AM — M&A in food, healthcare and finance set up a heavy day for business news.
Plus: Maait warns of global food crisis

Good morning, wonderful people, and welcome to a morning packed with M&A news. Two of the three transactions involve inbound foreign (Saudi) investment, as this morning’s tl;dr stack suggests. Unsurprisingly, food, healthcare and finance are all in play. We also have two IPO stories this morning: Fawry is putting on hold its plans for a New York listing (smart, given market conditions). And it looks like a number of high-profile state-owned hotel assets could be combined in a new entity on the fast-track to IPO.

It’s particularly nice to see M&A and IPO news back at the top of the issue after a news cycle that was heavily dominated by state policy announcements.

HAPPENING TODAY-

WATCH THIS SPACE- Are you still waiting for a new car you ordered before 12 April? Dealers may have to give you a full refund of your down payment — with interest — on orders placed before that date, according to reports overnight in both Masrawy and state-owned Al Ahram. The reports say the refund mechanism will be specified in a regulation to be published later today in the Official Gazette. The ruling by the Consumer Protection Agency (CPA) will reportedly specify that anyone who requests refunds will be entitled to interest “at the highest prevailing bank rate,” which by our math is the 18% deposit offered by Banque Misr and the National Bank of Egypt. Folks who paid before 12 April (three weeks after the float) will have full price protection, the reports suggest.

The Consumer Protection Agency is also raising by 5% the cap on prices it introduced in March in the wake of the float of the EGP. While the domestic press reports some car industry players welcoming the decision, which was announced at a press conference, the CPA has not issued a written statement. We’ll have the full rundown for you once the Official Gazette is out and we can see whether the rubber meets the road (pardon the horrid pun, but it’s 4am and, well, it is what it is).

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MEANWHILE- Foreign Minister Sameh Shoukry is in Davos for the World Economic Forum (WEF)’s first in-person annual meeting since the covid-19 outbreak, the Foreign Ministry said yesterday. Shoukry, who is also president of COP27, will participate in an event on how policymakers in the MENA region can use public-private partnerships to meet climate targets, and will hold talks with WEF delegates about Egypt’s hosting of the global climate summit.

On Day #1: The first day of the event will see attendees chew over the global food crisis, the impact on the global economy of sanctions on Russia, and climate tech, as well as the future of globalization, national digital currencies and the effects of social media on societies. It will also see a special address from Ukrainian President Volodymyr Zelensky.

SIGN OF THE TIMES- Business leaders warn that three-decade era of globalization is ending. That’s the headline atop the front-page WEF scene setter in the FT this morning.

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THE BIG STORY ABROAD-

Vaccines at the ready: It has only been in the headlines a few days but the EU and the US are already talking about monkeypox vaccine programmes in response to the outbreak, which has so far spread to 15 countries. The EU’s infectious diseases agency is recommending member states start preparing to vaccinate against the virus, while President Joe Biden said that the US government will study what vaccines it has to deploy. Meanwhile, Belgium yesterday became the first country to mandate a three-week quarantine for people infected with the virus. The UK is telling people who have come into contact with patients to isolate for three weeks, and has launched contact tracing and testing. (FT | Washington Post | Politico | The Guardian)

Ukraine latest: Eyes are still firmly trained on Ukraine, where Russia is making gains in the east of the country after taking full control of Mariupol at the weekend. (Reuters | AP | Washington Post | WSJ)

CIRCLE YOUR CALENDAR-

Direct flights between Cairo and Dublin will launch starting 2 June, the Civil Aviation Ministry said in a statement yesterday. EgyptAir will operate four flights a week between the two capitals.

Direct flights between Cairo and Sao Paulo will also be announced soon, Brazilian officials in Cairo were quoted as saying.

The Islamic Development Bank will hold its 2022 annual meetings in Sharm El Sheikh from 1-4 June under the slogan “post-pandemic recovery: resilience and sustainability,” according to a statement from the Planning Ministry. Several Egyptian ministries and representatives from the bank’s 57 member countries and other financial institutions are set to attend the meetings.

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

*** 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 do a deep dive on the Egyptian Knowledge Bank (EKB) — an online portal launched in 2016 by the Education Ministry that gives researchers access to a number of academic journals.

Surging food prices on the back of the crisis in Ukraine could put “mns” at risk around the world, Finance Minister Mohamed Maait told the Financial Times in an interview in London. Coming during the British Egyptian Business Association’s trip to the UK last week, the minister warned of rising food insecurity — a theme the UN, World Bank and G7 have hit in recent days. “We will feel shame if we find that mns of people [around the world] are dying because of food insecurity. They are not responsible for that, they didn’t do anything wrong,” he said.

No recession at home: Maait ruled out that Egypt would see a recession this year. “The issue of going to recession, I’m ruling [it] out,” he said, adding that Egypt was among the few countries to avoid recession during the pandemic. The government recently cut its 2022-2023 GDP outlook to 4.5% from 5.5%, but few economists right now are expecting the Egyptian economy to contract due to the global crisis.

REMEMBER- A recession is two (or more) quarters of economic contraction — NOT two or more quarters during which the economy grows, but at a slower pace than before. The latter is a slowdown in growth, not a recession.

Negotiations with the IMF for a new program are going “very well,” but neither the government or the Fund have put forward a figure, Maait said. Egypt has been in talks with the global lender of last resort for several months to receive a new assistance program to help it mitigate the fiscal strain and balance of payments pressures caused by spillover effects from the war in Ukraine. Prime Minister Moustafa Madbouly said last week that it could still take months before an agreement is reached, while central bank chief Tarek Amer said Egypt would only receive a limited amount of funding due to already exceeding its quota.

The government still plans to “rationalize” bread subsidies, but it will do it “over a gradual basis,” Maait told the salmon-colored paper. “So as long as the cost of bread and the cost of producing bread increases, so the cost of subsidy on the budget increases . . . It cannot go like that,” he said. The prospect of lifting brea subsidies was first put forward last year by President Abdel Fattah El Sisi, before the war in Ukraine sent shockwaves through global food markets.

The crisis means that Egypt is going to need to spend more on subsidies in FY 2022-2023. The state expects to spend EGP 356 bn on subsidies in total, up 11% on last year, due to rising food and energy prices, according to the draft budget.

MEANWHILE-

President Abdel Fattah El Sisi signed off a law to increase allocations in the 2021-2022 state budget by EGP 6 bn to help Egypt meet debt repayments, state-run MENA agency reported. This comes a week after the MPs voted in favor of the bill.

The Saudi sovereign wealth fund is considering making a bid to acquire United Bank, Hapi Journal reported yesterday, citing sources it claims have knowledge of the transaction. The Public Investment Fund’s play for UB comes amid a backdrop of an influx of investment from our friends in the Gulf, part of a raft of support measures to help shore up Egypt’s fiscal position amid global volatility triggered by the war in Ukraine. Execs at United Bank declined to comment yesterday when we reached out.

SOUND SMART- The Central Bank of Egypt holds 99.9% of United Bank, which it created in 2006 through the merger of smaller entities near the end of its well-regarded cleanup of the banking sector nearly two decades ago.

Is the transaction part of the promised USD 10 bn from the KSA? Saudi and Egypt inked an agreement in March that would see the sovereign fund invest up to USD 10 bn in our healthcare, education, agriculture and financial services sectors. No further details have yet been released on which assets PIF is targeting.

Five years in the making: In 2017, the CBE said it intended to sell the bank to a strategic investor and appointed EFG Hermes and New York’s Evercore to advise on the transaction, before the covid-19 pandemic put the sale on ice.

PIF likes our banking sector: The Saudi fund has strong interest in the Egyptian financial sector due to its resilience in the face of back-to-back crises, Hapi quotes its sources as suggesting.

They’re not the only ones: Financial services firms have also been a key target for Abu Dhabi wealth fund ADQ, which bought a 17.15% stake in leading private sector bank CIB, and an 11.8% stake in fintech player Fawry as part of a USD 2 bn investment agreed in March.

And the gov’t is in selling mode: The government’s recently unveiled privatization strategy aims to raise USD 10 bn annually over the next four years by selling stakes in state-owned assets to local and international investors. The state hopes to double the private sector’s role in the economy over the next three years in a bid to attract bns of USD of fresh foreign investment into the country.

UB isn’t the only state-owned bank earmarked for (at least partial) privatization: The government has also had plans to sell a stake in Banque du Caire for years, and could go ahead with its long-awaited IPO later this year.

ADVISORS: CI Capital is reportedly acting as UB's advisor, according to Hapi’s sources.

Saudi food conglomerate Savola Group is close to acquiring the Egyptian Belgian Company — best known for its Ole-branded baked goods — in a transaction worth c. EGP 600 mn, a source familiar with the matter confirmed Enterprise. Hapi Journal had reported that the acquisition would see the company acquire both the manufacturer’s assets and its brand name. Our source was not able to confirm this or disclose an exact timeline for the acquisition.

This isn’t the first time Ole has been up for grabs: Edita Food Industries was interested in acquiring assets belonging to the company but talks fell through in January after the two sides failed to reach an agreement on valuation.

Savola has been eyeing acquisitions in Egypt’s food sector for a while: The company said last year that it is considering acquiring food companies in Egypt. Savola said at the time that it would target companies who produce items not covered by its existing portfolio.

Savola is already a big player in our market — even if it’s not a “household name”: The company is behind popular local cooking oil, ghee, pasta, and sugar brands including Rawabi ghee, Afia oils, and El Maleka and Italiano pastas. Its products are sold across the region, including in the Gulf, Sudan, and Turkey. Egypt accounted for about 17% of Savola’s revenues in 1Q 2022, according to the company’s investor presentation.

ADVISORS- Zilla Capital is acting as the Egyptian Belgian Company’s financial advisor, while Al Ahly Pharos is Savola’s financial advisor, our source confirmed.

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OTHER M&A NEWS- Ibnsina Pharma is getting into the hospital business with the acquisition of El Shorouk Hospital in a transaction worth EGP 430 mn, the company said in a press release (pdf) yesterday. Ibnsina will pay EGP 200 mn in cash and will settle existing debts owed by the hospital. The statement does not make clear who the seller is. Company representatives did not respond to Enterprise’s request for comment.

What they’ve bought: Ibnsina will acquire the hospital’s real estate and operational assets, as well as the operating company. The 105-bed hospital serves residents across Shorouk City and neighboring Madinaty, Rehab, Badr City, New Cairo, and East Cairo.

What they said: “The rollout of the Universal Healthcare plan and the construction of new cities are behind our appetite for further investments in the healthcare sector. Population growth and having more people covered translates into higher demand for healthcare services,” said co-CEO Omar Abdel Gawad.

Looking ahead: Ibnsina will work on renovating the hospital and installing new equipment by the end of the year. The company has also hired a new team to manage the hospital, it said.

Fawry has postponed plans to list its shares in the US due to the current sell-off in US tech stocks, a source at Fawry told Enterprise yesterday.

Fawry had been exploring an SEC-registered secondary offering with plans to create an American depositary shares (ADS) program to allow it to list.

Never say never: The company will “continue to monitor market conditions,” the source said, without disclosing where the company stands in its preparation for the IPO or when it might revisit the plans.

US tech stocks are deep in bear territory: The tech-heavy Nasdaq has tumbled 30% from its November peak as rising interest rates and fears of an oncoming recession send investors fleeing growth stocks. Growth stocks don’t usually pay out dividends, tend to have higher valuations and rely on future growth projections to attract investors, making them more vulnerable in an environment of rising interest rates.

And volatility on the Nasdaq is a bit nuts right now, as Swvl can attest: The mass-transport app’s stock was down 5% on Friday at USD 5.02 apiece — that’s about 17% below its five-day peak. Swvl’s shares are down 34% in the past month — after having soared about 137% in the period between 19 and 28 April.

MEANWHILE- Fawry has already raised 99.9% of its EGP 800 mn capital increase through a rights issue to existing shareholders and will close the remainder today, the source told us. Fawry in January announced the capital increase, which will help expand its non-banking financial services offering, including plans to turn its MyFawry app into a super app. It follows a similar EGP 400 mn capital increase in June of last year.

Egypt will merge seven or eight state-owned hotels into a single entity ahead of a listing on the EGX, Public Enterprises Minister Hisham Tawfik told Bloomberg Asharq. The new entity will be offered to investors in coordination with the Sovereign Fund of Egypt (SFE) in the coming months, he said.

Which hotels will be merged is still TBC: The ministry hasn’t yet evaluated the finances of hotels owned by the Holding Company for Tourism and Hotels (HOTAC), Tawfik said, adding that the plan would not include Nile Ritz-Cartlon, owned by Misr Hotels Company, which is already listed on the EGX.

HOTAC owns several leading hotels, including the Cairo Marriott Hotel, Marriott Mena House, Luxor’s Sofitel Winter Palace, and Aswan’s Sofitel Legend Old Cataract, according to its website.

What we know: The Public Enterprise Minister’s statements come a week after the PM said a number of state-owned hotels would be merged and offered to domestic investors as part of government plans to privatize state-owned assets and boost the private sector’s role in the economy.

The government has begun trialing the Advance Customs Information (ACI) customs system on air freight shipments ahead of its official rollout later this year, Misr Technology Services’ (MTS) Khaled Nassef told us yesterday. The ACI is a pre-registration system that provides real-time information about incoming shipments and is a key part of the Finance Ministry’s Nafeza digital customs window which was launched in maritime ports in October. Authorities are calling on businesses that use air freight to import goods to register with the system before the system becomes mandatory in October.

What is MTS? Misr Technology Services is a trade and logistics platform provider and has been responsible for the rollout of the Nafeza customs window and the design of the ACI system.

>80% are on board: More than 31k maritime and air freight importers have so far joined the ACI system, Nassef said, adding that he estimates this represents more than 80% of all importers.

Want more on Nafeza and ACI? We explain everything here.

MPs gave preliminary approval to proposed amendments to the Anti-Money Laundering Act yesterday, Ahram Gate reported. The changes would create an anti-money laundering unit at the central bank, handing it greater powers to prevent money laundering and terrorist financing. The House also approved in principle a new bill organizing Hajj trips, according to Youm7.

Ibnsina Pharma’s net income rose 17% y-o-y in 1Q 2022 to EGP 58.8 mn, according to the company’s latest financial statements (pdf). Ibnsina booked revenues of EGP 5.3 bn, up 12% y-o-y.

CIB has appointed Fadhel Al Ali (bio) and Aziz Moolji (LinkedIn) as non-executive board members, the bank announced in a disclosure (pdf) to the bourse yesterday. The pair will represent the interests of Alpha Oryx Ltd, a subsidiary of Abu Dhabi sovereign wealth fund ADQ, which last month purchased an 18.6% stake in the financial institution. Al Ali is the chairman of the Dubai Financial Services Authority and was previously the deputy CEO and Group COO of First Abu Dhabi Bank. Moolji serves as ADQ’s M&A and alternative investments director and was previously a vice president at Dubai Holding.

Amr Elfass (LinkedIn) has been appointed vice-president for business success at Nawah Scientific, the scientific research startup said in a press release yesterday. Elfass is being tasked with transforming the startup into a multinational corporation as it makes several acquisitions, which will be announced later this year, the company said. Elfass has years of experience in the pharma sector, and has worked in companies including Janssen, Abbott Laboratories, and Innovara.

DAY ONE- After six-hour, 4.3k km flight from Cairo, we’re settled at the Nordic Hotel Lagos on Victoria Island. Think of Victoria Island as the Zamalek of Lagos — just a bit greener and more colorful. From the plane, we could see colorful rooftops covering the ground below.

Refresher: We hopped on a plane yesterday with our friend Aly Shalakany, CEO of the Cairo Angels Syndicate Fund (CASF) to explore one of Africa’s biggest startup hubs. We’re joined by Nawah Scientific CEO and founder Omar Shoukry and Adham Azzam, COO and co-founder of fintech player Lnddo. We’re looking forward to meeting interesting startups, angel investors and VCs in the capital of Africa’s largest consumer market.

As is typical for a bunch of entrepreneurs and the people who invest in them, conversations were lively on the way over. Is being an angel investor an actual full-time job or not? (Definitely, if you ask Shalakany). How important are African markets to Egyptian startups looking to expand into other countries? More on that in the coming days.

Nigeria loves biometrics: We gave thumb prints (and biometric photos) at the airport — and again when we bought SIM cards to have internet on the go.

And it is definitely looking towards the future: Tomi Davies, collaborator-in-chief at TVC Labs and our chaperone, showed us around Lagos’ Eko Atlantic City — or what locals like to call “The Future”. The country is building a 10 mn sqm multi-use commercial center as part of a land reclamation scheme intended to protect Lagos from coastal erosion (the city’s coast lies on the Atlantic Ocean). The project is a mix of public and private investment and is expected to contribute USD 1 bn to the country’s economy annually, once completed, according to local media reports.

Two things we loved at the airport in Lagos: #1- A sign declaring “We do not condone extortion,” which was accompanied by an image of two hands passing a crunched-up banknote. And #2- “Touting of any kind in the nation’s airports is prohibited” — along with an image of a silhouette in a hoodie.

Generally, Lagos feels a lot like home. The highway reminds us of the Da2ery, the driving style reminds us of a typical Egyptian microbus driver, and the potholes feel the same when you blaze through them.

But the weather… The humidity knob seems to be turned to its maximum (see how misty it is in the image above), while the gods of rain like to keep drizzling cold drops onto earth while you walk down the street. Despite it all, it’s supposed to be about 30 degrees Celsius.

Dominating the airwaves last night: Measures announced by the Consumer Protection Authority’s (CPA) yesterday to regulate prices of new cars led the conversation on Masaa DMC (watch, runtime: 9:04) and Kelma Akhira (watch, runtime: 7:13). CPA head Ayman Hossam El Din told Masaa DMC that the decision was made to protect consumer rights as it regulates the market amid surging inflation.

A monkeypox outbreak abroad also got a lot of attention: Ala Mas’ouleety (watch, runtime: 32:13), Salet El Tahrir (watch, runtime: 3:37), Kelma Akhira (watch, runtime: 2:59), and Al Hayah Al Youm (watch, runtime: 7:18) all provided updates as the outbreak spread to new countries yesterday.

Also getting a mention: Egypt and Liverpool’s Mohamed Salah winning the Premier League’s Golden Boot for the third time earned praise from Al Hayah Al Youm (watch, runtime: 9:32) and Kelma Akhira (watch, runtime: 0:45). Salah shared the award with Tottenham’s Son Heung-min after ending the season tied on 23 goals.

Egyptian filmmakers are getting rave reviews in the foreign press this morning: Boy from Heaven, the new film from Egyptian-Swedish director Tarik Saleh, is earning praise in the international press for its “bold” depiction of corruption in Egypt, following its screening at the Cannes Film Festival (The Guardian | Indiewire | Variety). Meanwhile, 2021’s critically-acclaimed social satire Feathers picked up some of the biggest awards at the Critics’ Awards for Arab Films, Variety reports.

Egypt’s new administrative capital gets nods from several media outlets, with Namibian state-run news agency New Era touring the USD 45 bn city and Xinhua running a photo essay on the central business district being built by Chinese companies. Meanwhile, the National reports that President Abdel Fattah El Sisi sought to defend his government’s spending record during a speech on Saturday, characterizing the bns of USD spent on infrastructure and new cities as a necessity due to the inaction of previous governments.

Also getting attention:

• There’s more ink on the City of the Dead tombs being “sacrificed” for a new highway. (DW)
• Archaeologists uncovered a 4k-year-old tomb, believed to belong to a man who handled pharaonic secret documents. (Smithsonian)
• Egypt’s new national dialogue comes under criticism. (Haaretz)
• An Israeli orchestra played in Cairo for the first time in 40 years last week during the Israeli Embassy in Egypt’s celebrations of Independence Day. (Jerusalem Post | i24)

Gov’t wraps up fourth phase of export subsidy program: Some EGP 261 mn in overdue export subsidies was paid out to more than 130 businesses during the fourth phase of the government’s export subsidy program, which started in November, the Finance Ministry said in a statement. The program allows exporters to receive overdue subsidies in a single payment rather than in installments over four to five years, in return for a 15% haircut.

Exporters want more support to boost exports: More government investment and longer installment periods for industrial plots were among the requests made by exporters during a meeting with Prime Minister Madbouly yesterday, according to a cabinet statement.

US approves USD 691 mn arms sale to Egypt: The US could sell Egypt USD 691 mn worth of missiles after the State Department last week approved the purchase request, the US Department of Defense said in a statement Thursday. The order includes 5k TOW missiles, support equipment and spare parts, as well as technical and logistical support and training.

Israel will not investigate the killing of veteran Al Jazeera correspondent Shireen Abu Akleh, which witnesses say was committed by Israeli soldiers, the Guardian reports. Despite global outcry and calls for an investigation, the IDF said that it would not open a criminal inquiry into her death because it took place in an “active combat situation” though it would continue with an “operational inquiry.”

Also worth knowing this morning:

• Sri Lanka has defaulted on its debt for the first time in its history amid an unprecedented economic crisis. (BBC)
• Australian voters have ended nine years of conservative rule after incumbent prime minister Scott Morrison lost the general election to Labor leader Anthony Albanese. (Reuters)