AM — The EGX could see its first SPAC by the end of Jan

Good morning, friends, and welcome to an incredibly busy issue packed with news of SPACs, IPOs, new debut issuance and new investment. It’s a bit like drinking from a fire hose this morning, so let’s jump straight in after this public service announcement:

PSA- It looks like we’ll need to keep wrapping up warm until at least the end of the week as cold winds from Europe sweep across the country, potentially bringing snowfall in some parts of Sinai, the national weather service forecast yesterday. In the capital, the mercury won’t get higher than 17°C between today and Sunday, while lows will remain at 8°C — a range our favourite weather app’s long-range forecast says will largely prevail through 1 February.

WHAT’S HAPPENING TODAY-

Consoleya will kick off its Startup Meet-up series today with a talk from Ayman Ashour, founder and principal at Newton International Management. The talk, titled Exits and Reset Dilemmas, will see Ashour discuss how to plan for your startup’s exit and the connections you’ll need along the way. Our friend Hossam Allam from Cairo Angels will moderate the discussion. The event will take place from 6-9pm — you can register using this link.

The World Economic Forum’s virtual Davos Agenda continues today: Davos 2022 may be canceled, but that hasn’t stopped the world’s political, corporate and intellectual powerbrokers from getting together for a chin-wag. The online five-day Davos Agenda (on until Friday) is seeing world leaders, business figures and scientists deliver speeches and participate in discussions on the challenges facing the world.

Chinese president Xi Jinping is getting most of the headlines on Day 1, which also saw Indian prime minister Narendra Modi and UN secretary-general António Guterres deliver speeches. In his statement, Xi pledged to provide another 1 bn covid vaccines to African nations and — in a not-so-subtle swipe at the US — called on countries to reject what he called “a Cold War mentality” and urged greater global cooperation.

Xi also had a message for the Federal Reserve as it prepares to hike interest rates: Please, dont. “If major economies slam on the brakes or take a U-turn in their monetary policies, there would be serious negative spillovers,” he said, warning that developing countries will “bear the brunt” of the economic fallout. This came as China’s central bank went against the international trend and lowered its key interest rate for the first time in almost two years.

On the agenda for today: Japanese prime minister Kishida Fumio and Israeli PM Naftali Bennett will address the event in the morning, followed by policy discussion panels on improving vaccine equity and the need to avoid social disruption caused by the pandemic, technological changes and the transition to green energy.

THE BIG STORY ABROAD-

A fourth Pfizer-BioNTech jab does little to protect against the spread of omicron, preliminary results from an Israel trial have shown. While a fourth shot of the Pfizer vaccine did raise antibodies above levels recorded following a third shot in the trial’s 154 participants, that did not translate into sufficient protection against omicron, though cases were mild or non-symptomatic. The early results suggest that existing vaccines are less effective against omicron than other variants — and put into question the Israeli government’s move to vaccinate 500k over-60s in the country in recent weeks in the first rollout of fourth doses of a covid-19 vaccine globally. The AP, Reuters and Bloomberg picked up the story.

FOR TOMORROW-

South Korean President Moon Jae-in is due in town from tomorrow until Friday, in what will be the first visit to Egypt by a South Korean president in 16 years. Moon will meet with President Abdel Fattah El Sisi during a regional tour that will also see him swing through the UAE and Saudi Arabia.

National flag carrier EgyptAir will operate a flight from Casablanca to Cairo tomorrow to bring home Egyptian expats stranded in Morocco following border closures.

MARKET WATCH-

Brent futures traded yesterday near their highest intraday level since 2014, after posting their fourth weekly gain on Friday and holding at almost USD 87 / bbl on the back of easing omicron concerns and an intensifying winter in North America, Bloomberg reports. Prices slipped marginally yesterday, but futures are expected to rise even further in the mid-term amid signs of slowing Chinese economic growth and a tightening market, traders say.

CIRCLE YOUR CALENDAR-

Applications are open until 31 March to join the Femtech Accelerator Program run by Flat6Labs and women’s healthcare firm Organon. The four-month-long virtual accelerator will support women-led digital healthcare start-ups operating in MENA to build products, test market fit and improve business models. You can register at this link.

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

*** 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: Tires are a notoriously difficult product to dispose of: they’re non-biodegradable and full of chemicals that harm the environment whether burned or stacked up in landfills. Egypt, like many countries around the world, is inundated with mns of scrap tires every year. Yet, it doesn’t have a formal system to process the waste, nor a regulatory system that ensures that the network of informal dealers and workshops that recycle tires are following environmental and public health protocols.

Make way for our first SPAC: Egypt’s first blank-check company will be established within the next month, Financial Regulatory Authority (FRA) chief Mohamed Omran told Bloomberg Asharq yesterday. “At the end of this month or early next month, we will have the first blank check company,” he said. The SPAC would be the first to list on the EGX and would have initial capital — pre fundraising — of EGP 10 mn, which is the minimum requirement set by the FRA.

Who’s involved: A consortium of Egyptian and international companies is planning to file for a license from the FRA to establish a SPAC, Zulficar & Partners founding partner Anwar Zeidan told Enterprise, without disclosing the names of the companies. After receiving FRA approval, the group will reveal more details on its plans, including the amount of capital it’s looking to raise.

What’s next: Once the consortium has obtained a venture capital license, a board of directors will be appointed, with a chairman who complies with the FRA’s regulations and guidelines for private equity firms. The blank-check firm would then be publicly listed on the EGX and have one month in which to raise capital from investors via a share sale. The funds raised would be placed in an interest-bearing bank account for a maximum of two years while it looks for a company to acquire or merge with —but you can probably expect that they’ll have a target in mind pre-listing. The SPAC must have at least EGP 100 mn in capital to complete an acquisition or merger and at least 80% of the SPAC’s capital must be used to acquire a target company.

Background: The FRA issued late last year the rules and regulations for establishing local blank-check firms, after the regulator greenlit EGX boss Mohamed Farid’s proposal to allow SPACs in Egypt. The proposal was partly driven by an increased interest in SPACs in the MENA region, following Swvl’s move to merge with blank-check firm US Queen’s Gambit Growth Capital and list on the Nasdaq, as well as Anghami’s plans to follow suit.

What about Swvl and Anghami? Queen’s Gambit is looking to close with Swvl this month, the domestic press quoted Swvl CEO Mostafa Kandil as saying last month. The company updated its SEC filing in late December. Anghami is looking to close by 11 February. You can check out its latest investor presentation here.

What’s a SPAC again? A special purpose acquisition company is a type of shell company used by investors to acquire firms. SPACs raise money from the public in an IPO and then use the proceeds to merge with or acquire an appropriate company. Check out our handy explainer for more on how SPACs work.

IPO WATCH- Nahr Elkhair Development and Investment’s shares could begin trading on the EGX this week, Al Borsa quoted Financial Regulatory Authority chief Mohamed Omran as saying at a presser yesterday. The company will offer shares to investors at EGP 0.25 a piece and is valuing itself at EGP 500 mn, according to the public subscription notice (pdf) published yesterday. Nahr will sell as much as 61.5% of its shares on the bourse, potentially giving the IPO a transaction value of c. EGP 307 mn.

About the company: Nahr Elkhair is an agricultural company with a footprint in environmental services, livestock, land reclamation and agricultural investment. The company is chaired by Ahmed Mohamed Rafqy Abdel Rahim, while Ahmed Mohamed Sayed Gamea is managing director. Gamea is a major shareholder in the firm, holding a 40% stake.

Financials: Nahr Elkhair generated a net income of EGP 7.4 mn in 2020 on revenues of EGP 61.7 mn. This is up from 2019 when earnings came in at EGP 3.5 mn, and 2018 when it EGP 1.3 mn in net income.

Forecasts: The company’s projected earnings for 2021 are EGP 20.9 mn. It is targeting an EGP 34.9 mn bottom line in 2022 and EGP 185.8 mn by 2026, the filing suggests.

Advisors: Osoul Arabia Investment and Financial Consultancy is providing financial advice while Helmy Hamza & Partners is legal counsel.

WHAT’S NEXT ON THE IPO FRONT? Omran said that Macro Group is on track to complete its IPO before the end of the month. The cosmeceutical firm, whose shares were listed on the EGX last week under the stock ticker MCRO.CA, has a 23 January deadline to begin trading its shares but can request an extension. Football club Ghazl El Mahalla is preparing to go public next month, while non-bank financial services outfit Ebtikar has also signaled it is looking to IPO. Our friends at the parent company of healthy foods brand Abu Auf are looking to offer as much as 49% of their company for sale in a transaction that could take place in 2Q.

What about military-owned companies? Senior officials including Prime Minister Moustafa Madbouly have recently noted the Sisi administration’s plans to sell stakes in a number of military-owned companies. Bottled drinks firm Safi and Wataniya Petroleum could both sell shares to strategic investors ahead of possible IPOs — they’re two of 10 military-owned firms the Sovereign Fund of Egypt is lining up to attract private capital. Separately, our friends at the SFE are guiding high-level talks on plans to sell stakes in three Siemens-built power plants in a process that could also involve a mix of sales to anchor investors as well as future offerings via public markets.

We could see a USD 400 mn corporate green bond issuance in the first half of 2022, Financial Regulatory Authority (FRA) head Mohamed Omran told Bloomberg Asharq yesterday (watch, runtime: 9:13). The green bond issuance will be used to finance renewable energy projects and could be cross-listed on the EGX and the German or Luxembourg bourses, Omran said, without disclosing the name of the issuer.

This follows Egypt’s first (and so far, only) corporate green bond issuance last year, when CIB sold USD 100 mn of the climate-linked securities to our friends at the International Finance Corporation (IFC), the proceeds of which were earmarked to finance green buildings.

More securitized offerings in the pipeline: About EGP 2.5-3.5 bn worth of securitized bonds from three companies could be issued in the first quarter, Omran said, adding that he expects securitizations to increase 15-20% y-o-y in 2022 amid increased appetite from the real estate sector. A total of 19 securitized bond issuances with a combined value of EGP 15.8 bn went to market last year, by our count, while this year has already seen a total of EGP 2.7 bn from issuers including GB Lease, CI Capital’s leasing arm Corplease, and Premium Card.

Proposals to allow companies to securitize future cashflows will encourage more companies to tap the securitization market, Omran said, adding that the draft amendments to the Capital Markets Act to make that type of offering possible are still awaiting parliamentary approval.

In the pipeline: Al Oula is looking to issue EGP 900 mn in securitized bonds in 1H2022, and the Financial Regulatory Authority has okayed issuances by Cairo Housing and Development and its subsidiaries worth a combined EGP 336 mn. Premium Card is also looking to tap the securitized bond market again this year with a two-tranche, EGP 500 mn issuance.

IN OTHER DEBT NEWS-

Are we going to see a revival of our Samurai bond plans? Finance Minister Mohamed Maait and Japan’s ambassador in Cairo discussed potentially issuing foreign currency bonds in Japan as part of Egypt’s debt diversification strategy, according to a ministry statement (pdf). The statement does not provide further details on the potential plans.

Sound familiar? Longtime Enterprise readers will remember that the government had been mulling selling JPY-denominated bonds back in 2019. The ministry had also been looking at RMB-denominated Panda bonds at around the same time, but Maait said in late 2020 that the planned sales were being pushed until at least FY2021-2022 because of complications caused by covid-19. Marketing foreign bonds in Asian markets requires more complicated clearance procedures such as new ratings assessments by Asian ratings agencies.

Careem plans to triple its investment in Egypt in 2022, Haitham Essam, head of the company’s Egypt business, told Ahram Online. The ride-hailing company wants to have deployed USD 11 mn in its local operations by the end of the year, up from USD 3.6 mn at the end of 3Q2021, he said.

Planned expansion: Careem, a subsidiary of US ride-hailing giant Uber, is planning to branch out into new sectors, following its parent into food delivery and courier services as well as digital payments. It’s unclear from Essam’s interview with the state-owned newspaper how much the company plans to spend on these new ventures versus expanding its existing ride-hailing business.

Egypt borrowed USD 10.3 bn from bilateral and multilateral lenders in 2021, according to the International Cooperation Ministry’s annual report (pdf) published yesterday. Most of the funding — USD 8.7 bn — went to the public sector, while the remaining USD 1.6 bn went to private-sector initiatives.

The key public sector financing agreements: By far the biggest chunk of funding to the public sector came in the form of a USD 2 bn loan under a framework agreement between Egypt, the French government and the French Development Agency (AFD). The second-largest financing agreement was a USD 1.4 bn facility from the International Trade Finance Corporation (ITFC) for basic commodities imports including wheat and other foods, followed by a USD 962 mn loan, also from the ITFC, for the import of petroleum products and more basic commodities.

The breakdown:

• Budget support received loans of USD 1.6 bn, including: USD 360 mn apiece from the World Bank and the Asian Infrastructure Investment Bank (AIIB) to support the post-covid recovery; USD 582 mn from the World Bank and AFD for the universal health ins. scheme: and USD 330 mn from Japan and the African Development Bank (AfDB) for electricity sector reforms.
• Agriculture, supply and irrigation received USD 1.6 bn in grants and loans, largely accounted for by the IFTC loan for food imports.
• Transport received USD 1.1 bn in loans, including USD 518 mn from the European Bank for Reconstruction and Development (EBRD) for the Cairo Line 1 and Alexandria metro projects, and the remainder from the World Bank, AfDB, and Austria for other railway upgrades.
• Energy projects (including renewables) came next with USD 1 bn, the bulk of which is accounted for by the IFTC petroleum imports loan.
• The environment, housing, and education were also highlighted as key sectors for development finance in the report, receiving USD 230 mn, USD 169 mn, and USD 134 mn respectively.

The biggest contributors to private sector financing were the EBRD at USD 527 mn, the UK’s CDC Group at USD 420 mn, and the International Finance Corporation (IFC) at USD 248 mn.

Egyptian e-commerce platform ExpandCart raised USD 2.7 mn in a pre-series B bridge funding round led by East Asian accelerator Betatron, with follow-on investments from Sawari Ventures and Kuwait’s Agility Ventures, according to an emailed statement (pdf). The new funding round will be used to fuel growth in ExpandCart’s current markets (Egypt, KSA, UAE, and Kuwait), maximize research and development, and build new products to help the startup reach its target of netting 1 mn merchants on its platform within the next three years, up from a current 25k.

About the company: Founded in 2013, it’s an e-commerce platform that allows merchants to create and manage online shops, streamlining their marketing, sales, store management and website design. The platform was the only African startup to be accepted into Betatron’s accelerator program in 2019, scoring an investment of USD 150k, before raising USD 2.5 mn in a series A round in 2020.

Our friends at Orascom Construction saw total new awards rise 22% y-o-y in 2021 to hit USD 3.5 bn, the company said in a statement (pdf). The firm added new awards worth USD 785 mn to its backlog in 4Q2021, the statement added. Projects in the MENA region — including transportation, water and power projects in Egypt — accounted for 55% of new awards in the last quarter of the year, while the remaining 45% were US projects, mainly in the commercial sector. The company’s consolidated backlog hit USD 6.1 bn at the end of 2021, rising slightly above the USD 6 bn record set in September 2021.

SODIC gets a new board of directors after Aldar / ADQ acquisition: SODIC shareholders have elected the company’s new board of directors at an extraordinary general meeting on Sunday, according to an EGX disclosure (pdf). The formation of the new board comes after an Emirati consortium of real estate giant Aldar Properties and Abu Dhabi sovereign wealth fund ADQ in December acquired 85.5% of SODIC in an all-cash, EGP 6.1 bn transaction.

Aldar now has five representatives on the board: Sitting at the table are Aldar’s Group CEO Talal Shaffique Abdullah Al Dhiyebi (LinkedIn), CEO Jonathan Emery (LinkedIn), Executive Director Sana Khater (LinkedIn), Executive Director of Investments and Partnerships David Dudley (LinkedIn), and Executive Director of Stakeholder Management Fahad Abdulla Al Mahmood (LinkedIn). ADQ’s Gamma Forge has two spots on the board, with Omar Mohammed Mehanna and Amer Al Ameri as Gamma’s representatives.

Our friend Magued Sherif (LinkedIn), SODIC’s CEO, will remain a member of the board. Rounding out the board as independent directors are non-executive chairman Osama Saleh and Masar Chairwoman and CEO — and former investment minister — Dalia Khorshed (LinkedIn).

IN OTHER MOVES-

Nestlé has appointed Yasser Abdul Malak (LinkedIn) as chairman and CEO for the MENA region, succeeding Remy Ejel, the company announced in a release. Abdul Malak was most recently the FMCG giant’s Turkey CEO, and previously served as CEO for Nestlé’s North East Africa Region based in Egypt.

IBM Egypt has appointed Marwa Abbas (LinkedIn) as general manager, according to a press release (pdf). She succeeds Wael Abdoush, who has now taken on the role of general manager for IBM Gulf, Levant and Pakistan.

Cairo-based e-commerce startup Capiter has appointed Simon Comina (LinkedIn) its chief financial officer, according to a statement (pdf). Comina was most recently CFO and executive board member of Dubai-based property site Property Finder, having previously headed up UK asset management firm Schroders’ MENA and private equity divisions.

Swvl named W. Steve Albrecht (bio) to chair its audit committee last month, according to a statement (pdf). Albrecht is currently the Andersen Alumni Professor at the Marriott School of Management of Brigham Young University and was the former president of the American Accounting Association. He has served as a director of five public companies and seven private companies.

Former Flat6Labs managing partner Marie Therese Fam (LinkedIn) has been appointed by Silicon Badia as a partner in its MENA unit, it said in a statement (pdf) yesterday.

It was a quiet night on the airwaves last night, with covid-19 and yesterday’s attack at Abu Dhabi Airport getting most of the attention. El Hekaya (watch, runtime: 5:54) and Masaa DMC (watch, runtime: 2:02) covered the events in Abu Dhabi, where three people were killed and six injured in an attack at the airport by Yemen’s Houthi group. Emirati Minister of Foreign Affairs Sheikh Abdullah bin Zayed Al Nahyan condemned the Houthi attack as an act of terror in a statement out late last night.

On the covid front, presidential health advisor Mohamed Awad Taj El Din attributed the recent rise in cases to the omicron variant in an interview on Al Hayah Al Youm (watch, runtime: 9:31).

It’s another light morning in the pages of the foreign press: The sole piece of note comes to us from Deutsche Welle, which takes a look at our ambitions to host the 2036 Olympics. The piece is anchored by an interview with Youth and Sports Minister Ashraf Sobhy.

Rameda to launch generic form of Merck’s covid pill: Rameda Pharma will begin selling its own generic version of Merck’s oral antiviral covid-19 med, Molnupiravir Rameda, before the end of 1Q2022, the company announced in an EGX disclosure (pdf). The company has begun manufacturing the pill after receiving authorization from the EDA, the national meds regulator. Molnupiravir Rameda will retail at EGP 625 per 40 capsules with an initial dose of 200 mg, with an eye to launch other, stronger versions of the pill “in due course,” the company said.

A total of five Egyptian companies are lining up to produce new covid meds and are waiting on the approval from the EDA, Health Ministry spokesperson Hossam Abdel Ghaffar said on Salat Tahrir yesterday (watch, runtime: 1:03:31).

The Health Ministry reported 1,232 new covid-19 infections yesterday, up from 1,197 the day before. Egypt has now disclosed a total of 401,308 confirmed cases of covid-19. The ministry also reported 31 new deaths, bringing the country’s total death toll to 22,179.