Braveheart: Ethiopian Prime Minister Abiy Ahmed is apparently heading to the battlefront, pledging yesterday to lead his troops into battle against Tigray rebels that have in recent weeks advanced closer to the nation’s capital and threatened to plunge the country into all-out civil war. “Starting tomorrow, I will mobilize to the front to lead the defence forces,” he wrote in a statement on social media. “This is a time when leading a country with martyrdom is needed.”

Ethiopian government forces have been fighting a year-long war against rebels in the Tigray region, which has sharply escalated in recent weeks. The government declared a six-month state of emergency earlier this month and urged people living in the capital to arm themselves and protect their neighborhoods. “This is so extraordinary and unprecedented, shows how desperate the situation is,” Awol Allo — the man who nominated Ahmed for the Nobel prize — wrote in a tweet. (AFP | Washington Post | The Guardian)

SIGN OF THE TIMES #1- The SAT — and standardized testing in general — just got dealt another body blow, as the University of California said that they would not look at any alternative “standardized test” to help it make admission decisions. No other exam “would avoid the biased results” that led the school to dump the SAT last year. The UofC system’s adoption of the SAT a half-century ago helped turn it into a “must-take” for generations of kids seeking college admission in the US. The Los Angeles Times has the story.

SIGN OF THE TIMES #2- Elon Musk is literally threatening to give JPMorgan a one-star review on Yelp as his feud with JPM boss Jamie Dimon continues. The edge lord — who said overnight that he tweets at least 50% of the time from his “porcelain throne” — made the threat in an exclusive with the Wall Street Journal.

MORNING MUST-READ- Where did all the workers go? in the Financial Times, wherein the salmon-coloured paper looks at how immigration, retirement and poor pay and working conditions are reshaping the labor market around the world. It’s the first in a series and worth keeping an eye on.

WHAT’S HAPPENING TODAY-

BOOK LAUNCH- Up and Doing, a memoir penned by Egyptian-American Enterprise Fund Chairman James Harmon (Morning Routine), will be published today. The memoir recounts Harmon’s career as a banker and discusses “how markets can move the world forward by creating stable, growing economies and sound [transactions] that promote economic development.”

The new administrative capital plays host to a Comesa summit today, while ITIDA and the Software Engineering Competence Center are hosting a webinar on fintech in Egypt.

CIRCLE YOUR CALENDAR-

The Home Appliances and Table Show (HATS Egypt) kicked off yesterday and wraps up on Wednesday. The event is organized by the Engineering Export Council of Egypt and brings together companies working in the home appliances sector.

Startup gathering RiseUp starts on Thursday and runs through Saturday.

The Cairo International Film Festival kicks off its weeklong run this coming Friday.

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

enterprise

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: Egypt’s plans to locally assemble electric vehicles are moving forward, despite the recent breakdown in negotiations between state-owned El Nasr Automotive and China’s Dongfeng — which had previously agreed to partner to assemble Dongfeng’s E70 vehicles here in Egypt. Today, El Nasr Managing Director Hany El Kholy talks to Enterprise about why the talks fell through.

enterprise

Somabay will proudly be hosting the upcoming Oceanman World Final Championship which will be held from the 2nd to the 4th of December. Oceanman is the first and biggest open water swimming franchise in the world, combining amateurs and professionals from all over the world with ages ranging from eight to 70 years old.

M&A WATCH

Aldar-ADQ acquisition of SODIC approved by FRA

Aldar-ADQ bid for SODIC is one step closer to materializing after getting regulatory green light: The UAE’s Aldar Properties and sovereign wealth fund ADQ’s bid to acquire 90% of upmarket real estate developer SODIC is poised to move forward after the Financial Regulatory Authority (FRA) greenlit the offer yesterday, according to a statement (pdf). The market regulator’s signoff comes two months after the consortium presented its offer in September. The regulator released the statement after trading on the EGX closed yesterday.

What’s being offered: The Emirati consortium — which is 70% owned by Al Dar and 30% owned by ADQ — is looking to pay EGP 20 per share in an all-cash transaction, valuing SODIC at around EGP 7.1 bn (USD 452 mn). The final bid saw the consortium up its offer from its original EGP per share 18-19 bid in March, which would have valued the company at EGP 6.6 bn.

Some shareholders want a valuation made public: SODIC had ordered a fair value assessment back in April. If the company makes the results public, it would help “guide minority shareholders on the real value of the company,” Act Financial CEO Bassem Azab told Enterprise. Act is part of a consortium with Hassan Allam Properties and Concrete Plus Engineering and Construction that together is the company’s single largest shareholder, owning a 15% stake. Sharing the fair value assessment with the rest of the market “should help shareholders make the right decision” on Aldar’s bid, Azab said.

What now? Now that the mandatory tender offer got final regulatory approval, the details of the offer should be made public within the coming days and shareholders will be given the chance to weigh in. Shareholders must agree to sell at least 51% of SODIC’s shares for the agreement to go through. Market regulations for MTOs typically give shareholders 10-30 working days to respond and Aldar has the right to adjust its offer price throughout the process.

The interest in SODIC — particularly from a regional player of Aldar’s size — should have a positive impact on the country’s real estate industry as a whole, as it signals foreign appetite for a sector that is underperforming largely because of market dynamics, Azab said. “Even if the transaction doesn’t go through for any reason, just the expression of interest that people want to buy a company in Egypt is a vote of confidence in the economy and stock market,” Azab says. There are also multiple attractive potential targets in other industries for inbound M&A, Azab says, suggesting this is the “key road going forward” to boost the EGX.

Aldar might want more of Egypt’s real estate sector: The acquisition of SODIC “is a part of Aldar’s overall expansion strategy into the attractive Egyptian real estate market, with Aldar currently assessing several opportunities,” it said in September.

OTHER M&A NEWS-

Irish insulation manufacturer wants a piece of construction player ICON: Ireland-based insulation manufacturer Kingspan is bidding to acquire at least 65% of the Industrial Engineering Company for Construction and Development’s (ICON) sandwich panel manufacturing division, ICON said in a disclosure (pdf) to the EGX. The potential acquisition would see ICON spin off the division (which manufactures components used to insulate the exteriors of buildings) into a separate company in which Kingspan would then buy a stake. The non-binding offer will be presented to ICON’s board of directors to assess.

How much are they offering? Kingspan said it would offer the equivalent of 8.5x the unit’s 2021 EBITDA.

CUSTOMS

Your next mobile phone is going to cost more

New tariffs mean more expensive phones: All imported mobile phones will now be subject to a 10% import tariff, according to a presidential decree published in the Official Gazette (pdf). The new tariff is double the 5% import fee originally imposed by the National Telecommunications Regulatory Authority last year and essentially applies to all phones sold in Egypt except for those assembled by local electronics outfit Sico.

Retailers will pass on the cost to consumers: Phone prices could rise 10-14% on the back of the new tariffs, the head of an industry trade body told Al Mal. Issam Badr El Din, director of the mobile traders’ syndicate, told the newspaper that there had been “confusion” between retailers and distributors following the customs hike and that the price hikes will weigh on consumer demand.

Other import fees included in the decision: Solar panels will now be subject to a 10% import tariff, according to the decree. Imports of fully manufactured marble products are also getting a 20% tariff tacked on (up from 2% previously), while tariffs on raw marble will remain unchanged at 2%, a Customs Authority source who wished to remain unnamed confirmed to Enterprise.

BASIC MATERIALS

Slightly less cement oversupply

Local cement production is on course to easily outstrip demand in 2021 despite production cuts being introduced in July to ease the years-long supply glut. But Lafarge Egypt says there are signs market demand is starting to recover, with CEO Solomon Baumgartner-Aviles now projecting a 7% rise in sales this year to 48 mn tonnes,according to Al Borsa. But sales will continue to be outweighed by production, which according to Baumgartner-Aviles sits at around 82.5 mn tonnes.

Producers have been flooding the market with cement for years, with annual production surging to 85-87 mn tonnes in the past three years, far surpassing market demand. A new state-owned plant in Beni Suef only made matters worse, adding 13 mn tonnes of capacity to the market every year since its launch in 2018.

Supply cuts were introduced in July to ease the glut: In place for a year, the quotas compel market players to cut production by at least 10.7%, while additional cuts of 2.81% per production line can also be made. Industry executives have previously said that cement producers could be asked to cut production by at least 10%, as part of a proposal put forward by the Egyptian government to reduce the supply glut that is crippling the industry.

Lafarge wants to leave coal behind: The company is looking to reach an agreement with the government to start relying on natural gas instead of coal, which would allow companies to cut their emissions in half, the CEO said.

A surge in global coal prices this year has put further pressure on the margins of cement companies, most of which rely on coal to power their facilities.

ENERGY

Gov’t working on national hydrogen strategy -Shaker

A national hydrogen strategy is in the works: The government is currently contracting with a global consulting office to develop a national hydrogen strategy, Electricity Minister Mohamed Shaker told CNBC Arabia (watch, runtime: 2:57). He added that we could be seeing a hydrogen project up and running by October 2022, without disclosing the name of the company behind its implementation.

A number of big players are eyeing Egypt’s hydrogen market: Eni, General Electric and ThyssenKrupp have reportedly submitted bids worth a collective USD 2 bn to establish hydrogen plants in Egypt that would produce both green and blue forms of hydrogen.

Policymakers in Egypt have been taking green hydrogen increasingly seriously over the past 12 months, holding talks with a number of international firms about establishing a local industry that has the potential to grow into a key part of the country’s energy mix. Siemens is already on board to set up a pilot green hydrogen production plant, while Norwegian renewable energy company Scatec announced last month that it will build a 50-100 MW green hydrogen facility in Ain Sokhna, in partnership with Nassef Sawiris-backed ammonia producer Fertiglobe and the Sovereign Fund of Egypt. Eni is working with state gas company Egas to produce feasibility studies for manufacturing blue and green hydrogen.

Energy firms have been pushing hydrogen as a greener alternative to traditional fossil fuels — in what some say is a tactic meant to delay the inevitable death of carbon-emitting energy sources.

STARTUP WATCH

Fintech startup HollyDesk raises USD 325k in pre-seed funding

Homegrown fintech startup HollyDesk raised USD 325k in pre-seed funding in a round led by angel investor Faisal Abdel Salam, reports Hapi Journal. The company has been looking to close the six-figure USD funding round since July, and will use the money to develop the team’s technical capabilities, grow the team and its product offering, and expand elsewhere in the region.

About the company: HollyDesk provides a SaaS tool that offers companies real-time expense tracking and management of receivables and payables through a dashboard to manage their finances. Earlier this year, it teamed up with our friends at CIB to provide rapid collection of funds for employees and company-verified parties through electronic wallets.

ALSO FROM STARTUPLAND- Three Egyptian startups were chosen to join Techstars Riyadh accelerator: Tegarti, a cloud-based point of sale and retail management platform, Glamera, an app for booking beauty and health services, and Untap, an all-in-one software for planning, launching managing, and assessing online innovation and talent acquisition programs. The companies will receive an investment of USD 120k each, along with mentoring. Techstars Riyadh is run in partnership with Saudi Arabia’s CIT Ministry and Raed Ventures. The 13-week program began earlier this month and will end in February 2022.

DEBT WATCH

Gov’t finalizes USD 2 bn loan from int'l banking syndicate

The government’s USD 2 bn syndicated bank loan has been finalized and is awaiting approval in the House of Representatives, Finance Minister Mohamed Maait told CNBC Arabia (watch, runtime: 00:45), confirming earlier press reports of ongoing talks with 10 international banks. The facility will reportedly be divided into a USD 1 bn Islamic financing tranche and a USD 1 bn ESG tranche set to target green projects under the Finance Ministry’s green financing framework, local media said last week.

DEVELOPMENT FINANCE

Women-led SMEs to get USD 5 mn in EBRD funding

EBE receives up to USD 5 mn from EBRD to support Egyptian women-led SMEs: The Export Development Bank of Egypt (EBE) has secured a loan of up to USD 5 mn from the European Bank for Reconstruction and Development (EBRD) to on-lend to women-run SMEs in Egypt, according to the EBRD’s website. The loan aims to expand access to funding for female entrepreneurs and increase women’s participation in the economy.

The loan comes under the EBRD’s Women in Business program which provides both financial and technical assistance. The program also saw CI Capital’s microfinance arm Reefy receive EGP 80 mn in development finance last month. The Reefy initiative aims to address the financing gap for women in rural areas.

EDUCATION

Hayah International Academy is coming to West Cairo

Hayah International Academy is coming to West Cairo as it looks to open its Sheikh Zayed campus Hayah West in September 2022 and will start student admissions for the 2022-23 academic year next month, according to a statement (pdf) out yesterday.

Hayah is part of the Egypt Education Fund, an education investment platform backed by GEMS, EFG Hermes, and the Sovereign Fund of Egypt. Established in 2003, Hayah is an IB school and joined the fund in June this year. EEP has several educational brands under its umbrella with two more to be launched soon. This includes GEMS International Schools, Prime National Schools and Hayah Schools. Over the summer EEP added Alexandria’s AIA International School to its portfolio and signed an MoU with Abu Soma Development (ASD) to develop and operate a school in Soma Bay under the GEMS International Schools brand.

enterprise

LAST NIGHT’S TALK SHOWS

Last night’s talk shows were all about our favorite Mediterranean city drowning: Alexandria witnessed an unprecedented amount of rain yesterday, giving us some very concerning and amusing clips of its streets overflowing with water and swallowing cars. Alexandria Governor Mohamed El Sherif said on Ala Mas’ouleety that the city’s streets are now dry and traffic has resumed (watch, runtime: 6:41).

Alexandria has given all non-essential state employees the day off and shut down schools today, not because it’s expecting more showers, but in order for the authorities to easily drain the remaining water from the streets without having the usual volumes of traffic on the roads. Kelma Akhira (watch, runtime: 2:59) and Al Hayah Al Youm (watch, runtime: 1:40) also covered the weather.

EGYPT IN THE NEWS

Forty-five local and international human rights organizations have called on Egyptian authorities to end what they say is the harassment of executive director and founder of the Egyptian Initiative for Personal Rights (EIPR) Hossam Bahgat, who is on trial for allegedly insulting the Elections Authority. A verdict in the case is scheduled for November 29.

Also: Amnesty, the Cairo Institute for Human Rights Studies, and Human Rights Watch criticized the UNDP’s Egypt Human Development Report for ignoring human rights issues and called for it to be reassessed in a letter (pdf) to UNDP head Achim Steiner. And an opinion piece in the Washington Post by Ezzedine C. Fishere criticizes last week’s sentencing of former member of parliament Zyad El Elaimy to five years in jail.

MEANWHILE- Egypt was named the world’s second-best scuba diving destination by Dive Travel for the third consecutive year, singling out Sharm El Sheikh, Hurghada, Dahab and Marsa Alam. Indonesia topped the list and Malaysia, Maldives and Mexico rounded out the top 5.

Also making headlines:

  • Egypt’s efforts to rebuild the Gaza Strip got ink in the AFP;
  • Egypt’s first wheelchair-friendly transportation company, Rahty, got attention in a short video by Reuters (watch, runtime: 1:38).
  • Another day, another archaeological find: German and Egyptian archaeologists discovered remains of a temple belonging to King Nectanebo I at Matareya in Heliopolis. (Al Monitor)

COVID WATCH

Everything you need to know about covid on 23 November 2021

The Health Ministry reported 870 new covid-19 infections yesterday, down from 884 the day before. Egypt has now disclosed a total of 351,267 confirmed cases of covid-19. The ministry also reported 58 new deaths, bringing the country’s total death toll to 19,991.

Pfizer-BioNTech vaccine effective for at least four months in 12-15 year-olds: Phase 3 trials conducted by Pfizer and BioNTech have shown that their mRNA covid jab remains 100% effective against the virus for up to four months in children aged 12-15 years-old, the companies said in a statement. The trials, which involved some 2.3k participants, didn’t reveal any serious safety concerns six months post-second dose, they said.

PLANET FINANCE

Powered by
EFG Hermes - https://efghermes.com/

Another one for the Dubai IPO pipeline as it looks to capitalize on a regional boom in public listings: Shuaa Capital could debut two of its companies — Stanford Marine Group and NCM Investment — on the Dubai stock market by early next year, sources told Bloomberg. The financial group is in the process of hiring investment banks as bookrunners and is in talks with the bourse to list the companies, which have a combined value of USD 545 mn.

The emirate has been playing catch-up on an IPO boom taking place in Abu Dhabi and Riyadh: In recent weeks Acwa Power and Saudi Telecom have both gone public on the Tadawul, while Fertiglobe, Adnoc Drilling Company and Abu Dhabi Ports have all listed on the ADX. In response, Dubai is offering new financial incentives for companies to list on the DFM and announced plans to IPO 10 state-owned firms.

Cross-border lending into EU countries is about to become a lot more difficult, as Brussels plans to crack down on licensing arrangements that allow banks outside of the EU to sell services into the bloc, reports the Financial Times. The new measures would limit all cross-border activity to “reverse solicitation,” meaning that banks will have to wait for an EU client to approach them — without any marketing from the institution — before offering their services. The proposal comes as part of the European Commission’s capital requirements directive, which aims to streamline how global banks operate in the EU and remove discrepancies in what different national regulators in the bloc allow.

Up

EGX30

11,359

+0.8% (YTD: +4.7%)

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

Down

Tadawul

11,172

-2.7% (YTD: +28.6%)

Up

ADX

8,345

+0.1% (YTD: +65.4%)

Down

DFM

3,172

-2.6% (YTD: +27.3%)

Down

S&P 500

4,683

-0.3% (YTD: +24.7%)

Up

FTSE 100

7,270

+0.6% (YTD: +11.7%)

Up

Brent crude

USD 79.70

+1.0%

Up

Natural gas (Nymex)

USD 4.81

+0.4%

Up

Gold

USD 1,811

+0.1%

Down

BTC

USD 56,300

-5.4% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 0.8% at yesterday’s close on turnover of EGP 764 mn (47.4% below the 90-day average). Regional investors were net buyers. The index is up 4.7% YTD.

In the green: Rameda (+6.8%), EFG Hermes (+5.9%) and Pioneers Properties (+3.5%).

In the red: Fawry (-1.7%), Egypt Kuwait Holding-EGP (-0.8%) and Oriental Weavers (-0.6%).

DIPLOMACY

Gaza will start receiving USD 7-10 mn worth of Egyptian fuel paid for by Qatar under a plan to help the financially-stricken enclave pay salaries of civil servants, a Hamas official told Reuters. Under a Hamas-Qatar agreement, the fuel will be delivered to Hamas via the Egyptian border crossing, who would then sell it to petrol stations in the strip and use the money to pay the salaries of civil servants, including teachers and doctors. Qatar said last week that it had signed an agreement with Egypt to work together to provide the Gaza Strip with fuel and basic building materials, but didn’t provide details.

AROUND THE WORLD

Sudan’s military leadership will need to do more if it is to unlock frozen US aid, US Secretary of State Antony Blinken told the country’s leaders yesterday, a day after military leader Abdel Fattah Al Burhan agreed to reinstate Abdalla Hamdok as the country’s prime minister and form a technocratic government. In separate calls to Al Burhan and Hamdok yesterday, Blinken urged them to “work rapidly to put Sudan’s democratic transition back” by releasing all political detainees and lifting the state of emergency. The US suspended USD 700 mn in aid to Sudan last month after Al Burhan led a military takeover, imprisoning Hamdok and other civilian ministers in the transitional government.

Israel and Jordan have agreed to partner in a water-for-energy agreement, Reuters reports. The agreement, the first of its kind between the two countries, was brokered by the UAE and would see Jordan build 600 MW of solar-generating capacity and export the energy to Israel. In return Tel Aviv would provide water-scarce Jordan with 200 mn cubic metres of desalinated water.

Israel is also reportedly in talks with Egypt for a similar agreement: The head of the Israeli prime minister’s office told Bloomberg last week that the two countries were having discussions about establishing Israeli solar plants in Egypt, but provided little details about what is on the table.

Also worth knowing this morning:

  • Oil companies think Libya could be looking more stable as they eye USD bn investments: TotalEnergies will invest USD 2 bn in Libya’s Waha oil project, while Eni will begin working on oil, natural-gas and solar projects ahead of the country’s presidential elections. (Bloomberg)
greenEconomy

Egypt’s EV plans post-Dongfeng: Egypt’s EV assembly plans haven’t been derailed by the recent collapse in negotiations with China’s Dongfeng, representatives of state-owned El Nasr Automotive and renewable energy industry leader Infinity tell Enterprise. El Nasr has received over 13 proposals submitted by prospective partners since the talks with Dongfeng fell through and anticipates having a new partner by the end of the month, Managing Director Hany El Kholy tells Enterprise.

Why did the talks fall apart? El Nasr had signed an agreement with Dongfeng in January to locally assemble EVs in El Nasr’s factory through one of the Chinese group’s subsidiaries. Talks with Dongfeng to locally assemble its E70 electric vehicles came to a halt due to an import pricing dispute with the automaker, according to a Public Enterprises Ministry statement (pdf) released earlier this month.

The rising cost of imported materials was the most significant factor in the negotiation breakdown, says El Kholy. The CNY has strengthened maybe 3% in the past year, but the cost of transporting materials to Egypt from China is up 4x this year, El Kholy says.

Price hikes affect whether fairly-priced vehicles and a good service can be offered, says El Kholy. This kind of partnership should be based on a long-term agreement, with the risk and burden of material cost increases shared between partners, he adds. Otherwise, it would be impossible for El Nasr to sell the EVs at the price point they want to target or provide after-sales service of the quality they want, he adds.

But other issues — including payment terms and the knowledge transfer process — also determine partnership success or failure, El Kholy adds. Important details that need to be finalized in the contracts include the warranties for vehicles and spare parts. “All these things affect the end price and value of the service the consumer receives,” he says.

So what happens now? The search for a new partner: El Nasr is actively looking for a new partner, El Kholy says. Since the collapse of Dongfeng negotiations, it’s received over 13 proposals from other Chinese and European EV manufacturing companies, he says.

The breakdown in negotiations with Dongfeng will likely delay our EV plans — but not significantly: The breakdown in negotiations between El Nasr and Dongfeng will likely only cause only a slight delay in the rollout of the project, Shams Abdel Ghaffar, managing director of Infinity EV, which is working with the government to install EV charging stations around the country. El Nasr had planned to begin locally assembling the Dongfeng E70 vehicles next year, and was aiming to have the first 100 ready by July-August 2022, a target which will now be pushed while the government finds a new partner.

On the bright side: “This could be a chance to bring a brand that’s even stronger than Dongfeng to the Egyptian market,” Ghaffar said. Certain other brands have more of a global presence than Dongfeng when it comes to EVs, he adds.

Slightly increased investment: Price hikes in importing materials are likely to drive a slight increase in El Nasr’s investment in this EV project, El Kholy notes: “We were planning to invest EGP 2.7 bn and now it could go into the EGP 3 bn bracket in the coming period.”

And more EV research: El Nasr won’t be returning the 13 E70 electric vehicles that it imported in June from China and began road-testing in collaboration with Uber in August, says El Kholy. Its engineers and mechanics are being trained on how the EVs work, and taking one apart to better understand its inner workings, he adds. “These vehicles are ours. Now we’re learning from them, and how being exposed to Egypt’s environment affects them.”

An El Nasr subsidiary is already moving forward with plans to manufacture EV microbuses domestically: The Engineering Automotive Manufacturing Company, an El Nasr subsidiary, last week signed a cooperation agreement with private Egyptian tech firm BrightSkies for the two firms to manufacture key components for Egypt’s first locally-assembled electric microbuses, according to a Public Enterprises Ministry statement (pdf).

Meanwhile, we’re waiting for EV charging tariffs — which have been approved by cabinet — to be officially announced by the Electricity Ministry, says Abdel Ghaffar. The tariffs have been set at 1.69 EGP/kWh for public charging stations and 1.89 EGP/kWh for charging stations within privately-owned establishments, says Abdel Ghaffar. The fast-charging tariff is set at 3.75 EGP/kWh for public and private establishments. “For fast-charging, the CAPEX is very high, so the tariff has to be higher to make up for that,” he adds. Infinity is waiting for the Electricity Ministry to officially announce the tariffs so it can launch its customer payment platform for EV charging.

These tariffs are due to be revised annually: The electricity and public enterprises ministries have promised to revise the tariffs on an annual basis, allowing stakeholders to assess their gains and whether they make sense financially for operators like Infinity, says Abdel Ghaffar. “At Infinity, we accepted this tariff to encourage people to make the change to EVs and for the electrification process to start.” While the company doesn’t feel the tariffs are all that lucrative, it’s willing to see how well they work over the coming year, he says. “If they’re insufficient, we were promised they’d be reviewed.”


Your top climate stories for the week:

  • Egypt and Israel are in talks to set up solar power plants in Egypt as part of Israel’s strategy to reduce carbon emissions and boost its green tech sector.
  • Environmental issues topped the Prince of Wales’ agenda during his visit to Egypt last week, discussing Egypt’s environmental initiatives and its selection as host of next year’s COP27 climate conference with President Abdel Fattah El Sisi.
  • Carbon capture promises to be a hot topic at COP 27, with Egypt’s first carbon capture initiative potentially coming in the form of a collaboration between Italian energy firm Eni and the Oil Ministry.
  • Cars and buses in Sharm El Sheikh and Hurghada will either be converted to natural gas or swapped out for EVs by the time COP27 comes to Egypt next year.
  • Companies could lose tns of USD in stranded assets in the green transition, as the shift away from fossil fuels threatens to make tns of corporate assets worthless due to emissions’ reductions rules.

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.

22-24 November (Monday-Wednesday): The Home Appliances and Table Show (HATS Egypt) is taking place, organized by the Engineering Export Council of Egypt.

23 November: 2021 Common Market for Eastern and Southern Africa (Comesa) summit in Sharm El Sheikh.

23 November (Tuesday): Webinar on FinTech Future in Egypt.

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 November (Thursday): Ibnsina Pharma’s extraordinary general assembly meeting (pdf) to discuss the company’s planned capital increase to EGP 280 mn through a share issuance.

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

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

28 November-1 December (Sunday-Wednesday): Creative Industry Summit, Nile Ritz-Carlton.

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).

End of November: El Nasr Automotive expects to have found a replacement for Dongfeng as its partner for its local EV assembly plans.

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.

5 December (Sunday): Purchasing managers’ index figures for November for Egypt, Saudi Arabia, and Qatar will be released.

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.

10 December (Friday): Capmas will release November inflation figures.

12 December (Sunday): Raya Holding’s Ordinary General Assembly meeting.

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 December (Tuesday): Inquiry session for the Industrial Development Authority’s licenses to manufacture steel products.

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.

15 December (Wednesday): Target date for snackmaker Edita to wrap up due diligence on its acquisition of the Ole brand owner Egyptian Belgian Company.

15 December (Wednesday): The European Bank for Reconstruction and Development will give its final approval for a USD 100 mn facility to state-owned Banque Misr to finance local SMEs working on green projects.

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

End of 4Q2021: EdVentures plans to have closed at least one more edtech investment round.

End of 4Q2021: Fawry plans to have launched its MyFawry card.

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

1H2022:: e-Aswaaq’s tourism platform will roll out its ticketing and online booking portal across Egypt.

1H2022: e-Finance’s digital healthcare service platform, eHealth, will launch its services.

1Q2022: Launch of the Egyptian Commodities Exchange.

1Q2022: Swvl acquisition of Viapool expected to close.

1 January 2022: Capital gains tax comes into effect on the EGX for local investors.

7 January 2022 (Friday): Coptic Christmas.

10-13 January 2022 (Monday-Thursday): World Youth Forum, Sharm El Sheikh.

15 January (Saturday): Target date for the finalization of snackfood giant Edita’s acquisition of the Egyptian Belgian Company, owner of the Ole brand.

17-19 January 2022 (Monday-Wednesday): World Future Energy Summit, Abu Dhabi.

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

11 February 2022 (Friday): Deadline for Anghami SPAC merger.

11-13 February (Friday-Sunday) FIBA Intercontinental Cup, Cairo.

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

15 February 2022 (Tuesday): The Industrial Development Authority’s deadline for receiving offers from companies for licenses to manufacture steel products.

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

March 2022: 4Q2021 earnings season.

March 2022: World Cup playoffs.

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.

Late April – 15 May 2022: 1Q2022 earnings season

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 2022 (Friday): Arafat Day.

9-13 July 2022 (Saturday-Wednesday): Eid Al Adha, national holiday.

30 July 2022 (Saturday): Islamic New Year.

Late July – 14 August 2022: 2Q2022 earnings season.

6 October 2022 (Thursday): Armed Forces Day, national holiday.

8 October 2022 (Saturday): Prophet Muhammad’s birthday.

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

Late October – 14 November 2022: 3Q2022 earnings season.

**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.

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