Sunday, 2 January 2022

AM — EGX boss says 4-5 companies could offer shares this year

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people, and welcome to our first EnterpriseAM of 2022. We hope you had a fantastic New Year’s weekend and are looking forward to the new year as much as we are.

PSA #1- We’re waiting for word from on high about whether or not this Thursday, 6 January, will be a national holiday in celebration of Coptic Christmas, which falls on Friday. We expect it will be and hopefully we’ll soon see notes from cabinet / the central bank / the stock market in our inboxes.

PSA #2- Schools will be closed in the Red Sea cities of Sharm El Sheikh, Hurghada and Safaga today as well as in Assiut, Al Masry Al Youm reports. The torrential rain, thunderstorms, strong winds, hail and even snow seen in some parts of the country over the weekend are expected to ease today, with conditions stabilizing nationwide by Monday, according to the Egyptian Meteorological Authority (pdf). School was out in five governorates yesterday, including Alexandria. Three people were killed and 13 injured in weather-related accidents on Friday, Ahram Gate reported, citing a Health Ministry’s spokesperson.

There’s a chance of a few sprinkles this afternoon in Cairo with a daytime high of 19°C, falling to 11°C overnight. Expect typical winter weather for the rest of the week, with highs in the 18-19°C band through next Sunday and the lows falling to single digits overnight.

PSA #3- You only have a few days left to take our annual reader poll — and join us for breakfast. Every year, we ask our readers to weigh in on what you expect for the year ahead in our Enterprise Reader Poll. Take a few minutes to give us your take on the outlook for your business and industry, whether you’re planning fresh investments and new hires, and how your business fared in the year past. We’ll share the results with the entire community next week to help shape your view of the year — and will invite eight of you to break bread with us. Another dozen of you who complete the poll will also get special Enterprise mugs to enjoy your morning beverage of choice.

PSA #4- Did you get jabbed with Sinopharm or Sinovac? Mabrouk — Canada now recognizes you as fully vaccinated if you have had two jabs at least 14 days before travel. The Great White North joins the UK and US in recognizing the vaccines.

WHAT’S HAPPENING TODAY-

Employees at private sector companies will now be paid a minimum wage of EGP 2.4k a month after a new rule came into effect on 1 January.

Well, some of them will: Thousands of companies have been given a six-week grace period from paying the minimum wage after requesting exemption on the basis that they cannot afford to up salary expenditure. Firms that have applied for exemption will not have to comply with the new wage requirements until at least mid-February, while the government takes a decision on whether to exempt them.

SMART POLICY- No company is getting a permanent exemption from paying the new minimum wage, Magdi El Badawy, member of the National Council for Wages (NCW), said yesterday (watch, runtime: 8:00). Temporary exemptions lasting three months will be given to firms that cannot afford to meet the requirements, which will be reviewed by the NCW at the end of the period, he said.

Also now in effect: the EGX capital gains tax. As of today’s trading session, resident investors will face a 10% capital gains tax on EGX transactions. The tax will be imposed on net portfolio earnings at the end of the tax year after deducting brokerage fees. Foreign investors are not subject to the tax.

The EGX30 closed up 10.2% YTD as of the final trading day of the year. The EGX lagged our regional competitors in 20201: The Nasdaq Dubai was up 21.4% at the end of the year; the ADX closed up 26.1%; and Saudi’s Tadawul climbed 29.8%.

THE BIG STORY ABROAD (other than the fact that it’s now 2022) is a tie between two record-breakers: The omicron variant, which led Australia and New York on Saturday to set fresh records for new daily covid cases. The silver lining: Research out of South Africa suggests the variant is significantly less deadly than was the delta version of the virus.

ALSO- Stock markets had a bumper year in 2021.

CIRCLE YOUR CALENDAR-

It’s the start of a new month. The key news triggers to keep your eye on:

  • PMI: Purchasing managers’ index figures for December for Egypt, Saudi Arabia, and Qatar will be released on Tuesday, 4 January. Figures for the UAE will be released on Wednesday, 5 January.
  • Foreign reserves: December’s foreign reserves figures will be announced before the week is out.
  • Inflation: Inflation figures for December will be released on Monday, 10 January.
  • Interest rates: The Central Bank of Egypt (CBE) will hold its first policy meeting of 2022 later this month. The CBE hasn’t yet published its meeting schedule for the year so we’re still waiting on an exact date.

PSA #5- The Taxman would very much like it if you were to soon file your 2021 tax returns: The deadline for submission for individuals is 31 March, while the deadline for companies with January-December fiscal years is 30 April.

OPEC+ is meeting this Tuesday, 4 January. The cartel agreed in December to continue ramping up oil production despite concerns that the spread of the omicron variant could hit energy demand. Pundits see it sticking to its planned monthly production increases at this week’s meeting.

Expect progress in El Nasr Auto’s EV talks this month: That was the message delivered to Al Borsa by CEO Hani El Khouly over the weekend. The newspaper quotes him as saying the company will make an announcement at the end of the month on its talks with foreign auto firms to begin assembling electric vehicles in Egypt. El Nasr is now talking to seven international companies, El Khouly said. The talks come after negotiations with Chinese auto firm Dongfeng collapsed in November.

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


IN CASE YOU MISSED IT- Check out our look back at 2021. We published last week our annual roundups of the top business, finance and policy stories of the year. Finance nerds, VC types and folks building businesses and Planet Startup will want to pay close attention. Also- This morning’s What’s Next vertical covers fundraising by startups in 2021.

enterprise

*** It’s What’s Next day: We have our weekly deep-dive into what makes and shapes pre-listed companies and startups in Egypt, the UAE and KSA, touching on investment trends, future sector insights and growth journeys.

In today’s issue: We take a look at what our internal trackers tell us about Egypt’s 2021 startup investment rounds in terms of size, types of investors, and sectors. What we can say up front is that fintech and e-commerce are tying for the top position in terms of number of transactions, and international investors are more interested in Egypt than ever before.

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IPO WATCH

4-5 companies could sell shares on the EGX this year -Farid

Four or five companies could offer shares on the EGX in 2022, Hapi Journal reported EGX boss Mohamed Farid as saying last week. Ten companies have contacted the bourse regarding listing shares on the exchange, he said, without providing further details.

In the running to become the first of 2022: Nahr Elkhair Development and Investment, which last week received the greenlight to IPO from the EGX listing committee, according to a bourse statement. The agricultural company’s 2 bn shares will today be admitted to trading on the exchange at a par value of EGP 0.10 apiece ahead of the sale, which could see as much as 61% of the company offered to investors.

Look for the IPO to be worth up to EGP 500 mn, the FRA statement implies. The company, which operates in land reclamation and livestock, among other sectors, will see its shares trade under the ticker KRDI.CA. Nahr Elkhair was originally looking to offer a 25-40% stake to investors.

ADVISORS- Baker McKenzie is providing legal advice to Nahr Elkhair. We’re not clear on which investment bank(s) are leading the transaction.

Also lined up for EGX debuts this year: Cosmeceuticals giant Macro Group is set to offer up to 45.8% of its shares in a transaction that could value the company at around EGP 3.5 bn before its FRA approval expires on 23 January, though an official timeline has not yet been set. Healthy food brand Abu Auf also has its eye on a 2Q2022 listing, having recently tapped EFG Hermes to quarterback the transaction, while non-bank financial services player Ebtikar could go to market in early 2022. Ghazl El Mahalla Football Club is also offering shares in a micro-IPO (see story below).

EDITOR’S NOTE: This story was corrected on 12 January, 2021 to reflect that the EGP 3.5 bn figure refers to the potential value of 100% of Macro Group’s shares, not the 45.8% of shares set to be offered in the transaction. 

PRIVATIZATION WATCH

Ghazl El Mahalla FC hits the EGX next month + SFE makes progress on stake sale plans

Ghazl El Mahalla FC shares are set to begin trading on the EGX in February, the Public Enterprises Ministry said in a statement (pdf). The EGP 37 mn institutional component of the football club’s offering wrapped last Tuesday, according to the statement. The EGP 98 mn public offering to individual retail investors is still pending sign-off from the club’s general assembly, which is set to meet “soon,” the statement says.

Refresher: Ghazl El Mahalla is offering a 67.5% stake in its IPO, which is expected to raise EGP 135 mn. The transaction will mark the first time a football club is publicly traded in the Arab world, and could pave the way for more IPOs of this sort — football giant Al Ahly has also expressed interest in offering as much as 49% of the club.

Advisors: Prime Holding is acting as bookrunner on the offering.

ALSO ON THE PRIVATIZATION FRONT- Could we soon see concrete steps towards the sale of stakes in the Siemens power plants + military companies? High-level talks on the Sovereign Fund of Egypt’s (SFE) plans to sell stakes in the three Siemens-built power plants and a handful of military-affiliated companies took place last week. Prime Minister Moustafa Madbouly, Electricity Minister Mohamed Shaker, Planning Minister Hala El Said, SFE CEO Ayman Soliman, National Service Projects Authority (NSPO) Deputy Director Major Gen. Khaled Farouk, and other officials took part in the discussions last week, cabinet said in a statement, without providing further information.

BACKGROUND: The SFE in 2019 said it could acquire a 30% stake in the three combined-cycle power plants, while the remaining 70% would be sold to one or more private sector investors. The fund could in the future offer a stake in the plants on the EGX or an international bourse, as a way to stimulate FDI inflows, Soliman said at the time.

On the military-owned companies front: The SFE is also looking at 10 firms owned by the NSPO with a view to bringing in strategic investors ahead of potential IPOs at a later date. Bottled water brand Safi was gearing up to sell a minority stake to a strategic investor last year, while Wataniya Petroleum was expected to sell a major stake to an investor in 2H2021. Both companies had earned plenty of investor interest.

DEBT WATCH

The end of year dash to the securitization finish line

Companies raised a combined total of nearly EGP 1.75 bn in three securitizations last week as the securitized bond market saw a flurry of activity to close out the year.

By our count, this brings the total number of securitized bond issuances that went to market last year to 19, with a combined value of EGP 15.8 bn. We expect a few more issuances to close soon, as the Financial Regulatory Authority said late last month (pdf) it would approve 11 sales worth a combined EGP 11.5 bn before the end of 2021.

EFG Hermes Corp Solutions closed its first EGP 790 mn securitized bond issuance last week, part of a wider EGP 3 bn program, EFG Hermes said in a statement (pdf) on Thursday. The issuance is backed by a EGP 815.1 mn receivables portfolio covering 47 lease contracts. EFG Hermes was the sole financial advisor, sole transaction manager and book runner, underwriter, and sole arranger on the issuance.

Pioneers Properties closes EGP 627.5 mn securitized bond issuance: EFG Hermes was also the sole financial advisor, sole transaction manager and book runner, underwriter, and sole arranger on a EGP 627.5 mn securitized bond issuance on behalf of Pioneers Properties for Urban Development on Thursday, according to a statement (pdf). The issuance, which was the first tranche of Pioneers’ EGP 3 bn bond program, is backed by a EGP 798.3 mn receivables portfolio, the statement notes.

Rawaj Consumer Finance also closed a EGP 305.5 mn securitized bond issuance, according to a press release (pdf) on Thursday. The issuance is backed by account receivables from Tawriq for Securitization. Misr Capital was sole financial advisor, bookrunner, arranger, and general coordinator for the transaction. Misr Capital, Banque Misr, National Bank of Egypt, and Arab African International Bank acted as underwriters for the issuance. Dreny & Partners acted as legal advisors and Ernst & Young as auditor.

ENERGY

Israel-UAE’s answer to the Suez Canal just got blocked

Suez Canal rival nixed by Israeli gov’t: A proposed oil transport corridor between the UAE and Israel that could have undermined the Suez Canal’s role as a major trade artery appears to have been spiked. Israeli environment minister Tamar Zandberg said last week that the agreement to use Israel as a transit country for Emirati oil heading to Europe has been blocked by the justice ministry, according to the Associated Press.

The accord could have allowed one of the region’s biggest oil producers to skirt the Suez Canal and dent its revenues: A secret agreement between Israel and the UAE last year would have seen Emirati oil delivered via tankers to Israel’s Red Sea port of Eilat before being sent to the Mediterranean via the existing Eilat-Ashkelon pipeline and onwards to Europe. The plan was positioned by Israel’s state-owned Europe Asia Pipeline Co (EAPC) and its new partner Med-Red — a consortium of Emirati and Israeli companies — as offering a quicker, less costly alternative to the Suez Canal.

STARTUP WATCH

Three edtech startups close rounds

EdVentures, ASRT go big on edtech: Three edtech startups received unspecified equity investments from education focused VC EdVentures and the Academy of Scientific Research and Technology (ASRT) — a nonprofit organization affiliated to the Higher Education Ministry, according to a press release (pdf). The startups, OBM Education, Super Fny, and Crafty Workshop, will also receive in-kind support, including training and mentorship, as part of the transaction.

About the companies: OBM Education offers content to pre-university students through online and in-person training programs and events. Meanwhile, Super Fny provides technical, vocational, safety, soft skills, and entrepreneurship training for professionals, and connects employers with jobseekers. Finally, Crafty Workshop offers business-oriented courses for craftspeople on product development, photography, pricing, marketing, branding, and finance.

POLICY

Out with the in-kind, in with the banknotes

Farmers could soon be getting cash subsidies for fertilizers instead of in-kind subsidies, after President Abdel Fattah El Sisi called for the switch last week at the inauguration of expansions to the Kima 2 ammonia and urea industrial complex in Aswan (watch, runtime: 21:20). The move away from in-kind subsidies could end the parallel market trade in fertilizers, while providing farmers with the direct liquidity to buy their fertilizers would help factories better assess local market needs before earmarking for exports, El Sisi said. The president also urged farmers to adopt modern irrigation systems, which slash fertilizer consumption needs by 40-50%.

This comes as fertilizer prices surge on the back of global commodity costs. The government gave producers the green light in December to hike prices at which they sell subsidized urea fertilizers to farmers by 50% to EGP 4.5k per ton. The increase comes shortly after the government raised natural gas prices for industry, hiking rates by up to 28% for businesses including fertilizers, iron and steel, petrochemical, and cement makers.

Analysts give the move a thumbs up: The president’s directives will “put an end to the black market and ensure that the subsidy reaches those in need,” CI Capital said in a report on 29 December. The move could also cut down on the overuse of nitrogen fertilizer, “which in Egypt is >4x the global average,” the investment bank said.

The move is consistent with the Sisi administration’s general policy direction for subsidies: Back in 2017, the Supply Ministry ended subsidies on flour used to produce subsidized bread to put an end to fraud that saw the flour traded on the black market. The ministry instead subsidizes only the price of the final loaves. The government also drafted a new Cash Subsidies Act in mid-2019 to govern a new system of direct money transfers instead of the current setup of in-kind subsidies using ration cards. The new system is designed to be more efficient and streamlined, while cutting down on subsidy fraud. The Takafol and Karam social welfare programs, launched in 2015, pioneered the idea in Egypt by providing cash subsidies directly to qualified beneficiaries.

El Sisi ordered a rework of the subsidy system several times last year, including calling for the introduction of a modernized, digitized ration card program, which he said would help end the large-scale misallocation of welfare subsidies.

Also rising: Sugar prices. The government has hiked prices at which it sells sugar by almost 25% in response to rising international prices. A kilo of sugar will now be sold at EGP 10.50, up from EGP 8.50, Al Masry Al Youm quoted Supply Minister Ali El Moselhy as telling reporters last week. International prices of raw sugar have surged some 57% since 1H2020, Prime Research wrote in a note last week.

The move will have a noticeable impact on inflation, according to analysts at CI Capital in a note last week. They expect the rising prices of sugar to add another 0.15 percentage points onto the headline rate.

SMART POLICY- Could we see higher piped water prices soon? The government has wrapped a feasibility study on reworking piped water consumption tiers for both residential and non-residential use, which Prime Minister Moustafa Madbouly reviewed last week, according to a cabinet statement. The statement doesn’t provide further details on what the restructuring would look like, or how much we can expect prices to increase. Piped water prices were last raised in 2018, when the government hiked prices across all consumption tiers by up to 46.5%.

DEVELOPMENT FINANCE

Egypt admitted as new member of NDB

Egypt is now part of the BRICS-led New Development Bank (NDB) after the bank admitted us as a member thanks to our position as “one of the world’s fastest growing countries,” according to a statement. Egypt is the fourth new member admitted into NDB, after Bangladesh, the UAE, and Uruguay joined in September. Our membership in the bank will give us access to support for infrastructure and sustainable development investment through public or private projects.

What is the NDB? The USD 100 bn Shanghai-headquartered bank was launched in 2015 by the BRICS group of major emerging economies: Brazil, Russia, India, China and South Africa. The international organization mobilizes resources for infrastructure and sustainable development projects in BRICS and other developing nations.

MEANWHILE- Egyptian SMEs to receive EGP 300 mn in Saudi finance: The Saudi Arabia Grant Management Committee will provide EGP 300 mn in grants to Egyptian SMEs after inking agreements with the Industrial Development Bank, Banque du Caire and Enmaa Finance, the International Cooperation Ministry said Friday. The committee has provided some EGP 1.5 bn to around 2.6k Egyptian SMEs to date, according to the statement.

CAPITAL MARKETS

EFG Hermes tops EGX brokerage league table for 2021

EFG Hermes topped the EGX’s brokerage league table for the year with a market share of 18.9%, according to figures from the EGX (pdf). Rounding out the top five were CI Capital with 10.1%, followed by Al Ahly Pharos with 6%, Beltone with 5.9% and Pioneers Securities with 5.4%.

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LAST NIGHT’S TALK SHOWS

Expect a decision by March on how bread subsidies will be reworked -Moselhy

Subsidies were the topic of the night on the talkshows as Supply Minister Ali El Moselhy phoned into Ala Mas’ouleety to discuss the government’s plans to increase the price of subsidized bread (watch, runtime: 8:14 | 7:39 | 3:52). The ministry is considering several scenarios — which include targeted subsidy cuts that ringfence the most vulnerable people and replacing bread subsidies with cash payments — and will take a final decision by the end of March, he said.

Price rises were signposted last summer by President Abdel Fattah El Sisi, who suggested that the government would make a “modest” reduction to bread subsidies for the first time in a generation. Bread is currently sold for EGP 0.05 per loaf but costs EGP 0.6-0.65 to produce.

Mahmoud Mohieldin on Min Masr: To secure a high economic growth rate, Egypt needs to secure public, private, and foreign direct investment equivalent to 25% of its GDP, IMF Executive Director Mahmoud Mohieldin told Min Masr’s Amr Khalil. Over the past decade, that figure has averaged 15-18%, meaning we need to work to attract more investments. The government’s megaprojects are a key contributor to the country’s overall investment levels, Mohieldin said, but private sector investments and FDI need to be tripled from their current figures to spur job creation and sustainable growth. This growth, especially when it is underpinned by a strong base of local industry and exports, will help keep inflation from biting citizens’ pockets too hard, Mohieldin said, noting that the current national inflation rate is “reasonable” (watch, runtime: 26:24).

You can read more on the proposed changes to the subsidy system in today’s newswell, above.

EGYPT IN THE NEWS

Citroën Egypt has pulled an advertisement that triggered an uproar on social media over [redacted] harassment, writes BBC. The ad had featured singer Amr Diab riding a Citroën vehicle and taking a photo of a woman crossing the street without her consent using a built-in camera feature in the car. The story is getting ink everywhere, including: BBC | AFP | Associated Press | Washington Post | Independent | National | Al Monitor.

Also making headlines:

  • Our smoking habits make it to the foreign press: The government’s decision to ban shisha to contain the spread of the coronavirus has stripped away one of the nation’s most beloved pastimes. (Washington Post)
  • Mo Salah has been voted Premier League player of the year in a BBC poll, claiming 60% of the votes ahead of West Ham midfielder Declan Rice, who came second with 7%. (BBC)

ALSO ON OUR RADAR

Other things we’re keeping an eye on this morning:

  • The Prosecutor General referred to trial four individuals on charges of graft and abuse of power relating to an alleged EGP 5 mn bribe to reverse a Health Ministry decision to shut down an unlicensed private hospital, according to a statement.
  • Dana Gas collections from Egypt shot up 130% y-o-y to USD 184 mn in 2021 (pdf), reducing our arrears to their lowest level since the company started operating here in 2007.
  • Lebanon could begin receiving gas from Egypt by the end of February via a repaired pipeline crossing Jordan and Syria, according to a Lebanese presidency statement.

COVID WATCH

Tightening restrictions in the Gulf as omicron spreads: Masking and social distancing mandates came into effect again in Saudi Arabia last week, according to the Saudi Press Agency, while the UAE will introduce a travel ban for all unvaccinated citizens starting 10 January, according to Emirati state-run news agency WAM.

The Health Ministry reported 783 new covid-19 infections yesterday, down from 847 the day before. Egypt has now disclosed a total of 386,358 confirmed cases of covid-19. The ministry also reported 16 new deaths, bringing the country’s total death toll to 21,768.

We received 347k AstraZeneca jabs last week, the Health Ministry announced. The ministry did not disclose where we received the jabs from.

Sinovac shot + Pfizer booster less effective against omicron: The two-dose Sinovac shot followed by a single Pfizer booster produces a lower immune response against the omicron variant than previous forms of the virus, according to a new study. The combination of vaccines produced 6.3x less antibodies against omicron compared to the original strain of the virus, researchers from Yale University and the Dominican Republic Health Ministry found.

PLANET FINANCE

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2021 was the year of the “everything rally,” as financial markets enjoyed a record-breaking comeback fueled by governments and central banks rolling out huge support programs, writes the Financial Times. The MSCI All-Country World index of global stock markets rose to USD 756.40 on Wednesday, compared to USD 645.29 on 30 December 2020 — the third consecutive year of double-digit returns.

US stocks had a pretty spectacular 2021: Both S&P 500 and Nasdaq gained about 27% during the year, beating out even the most bullish of outlooks.The S&P 500 ended the year at 4,766, a significant increase from analyst expectations, whose average forecasts sat at 4,074 at the start of the year, Bloomberg wrote.

But the UK and EMs have been largely been left on the sidelines: The MSCI UK kept up a decade long-trend of falling behind global peers, gaining only 11% in 2021, compared to 69% increase in Europe’s and 287% in the US. Analysts attributed the lag to Brexit and the lack of fast-growing tech stocks in the market. Meanwhile, the MSCI Emerging Markets index was down 5% in late December, dragged down by crackdowns in China on major sectors and stocks.

There is, however, optimism from some quarters on EMs: Emerging markets’ equities could return 18% in 2022 as corporate earnings grow and China’s clampdown subsides, JPMorgan strategists have predicted in the investment bank’s 2022 outlook. Meanwhile, a Bank of America fund managers survey cited by the FT suggests that EM stocks could provide some of the best returns over the year.

ALSO- The super-rich got super-richer: The collective fortune of the world’s 500 richest people jumped by more than USD 1 tn during 2021 on the back of soaring equity markets and rising valuations. The combined net worth of people featured on the Bloomberg Bn’aires Index is now more than USD 8.4 tn, with a record 10 people with fortunes exceeding USD 100 bn and more than 200 people being worth over USD 10 bn.

…unless they happened to head a Chinese tech company: China’s 10 richest tech tycoons lost almost a quarter of their wealth (i.e. USD 80 bn in net worth) in 2021, due to crackdowns by regulators, Bloomberg adds.

Up

EGX30

11,949

+0.4% (YTD: +10.2%)

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

11,282

+0.7% (YTD: 0.0%)

Up

ADX

8,488

+0.5% (YTD: 0.0%)

Up

DFM

3,196

+0.7% (YTD: 0.0%)

Down

S&P 500

4,766

-0.3% (YTD: 0.0%)

Down

FTSE 100

7,384

-0.3% (YTD: 0.0%)

Down

Brent crude

USD 77.78

-2.2%

Up

Natural gas (Nymex)

USD 3.73

+4.75%

Up

Gold

USD 1,829

+0.8%

Up

BTC

USD 47,301

+1.9% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 0.4% on Thursday on turnover of EGP 1.1 bn (16.1% below the 90-day average). Local investors were net buyers. The index is up 10.2% YTD.

In the green: Gadwa Industrial Development (+6.4%), Aspire Capital (+4.3%) and Pioneers Properties (+3.1%).

In the red: Fawry (-1.8%), Egypt Kuwait Holding (-1.2%) and CIRA (-1.0%).

whatsNext

Egypt’s startup scene in 2021 (Part I): Startups just keep breaking those investment records. Egypt has heard of some big funding rounds this year, as ticket sizes are growing and the total number of fundraising rounds across the startup scene is increasing. Acquisitions have also been more frequently mentioned in 2021 than any year before.

We take a look at what our internal trackers tell us about those investment rounds in terms of size, types of investors, and sectors. What we can say up front is that fintech and e-commerce are tying for the top position in terms of number of transactions, and international investors are more interested in Egypt than ever before.

DISCLAIMER- These numbers are — at best — approximations, with 17 startups only disclosing that they had raised a “6- or 7-figure round” and 19 others preferring to not name an exact amount.

Our internal trackers count 76 investments in Egyptian startups in 2021, a 55% increase from 49 in 2020. September, November and December clearly were prime time for startup investments. Eleven closed investment rounds were announced in the last month of 3Q2021 and 4Q2021 each, and 12 in November. The most discreet months of the year were April and August, with only three investments each — but there wasn’t a single month all year devoid of investment announcements.

Egypt’s startups raised well over USD 373 mn this year compared to over USD 100 mn last year, according to our data. One of them said it had raised more than USD 1 mn, which is also not precise, as well as another that announced a “multi-mn USD investment.”

Government-backed VC Egypt Ventures invested some EGP 92 mn in startups and accelerator programs in 2021, the International Cooperation Ministry said in a statement. The investments include EGP 75 invested directly in businesses, and another EGP 17 mn that were earmarked for accelerator programs by Falak Startups and EFG-EV Fintech.

And accelerators have been quite active, too. Besides the above-mentioned investment rounds, EFG-EV made two unannounced investments, with the outfit investing a total of USD 1 mn in five transactions in 2021, CEO of EFG-EV Mahmoud El-Zohairy told us. Flat6Labs poured USD 3.14 mn into 29 local transactions through its accelerator program and other rounds, according to regional investment associate at Flat6Labs Cherif Hamdi, of which four were announced and included in our tracker. Falak Startups joined six more investment rounds worth over USD 413k in 2021, besides the two included in our tracker, CEO of Falak Startups Ahmed Hazem told us.

There are other indicators that set the bar for that number a notch higher. ITIDA CEO Amr Mahfouz estimated the number to be USD 400 mn in October, while database Africa: The Big Deal puts a USD 588 mn label on Egypt, as of 1 December.

Setting aside MNT-Halan, the average transaction raised was almost 3x this year compared to 2020. Of those who disclosed a precise figure, the average raised this year per transaction was USD 6.09 mn, up from USD 2.38 mn in 2020.

The five largest tickets in 2021? Most of them were series A rounds: MNT-Halan raised USD 120 mn, followed by Trella’s USD 42 mn series A round. Maxab announced a USD 40 mn round, while Capiter and Breadfast saw USD 33 mn and USD 26 mn, respectively, go into their bank accounts.

Some 60% of investments had international involvement, compared to 53% last year. In previous years, “international” involvement mostly referred to regional investors, but this year we’ve seen investors from Japan, the UK, Switzerland, pan-Africa, Canada, Japan, and even Ireland join local funding rounds. We even had Silicon Valley’s Sequoia Capital enter the region for the first time through its investment in fintech outfit Telda.

Fintech and e-commerce are almost tied again for the top sectors of 2021, which was also the case in 2020. Fintech saw 13 transactions, while e-commerce (between B2B and B2C) saw 11 investment rounds.

What’s new and interesting about this year is where the biggest pickups in investment rounds happened: Edtech, had 8 investments (up three from last year), and healthtech and grocery delivery had five investments apiece. Taking on supply chain solutions has also proven to become more popular, with six rounds in the logistics sector. Proptech, which was barely seen in the past years, nailed 3 investment rounds.

Pre-seed and seed rounds were all the rage this year: We saw 28 pre-seed rounds and 23 seed rounds raised in 2021, accounting for the bulk of this year’s rounds. Twenty-three companies did not specify for which rounds they were raising, seven raised a pre-series A, six announced series A rounds, and nine companies ranged between bridge rounds and other types of funding.

Pre-seed rounds specifically kept breaking records in the first half of the year. Dayra started off with a USD 3 mn round in March, after which Flextock raised USD 3.25 mn in May, followed by Telda’s announcement of a USD 5 mn pre-seed round. But the largest we heard of to-date was Rabbit’s USD 11 mn round in November.

What do startups want to do with all those USDs? Mainly geographical expansion. Thirty-three startups want to either enter new locations within Egypt, or venture beyond our borders, most popularly into MENA and the GCC. Hiring and product development were also among the most sought ambitions of startups that raised investments in 2021.

Five acquisitions from the local startup world graced our news coverage last year. Eventtus was acquired by US event management platform Bevy, South African home services firm SweepSouth bought Filkhedma, CIRA acquired 51% of education startup Innovvette, Tareeqi was scooped up by Oman-based e-Mushrif, and Jordanian B2B healthtech platform Aumet acquired Egyptian startup Platform One.

And startup-to-startup acquisitions have also seen a (small but noteworthy) spike. B2B commerce platform MaxAB acquired Moroccan startup WaystoCap last summer, Egyptian edtech startup Tyro bought local edtech outfit Nafham, and Egypt-based customized celeb video platform Minly scooped up Emirati celebrity shout-out platform Oulo.

More seasoned entrepreneurs and founders are starting new businesses: “Entrepreneurship is attracting people with more experience, which we will see even more of in 2022” managing partner at Algebra Ventures Tarek Assaad tells us.

Next week, we’ll dive into how investment vehicles in Egypt developed over the past year, before we tell you what (we think) is in store for 2022.


Your top stories on future trends for the week:

  • MENA SPACs this month: Swvl and Anghami are expected to complete their SPAC mergers and list on the Nasdaq in the second half of January.
  • Startup buys startup: Jordanian B2B healthcare marketplace Aumet has acquired 100% of Egypt-based digital pharmacy supplier Platform One.
  • A record year for Africa tech investment: African tech startups raised a record USD 5 bn of investment in 2021, with most of the funding concentrated in Nigeria, South Africa, Kenya and Egypt, according to a report from Briter Bridges Intelligence cited by Bloomberg.

CALENDAR

Early 2022: Results to be announced for the second round of the state’s gold and precious metals auction.

1Q2022: Launch of the Egyptian Commodities Exchange.

1Q2022: Swvl acquisition of Viapool expected to close.

1Q2022: Waste collection startup Bekia plans to expand to the UAE and Saudi Arabia.

1Q2022: Macro Group intends to IPO on the EGX.

January 2022: Tenth of Ramadan dry port tender to be launched.

January 2022: NilePreneurs is launching a training program that aims to increase the industrial capacity of SMEs in the automobile manufacturing, home appliances and engineering industries.

1-15 January (Saturday-Saturday): Qualified Industrial Zones (QIZ) Joint Committee.

4 January (Tuesday): OPEC+ ministerial meeting.

7 January (Friday): Coptic Christmas.

9 January – 6 February (Sunday-Sunday): 2021 Africa Cup of Nations, Cameroon.

10-13 January (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.

Second half of January: Egypt will host the Egyptian-Bahraini Joint Committee.

Second half of January: Regulations for installing EV charging stations will be published.

16 January (Sunday): SODIC shareholders will vote on the company’s new board of directors at an extraordinary general meeting.

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

20 January (Thursday): Kadmar Shipping’s new line transporting agricultural crops between Alexandria and Russia begins its operations.

23 January (Sunday): Deadline for Macro Pharma to IPO on the EGX.

25 January (Tuesday): 25 January revolution anniversary / Police Day.

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

End of January: The Egyptian-Romanian business forum will take place with the aim of strengthening joint investment relations.

January-February 2022: Construction work on the Abu Qir metro upgrade will begin.

February: Hassan Allam Construction’s new construction firm established with Russia’s Titan-2 to handle construction work on the Dabaa nuclear power plant begins its operations.

February: Ghazl El Mahalla shares will begin trading on the EGX this month.

Mid-February: End of grace period to comply with new minimum wage for firms who sent in exemption requests.

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

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

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

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

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

End of February: Lebanon to receive gas from Egypt via a pipeline crossing Jordan and Syria.

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

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

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

1H2022: The government will respond to private companies’ bids to build desalination plants.

March: Rollout of the government financial management information system (GFMIS), a suite of electronic tools to automate the government’s financial management processes (pdf) that will replace the existing “closed” financial management system.

March: 4Q2021 earnings season.

March: Deadline for the World Health Organization’s intergovernmental negotiating body to meet to discuss binding treaty on future pandemic cooperation.

March: World Cup playoffs.

31 March (Thursday): Deadline for submitting tax returns for individual taxpayers.

31 March (Thursday): Supply Ministry expected to take final decision on bread subsidies by this date.

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

3 April (Sunday): Bidding begins on the Industrial Development Authority’s license to manufacture tobacco products.

4 April (Monday): CDC Group will formally change its name to British International Investment.

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

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

25 April (Monday): Sham El Nessim.

25 April (Monday): Sinai Liberation Day.

30 April (Saturday): Deadline for submitting corporate tax returns for companies whose financial year ends 31 December.

Late April – 15 May: 1Q2022 earnings season

May: Investment in Logistics Conference, Cairo, Egypt.

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

15-18 June: St. Petersburg International Economic Forum (SPIEF), St. Petersburg.

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

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

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

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

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

July: A law governing ins. for seasonal contractors will come into effect.

8 July (Friday): Arafat Day.

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

30 July (Saturday): Islamic New Year.

Late July – 14 August: 2Q2022 earnings season.

September: Egypt will display its first naval exhibition with the title Naval Power.

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

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

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

Late October – 14 November: 3Q2022 earnings season.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across 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. © 2021 Enterprise Ventures LLC.

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