AM — Domty and Giza Systems offer us rare Ramadan-time M&A news

Good morning, ladies and gentlemen, and happy Monday. News flow has slowed down a little bit today, but there’s still plenty of meaty corporate stories to keep us all busy.

The traditional Ramadan killing of ads has begun, with the nation’s media regulator ordering Dice’s underwear ad off the air after reportedly receiving complaints from the Doctor’s Syndicate. You can catch the offending ad here, at least for the time being (watch, runtime: 1:10). Ah, for the days of dandoo…

Okay, but was it funny? We’re split here. Some of us found it hilarious. Others, meh.

ALSO: Is anyone else finding the ratio of “content” to advertisement more skewed in favour of ads than usual this year? The resident 14-year-old was growling last night that it felt as if there were 15 minutes of ads for every four minutes of content on Ramez’s latest hidden camera / prank “show.” (Yes, it is a failing of parenting on our part that she looks forward to Ramez each year.)

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:15pm CLT this evening in the capital city, and fajr prayers are at 4:12am.

H/t to reader Hisham H, who wrote in to let us know that (a) the chocolate with orange peel is the best stuffed date (following up on our shout-out to Mōko) (b) and pointed out that the maghrib and fajr prayer times we included yesterday were arguably a few minutes off. Our go to is Islamic Finder, but the Egyptian General Survey Authority’s official calendar lets you check exact times based on your city and governorate, and matches up with that used by Dar Al Iftaa. We’ll be using their official Cairo schedule for the remainder of the holy month.

DATA POINT of the morning- Investors have poured some EGP 401 bn into 18% CDs launched by Banque Misr and the National Bank of Egypt (NBE) as of Sunday, Masrawy reports, citing sources at the two lenders. The CDs were launched two weeks ago, following the central bank’s 100-bps interest rate hike.

KEEP YOUR EYE ON THIS- The UN’s latest climate report could be published today — if the politicians can get out of the way. The UN’s Intergovernmental Panel on Climate Change should be releasing the latest report in its current assessment cycle today, which will give concrete recommendations on how to limit global warming to 1.5 degrees this century ahead of COP27 in Sharm El Sheikh. But while the science isn’t up for debate, talks between researchers and governments over the wording of a summary of the findings have reached a gridlock, the Associated Press reports, citing anonymous observers.

What’s the snag? Major coal user India is reportedly among key players pushing for recognition that wealthy countries (who have contributed the most to historical emissions) should bear the brunt of carbon cuts and provide financing to ease the developing world’s green transition. If that sounds familiar, it’s because our government is pushing some of the same priorities for the African continent ahead of the November climate summit.

PSA- The Financial Regulatory Authority (FRA) is calling (pdf) on property and liability ins. holders to review the value of their properties and update ins. providers. Some ins. plans include a proportionality clause that comes into effect when there is a change in the asset’s market value — following, for example, last month’s currency devaluation — meaning that if your property has become worth more than your policy, the full value may no longer be ins.d and you could take a hit on the loss that isn’t covered.

CIRCLE YOUR CALENDAR-

Companies have a little over two weeks to file their first quarterly ESG compliance report: Listed firms and non-bank financial services companies need to submit their first quarterly ESG report by 20 April, the Financial Regulatory Authority (FRA) announced last week.

Didn’t we say yesterday that the deadline was 10 April? Yes, we did, per a circular (pdf) published by the FRA last month. The regulator has since amended the deadline, handing firms an extra 10 days to submit.

What you need to know: The regulator is making it mandatory for corporates to publicly disclose their performance on key environmental, social and governance metrics each year when they submit their annual financial statements, starting 2023. Reach out to Moustafa Taalab at InkankIR, our parent company, if you need some help.

Other upcoming dates you want to know about:

• It’s PMI week: Purchasing managers’ index figures for March for Egypt, Saudi Arabia, the UAE, and Qatar will be released on Tuesday, 5 April. By that specific gauge, Egypt’s private sector has been in contraction since November 2020. Headwinds intensifying last month due to the conflict in Ukraine are unlikely to have changed that;
• Foreign reserves: March’s foreign reserves figures will be announced some time this week;
• Inflation figures for March are expected on Sunday, 10 April.

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

MARKET WATCH-

Oil prices are now on the decline — but crude trader Vitol says they do not reflect the “full risk” of a shortage in Russian supplies, Bloomberg reports. “Oil prices could be higher given the risk of disruption of supplies from Russia,” a top Vitol official said on a podcast. “But people are still lost figuring out those numbers.” Brent has slipped 13% from highs of near USD 140 after the US ordered an unprecedented release of its strategic reserves to tame prices.

Lithuania has become the first European country to say a permanent goodbye to Russian gas, the Lithuanian government announced. “Lithuania won't be consuming a cubic cm of toxic Russian gas,” Prime Minister Ingrida Simonyte wrote on Twitter yesterday.

Russia threatens to price more of its exports in RUB: Russia’s RUB-for-gas scheme is a “prototype” and could soon expand to more exports, the Kremlin’s spokesman told Russian state TV, according to Reuters. "It is the prototype of the system … I have no doubt that it will be extended to new groups of goods," Dmitry Peskov said.

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.

In today’s issue: We take a deep dive into how the inflationary environment is impacting private school enrollment. As prices rise, more children are transferring to less expensive private schools, sources tell us. But so high is the demand for private education that high and upper-middle income schools aren’t seeing enrollment rates fall. Middle-income schools, though, could see changes in the composition of their applicants – and it’s new schools that are most at risk of an enrollment slowdown, some in the industry say.

Domty up for grabs: A group led by Expedition Investments has submitted a non-binding offer for a majority stake in cheese maker Domty, the company announced in a statement (pdf) to the EGX. The group is looking to acquire up to 90% of the food producer at EGP 5.00 per share, according to a statement by the FRA to the bourse. The transaction could be valued at nearly EGP 1.3 bn if it goes through, based on our math.

Domty’s shares soared 14.2% on the back of the offer to close at EGP 4.50 apiece yesterday.

So who’s mounting the bid? Investors from Egypt and the Gulf, according to a source close to the transaction. Execs who are members of the Domty’s founding family, including Omar El Damaty (the company’s current chairman and MD) and Mohamed El Damaty (vice-chairman) are also on board and hold minority stakes in Expedition. The company is domiciled in Mauritius and counts veteran investment banker Mohamed El Akhdar as a board member. It was established on 21 March, according to the Mauritius company register.

Expedition wants to do the due diligence process on Domty “as soon as possible,” a company statement said, with a mandatory tender offer contingent on the outcome of due diligence and regulatory approvals.

Domty isn’t being expatriated, our source tells us. Though Expedition is an offshore special purpose vehicle, this transaction is about private equity changing hands, not a relocation for the Egyptian firm. Mauritius is a common jurisdiction for takeover vehicles that have raised foreign capital as well as for funds raised by private equity firms.

Matouk Bassiouny & Hennawy is advising Expedition, according to the statement..

Expedition will have more to say about the transaction in the coming weeks, our sources tell us.

B Investments is selling its entire 44.7% stake in engineering subsidiary Giza Systems to Saudi Telecom’s internet subsidiary, the Egyptian private equity firm said in a statement (pdf). B Investments’ board accepted an undisclosed binding offer for the shares from Solutions by STC that would value Giza Systems at USD 145 mn, the statement read.

A turnaround for Giza Systems: A pioneer of what was once called the “IT” industry, the systems integrator has been in the market since the 1970s and lost a step in the marketplace prior to B Investments’ acquisition in 2006. The company now positions itself as a digital transformation specialist with some 1.4k professionals working across the Middle East and Africa providing “industry-specific technology solutions for asset-intensive industries” including telecoms, utilities, and oil and gas.

The usual caveats: The final value of the shares will be decided based on Giza Systems’ net debt and working capital at the close of the transaction, which is still pending final documentation and regulatory approvals, the statement read.

SOUND SMART- The Saudi telecom giant’s internet arm debuted on the Riyadh exchange last September in a transaction that valued the firm at some SAR 18.1 bn (USD 4.8 billion).

This marks the latest in a stream of recent news about incoming M&A and investment from the Gulf to Egypt, on both the public and private side of things. Yes, our GCC neighbors are stepping in to offer us a helping hand in a time of crisis — but this kind of news also underscores that many Egyptian sectors and firms offer an increasingly attractive proposition for regional investors. More of this, please.

Egyptian online mental health startup O7 Therapy has raised a USD 2.1 mn seed round in what the startup says is the largest seed round for a mental health startup in the Middle East, the company announced in a press release (pdf). The round was led by UK-based VC Hikma Ventures with participation from corporate venture capital outfit CVentures (a unit of CIB), Lotus Capital, and several angel investors.

About the company: The online therapy platform matches users with bilingual (English and Arabic) psychiatrists and psychotherapists and connects them via online therapy sessions. It also offers employee wellness programs for organizations, an offering it plans to expand across the region with the help of the funding round.

Where the money’s going? O7 Therapy will use the funds to expand across the Middle East and introduce new products and features to its platform.

Hikma has been busy: This is the first time the pharma VC has led an investment round in the MENA region. The news comes just a few days after the announcement of Altibbi’s USD 44 mn series B round, in which Hikma participated.

ALSO FROM PLANET STARTUP-

Flat6Labs launches new Saudi seed fund: Flat6Labs and the Saudi Venture Capital Company have launched a new seed fund in Saudi Arabia that is expected to back more than 60 early-stage startups over the next three years, according to a joint press release quoting our friend Ramez El Serafy, Flat6’s CEO, and SVC chief Nabeel Koshak. The two VCs hope to raise SAR 150 mn (c. EGP 732 mn) over the next 12 months for their Startup Seed Fund, with Blominvest marketing the fund and taking sole responsibility for fundraising in Saudi Arabia.

Outsourcing fundraising to an outfit like Blominvest is fairly novel and frees the VCs to focus on building and managing their portfolio — an interesting my-drugs-blog.com.

Ticket size: The fund will commit between SAR 750k to SAR 1.5 mn (c. EGP 4 mn – EGP 7 mn) to each company, and follow-on funding will be made available to support expansion inside the kingdom and abroad, the statement said. The fund aims to back some 180 entrepreneurs in the kingdom and create c. 6k private-sector jobs while helping Saudi companies expand regionally.

The fund will run a four-month Flat6Labs Riyadh Seed Program twice a year for a three-year period. Its first cycle is set to begin in the third quarter of this year.

Edita Food Industries has officially inaugurated its Moroccan plant, according to a company statement (pdf). The snackfoods giant started operations in December at the facility, which is the company’s first greenfield investment outside of Egypt and marks its transformation from manufacturer that exports to a host of regional markets into a true multinational with offshore operations. Catch a recording of the livestreamed inauguration ceremony here (watch, runtime: 7:30) and lots of additional highlights here, here and here.

About the facility: The company has so far invested MAD 203 mn (some EGP 382.5 mn) in the plant outside Casablanca, according to the statement, including initial investments of EGP 200 mn up to December. The factory employs 300 Moroccan citizens and produces three variations of Edita’s HOHOs cakes. The facility is operated by Edita Food Industries Morocco, a joint venture set up between Edita and Moroccan FMCG distributor Dislog Group. Edita holds a 77% stake in the company and Dislog holds 20%.

It’s wonderful to see a regional country rolling out the red carpet for an Egyptian company as the “Arab foreign investor.” Edita chief Hani Berzi and Dislog’s Moncef Belkhayat were joined by Moroccan Industry Minister Ryad Mezzour, who positioned the Edita investment as being a play on “the strengths of the Moroccan agri-food sector and … in line with its future priorities to meet global consumer demand.”

More expansion to come abroad… Edita is set to pour an additional MAD 170 mn (EGP 320.3 mn) into a second phase of expansions at the factory, with plans to employ another 400 people, add production lines, and introduce more products to the Moroccan market, the statement read. Edita is “pivoting from a focus on recovery and resilience to expansion mode,” the company said

…and at home: in its most recent earnings release, Edita said it plans to invest around EGP 400 mn to add new production lines for its baked goods and wafers segments in Egypt this year, as well as to expand to at least one new market in 2022 and another in the next five years.

International outrage is mounting as evidence emerges of alleged war crimes by Russian soldiers in Ukraine: Images of the carnage left in the wake of the Russian military’s withdrawal from western parts of the country — including reports from the Ukrainian side of mass executions of civilians — has led to a fresh wave of condemnation and promises of consequences in the geopolitical arena.

Ukraine is requesting the International Criminal Court gather evidence of alleged war crimes by Russian troops in Bucha, according to Bloomberg. Asked to comment by the business information service, Kremlin spokesman Dmitry Peskov said many of the images were “fakes and staged shots.”

Guterres calls for an independent investigation: United Nations Secretary-General Antonio Guterres said in a tweet that he was “deeply shocked” by the images coming out of Bucha, adding that “it is essential that an independent investigation leads to effective accountability.”

And the EU prepares more sanctions: Further sanctions and support for Ukraine are “on their way,” European Council President Charles Michel said in a tweet, calling the images from Bucha “haunting.” New sanctions could will for now focus on “closing loopholes [and] strengthening existing actions,” including making sure Russian banks are completely cut off from the SWIFT payment system and sanctioning more individuals, Bloomberg reports citing diplomatic sources. Some members of the bloc are calling for harsher action, with Germany among those promising “further measures” to come.

EFG Hermes topped the EGX’s brokerage league table once again in March, with a market share of 23.5%, according to figures from the EGX (pdf). Rounding out the top five were CI Capital (11%), Al Ahly Pharos (7.9%), Arqaam (6.2%) and Cairo Capital (5.9%).

The National Bank of Egypt was at the top of Bloomberg’s African syndicated loans league table as a financing agent, lead manager and promoter in 1Q2022, according to a statement (pdf) from the lender. The state-owned bank managed nine transactions worth more than EGP 35 bn during the quarter — more than any other bank in the Middle East and Africa, the statement read. The bank finished 2021 at or near the top of the league table.

MENA rankings: NBE came in third in the MENA region as a financing agent, and fourth as a lead manager.

Credit Agricole Egypt has appointed Ravinarayanan Iyer (LinkedIn) as its new chief financial officer, replacing Hany Nassef, who stepped down in December, the bank announced in a regulatory filing (pdf) yesterday. The bank also appointed Osama Saleh as its new non-executive chairman, to replace Assem Ragab, whose term has ended; and Michel Le Masson (LinkedIn) as non-executive vice chairman. All changes are pending approval from the Central Bank of Egypt.

Talaat Moustafa Group (TMG) chairman Tarek Talaat Mostafa has become a non-executive chair of the company, according to an EGX disclosure (pdf). Hisham Talaat Mostafa was reappointed as company CEO and managing director.

Rear Admiral Nihad Shaheen Ali has been appointed chairman of the Alexandria Port Authority by Transport Minister Kamel El Wazir, according to a ministry statement. Ali previously served as the authority’s vice chairman for financial, administrative, commercial and engineering affairs, and replaces Tarek Shaheen who was reassigned to work as an advisor to the ministry.

Former vice chairman of the Red Sea Ports Authority Rear Admiral Ahmed Abdel Moati Mohamed Hawash has been appointed chairman of the Damietta Port Authority, according to the statement. Hawash replaces Walid Mostafa Awad Al Sayed, whose term has ended.

Gulf investments get airtime: Al Hekaya’s Amr Adib tipped his hat to the recent helping hand we received from the KSA (watch, runtime: 1:14). Saudi Arabia last week deposited USD 5 bn with the Central Bank of Egypt (CBE) and pledged around another USD 10 bn in sovereign investments to shore up our finances, which have taken a hit due to the Ukraine war, following similar moves from the UAE and Qatar.

UK won’t take a position on GERD: The UK supports the African Union-led negotiations between Egypt, Ethiopia and Sudan to reach a suitable solution for the ongoing dispute over the Grand Ethiopian Renaissance Dam (GERD) — but isn’t looking to enter the fray directly, UK’s Ambassador to Egypt Gareth Bayley said in an interview with Bel Warak W El Kalam on Saturday (watch, runtime: 3:33). “We don’t want to complicate the situation by adding our voice officially to the issue,” Bayley said.

A sprinkling of stardust as the Ramadan drama coverage continues: After trending on Twitter, Al Maddah 2 received some love from Al Hekaya’s Amr Adib, who spoke with the show’s star Hamada Helal (watch, runtime: 6:29). Maktoub Alaya star Akram Hosy joined Al Tasea in a phone-in (watch, runtime: 2:02) to give us the behind the scenes scoop. Still haven’t decided what to watch this Ramadan? Head to our rundown here.

Is Salah bowing out of international football? Speculation is mounting over whether Egypt’s star striker Mohamed Salah has played his final game for the national team following the Pharaoh’s failure to the World Cup. A video of Salah talking to his teammates following last week’s loss to Senegal shows him saying that he is proud of the team “whether or not I'm here," a statement being interpreted as a signal he may retire from the international game. “There isn't much to say, but it has been an honor to play with you, whether or not I'm here,” he says in the video, published by the Youth and Sports Ministry last week (watch, runtime: 2:40). AFP has more.

Speaking of which: Perhaps we haven’t seen the last of Queiroz after all. Egypt’s national team coach and manager Carlos Queiroz — who was reported to have left his post after last week’s loss to Senegal — is in fact “on leave” and could be back after FIFA and CAF hears the team's appeal over the match, depending on the ruling, the Egyptian Football Association said.

The holy month amid soaring food prices: The AP is out with another piece on the shadow cast over Ramadan by food and energy inflation on the back of war in Ukraine.

Contact + Nawy sign EGP 1 bn financing agreement: Contact Financial’s real estate finance subsidiary will lend EGP 1 bn to clients of Nawy after signing an agreement with the proptech startup, according to a statement (pdf. Users of Nawy’s real estate search engine will be able to borrow the money to purchase property found on its platform. Nawy recently received an undisclosed amount of bridge funding in a round led by the Sawiris family office.

Egypt, France and Malta’s sovereign wealth funds have established a “collaboration network” across the Europe, Middle East and North Africa (EMENA) region, according to a press release (pdf). The Malta-based EMENA Sovereign Wealth Funds Collaborative Network aims to support investments in green technology, sustainable development, SMEs and innovation to help plug the USD 700-900 bn funding gap in the EMENA area. Spain’s sovereign wealth fund has also signed an MoU pledging its intention to join.

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

• EgyptAir has partnered with EFG Hermes’ digital payments subsidiary PayTabs and consumer finance arm valU to provide its customers with payment solutions to book and pay for domestic and international flights. (Hapi Journal)
• Afreximbank will work with Elsewedy Electric and three other Egyptian companies to channel USD 1.5 bn of investment into infrastructure projects in Angola, the bank’s head of intra-African trade finance said at an event in Cairo. (Amwal Al Ghad)
• US customer service provider Concentrix has opened two new call centers in Egypt, and plans to almost double its employee headcount in the country to 8.5k this year. (statement)
• Egypt is courting the African Medicines Agency and wants it to choose Cairo as a base for its headquarters. (statement)
• State-owned firm El Nasr Automotive inked a contract with German consulting group FEV to develop the local EV industry, after the firm helped El Nasr choose its soon-to-be-announced Chinese partner on local EV assembly. (Al Borsa)

President Abdel Fattah El Sisi received the credentials of 18 new ambassadors to Egypt last week, according to an Ittihadiya statement. Among the officials were: Mariam Khalifa Al Kaabi (UAE), Hameed Shbeira (Algeria), Marc Baretti (France), Michele Quaroni (Italy), Oka Hiroshi (Japan), and Yvonne Baumann (Switzerland).

MEANWHILE- The Foreign Ministry has strongly denounced Israeli “escalations” against Palestine in the past days, including attempts by Israeli settlers to storm Al-Aqsa mosque and the targeting of Palestinian citizens.