Tuesday, 19 July 2022

AM — Infinity + AFC buy Lekela in Africa’s largest-ever renewables acquisition

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, friends, and welcome to another compact, business-focused issue as we celebrate the arrival of hump day. Do you now remember who you are, where you work, and what you were doing before the Eid break?

THE BIG STORY here at home is the latest sign that the boomlet in M&A activity we’ve seen in recent months has legs as our our friends at Infinity and AFC snap up Lekela in what’s being billed as the largest-ever renewables acquisition in Africa. We have chapter and verse on this and other transactions in this morning’s news well, below.

SIGNS OF THE TIMES-

#1- Major corporations are firing people… Goldman Sachs warned yesterday that it may cut staff and slow hiring, TikTok and Vimeo are slashing jobs, and Apple is slowing spending, including (likely) on new staff. They’re just the latest major corporations to announce jobs cuts or hiring slowdowns after HR pros at startups began swinging the axe in late spring.

#2- …at the same time as businesses in the West complain they can’t find qualified staff. And it’s not just in the service industry (restaurants in particular) or retail: Microsoft’s Brad Smith is warning that “US companies are facing a ‘new era’ in which fewer people are entering the workforce and pressure to pay higher salaries may become permanent.”

#3- Are fintech players falling from grace? Some USD 500 bn has been wiped off the value of US fintech startups in the recent equity sell-off, according to the Financial Times. The more than 30 fintechs that listed during the recent IPO boom have lost USD 460 bn and are down more than 50% on average since the start of this year (compared to 29% for the tech-heavy Nasdaq). Fintechs have been hit hard by tighter financial conditions, in which investors are less ready to sink funding into businesses whose earning ability is untested, the salmon-coloured paper says.

#4- It’s just not a great time to be a VC. 2Q 2022 was really bad for venture capital-backed IPOs, Axios Pro Rata reports, citing data from PitchBook. “The IPO window was virtually shut in 2Q 2022, and VC-backed public listings reached a 13-year quarterly low with eight completed.” Throw in a big fundraising slowdown and its shaping up to be somthing of an annus horribilis for VCs.

#5- Is the Gulf IPO boom losing steam? That’s what Bloomberg is wondering after Dubai’s Union Coop slumped 13% in its trading debut. Union followed Tecom Group (down 17% on the first day of trading this month), while the Dubai Electricity and Water Authority has recently given up almost all of the gains it posted since its debut in March.

#6- Armpit hair is back whether we like it or not, the Wall Street Journal kindly informs us all.

ONE RAY OF SUNSHINE- Haleon, GSK’s now-former consumer healthcare unit, just pulled off Europe’s largest listing in more than a decade despite particularly challenging market and macro conditions. With the spinoff, Haleon immediately became one of 20 largest companies in the FTSE with a market cap of about USD 36 bn. The world’s largest standalone healthcare business, Haleon controls brands including Advil, Voltaren and Otrivin. The company is led in North Africa by Nabil Besri. Haleon executed the demerger despite clear macro challenges including the erosion in consumer sentiment amid rising inflation. In parallel, the FTSE 100 is down about 3.8% year-to-date. You can catch the Haleon press release here (pdf) or check out coverage in the global business press: CNBC | Financial Times | Reuters.

WHAT’S HAPPENING TODAY-

The state’s national dialogue meetings resume today: The board overseeing the Sisi administration’s national dialogue will hold its second meeting today, during which it will set a schedule of debate, discuss the agenda and form subcommittees.

Need a refresher on the national dialogue? We’ve got you covered.

The government’s public consultations on its state ownership policy continue today with representatives from the wholesale and retail sectors having their say. Sunday’s session brought leather manufacturers together to discuss the state’s privatization plans. Every Sunday, Tuesday and Thursday sees workshops on how privatization plans will affect specific industries. You can find more details on the schedule of the meetings here.

Russian President Vladimir Putin is making a rare trip to the Middle East today, traveling to Tehran to attend a summit with Iranian President Ebrahim Raisi and Turkish President Recep Tayyip Erdogan.

On the agenda at the summit: An agreement to unlock Ukrainian grain via the Black Sea, according to a Kremlin spokesperson, according to Reuters. A Turkish official said that “small problems” remain but expressed optimism that Ukraine and Russia will sign an agreement this week.

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

THE BIG STORY ABROAD- Climate is dominating the international front pages this morning as ministers from 40 countries gathered in Berlin for the Petersberg Climate Dialogue amid expectations of record temperatures in Europe. With heat waves and wildfires sweeping countries on the continent, UN Secretary-General Antonio Guterrres said that humanity was on the verge of committing “collective suicide.” Temperatures in the UK are expected to reach record highs this week (prompting the declaration of a national emergency) while wildfires are raging in France, Spain, Portugal and Greece. (Reuters | AP | FT | Bloomberg | BBC | NYT | Washington Post)

Energy was at the top of the priority list in talks between German Chancellor Olaf Scholz and President Abdel Fattah El Sisi, who is co-chairing the summit as Egypt prepares to host COP27 this fall. We have more details on this in this morning’s Diplomacy section, below.

Germany’s energy situation is looking increasingly grim: Speculation is growing that Russia might not resume gas flows through the vital Nord Stream 1 pipeline next week after Gazprom yesterday told buyers in Europe that it could not guarantee shipments due to “extraordinary” circumstances, according to a letter seen by Reuters. The Russian gas giant has shut the pipeline for 10 days while it conducts annual maintenance and there are fears that it might not turn the gas back on when it finishes on Thursday as Moscow ratchets up the pressure on energy-starved Europe. Before last week, Gazprom had already cut flows through Nordsteam by 40%, leaving Germany’s largest gas provider on the verge of collapse and forcing cities to ration hot water and dim the lights.

Brussels could turn to emergency measures: The EU could move to force member states to cut gas consumption if the energy crisis intensifies in the coming weeks and months, the Financial Times reports.

enterprise

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

In today’s issue: Our combined wind and solar power generation capacity is the highest of any Arabic-speaking country, according to a new report from nonprofit renewables researcher Global Energy Monitor. But as our once oil-reliant neighbors go all in on the energy transition with ambitious plans to ramp up renewables output, we could lose our edge on wind and solar by the time 2030 rolls around.

enterprise

A sizzling summer awaits you by the bay: We’ve saved you the hassle of planning by bringing you a lineup of unmatched energy and fun-packed vacation activities to last you all season long. It’s time to create magical memories with relaxed beachside days and excitingly fresh nights. From pumping up the adrenaline with Footgolf and Go-Karting to turning up the music and heat at Sobar with ladies’ nights, groovy beats, and lots of dancing. From BBQ beach parties at S-cape to riding horses by the sea — there’s a little special something for everyone. We look forward to seeing you at the bay.

M&A WATCH

Infinity will become Africa’s largest renewables player through Lekela acquisition

Infinity + AFC just sealed Africa’s largest-ever renewables acquisition: Our friends at renewables player Infinity Group and Africa Finance Corporation (AFC) have signed an agreement to acquire 100% of Lekela Power in what is Africa’s largest renewables acquisition, the companies involved said in separate statements (here, pdf and here). The acquisition will give Infinity and AFC a 2.8 GW portfolio of wind projects across Africa, making Infinity the largest renewables company on the continent. Representatives from Infinity declined to disclose the value of the transaction when we approached them yesterday, though Dow Jones suggests that it values Lekela at USD 1.5 bn.

The sellers: Private equity firm Actis is selling its 60% stake in Lekela alongside Irish wind / solar developer Mainstream Renewable Power, which owns the remaining 40% of the company. The two firms founded Lekela in 2015.

What they’re buying: Lekela is Africa’s largest independent power producer (IPP) and has >1 GW of installed capacity at projects located in Egypt, South Africa and Senegal. It has another 1.8 GW of projects in the pipeline that are expected to close “in the near future,” Infinity and AFC said. The company brought online its 250-MW wind farm in West Bakr last November.

Watch this space: The acquisition is expected to close in 4Q, subject to regulatory approvals and customary closing conditions, Infinity co-founder and chairman Mohamed Ismail Mansour told Enterprise.

What they said: “Our acquisition of Africa’s largest independent power producer in the renewables sector is a major milestone in our strategy for growth across the African continent,” Mansour said in the statement. Actis said the exit “reflects the successful culmination of Actis and Mainstream’s partnership strategy for Lekela.”

In the pipeline: Infinity and AFC plan to more than double the capacity of the company’s operating assets over the next four years.

What’s happening with management and operations? Nothing has been decided yet, but Infinity is keen on integrating Lekela into the company, Mansour told us. “We will assess with Lekela’s management how we structure this new integrated company to achieve our aggressive plans for future growth,” he said.

Lekela had plenty of suitors: Actis was reported earlier this year to be in negotiations to exit the firm. Pan-African financial services outfit Old Mutual to Chinese state fund CNIC were reported to be among the final bidders, while Mainstream had apparently also considered buying Actis out of the firm.

Masdar was originally in AFC’s shoes: Reports last month suggested that Emirati renewables player Masdar was in talks alongside Infinity to acquire Actis’ stake in Lekela.

It’s not only Lekela that Actis wants to exit: Actis is looking to sell its South African business BTE Renewables for around USD 1 bn and has hired Citigroup as advisors, Bloomberg reported last week, citing people familiar with the matter.

ADVISORS- Cantor Fitzgerald, ABSA and Norton Rose Fulbright advised Infinity and AFC on the acquisition, while Citi and Clifford Chance advised Actis and Mainstream.

IPO WATCH

Has Banque du Caire pushed its IPO back again?

Banque du Caire’s IPO may have been kicked down the road once more: State-owned Banque du Caire is postponing its long-awaited IPO due to unfavorable market conditions, Al Borsa reports, citing unnamed sources. The bank had been set to make its EGX debut by the end of the year, but the sources suggested that poor liquidity on the EGX had led the offering to be postponed “until market conditions improve.” Banque du Caire and EFG Hermes — which is managing the offering alongside HSBC — declined to comment when we reached out this week.

This shouldn’t come as a big shock: The EGX 30 has entered a bear market this year amid a tough time for equities markets globally, as war in Ukraine, inflationary pressure, rising interest rates and supply / demand imbalances spur risk-off sentiment among investors. The benchmark index is currently trading at lows not seen since November 2016 and has lost 26% from its recent peak in January.

And don’t be surprised if the state decides to privatize Banque du Caire through a trade sale. The Banque Misr-owned institution has attracted interest from strategics in the past. We think a one-and-done trade sale at a reasonable valuation would go a long way toward showing the state is serious about its plan to generate USD 10 bn per year through asset sales in each of the nexts four years. (Just don’t expect the transaction to hit the high-water-mark for valuation posted by the sale of Bank of Alexandria to Italy’s Intesa Sanpaolo in 2006…)

BdC is ready to make its debut and has major Gulf and foreign institutional players interested in subscribing to the offering, the sources told the newspaper. The bank underwent a restructuring in May ahead of the offering which saw its majority shareholder Banque Misr purchase nearly all of the remaining shares from its investment arm, Misr Capital, giving it direct ownership of 99.99% of its shares.

But flagging equity markets in Egypt and far beyond suggest IPOs are not likely to soon be on the menu. Public Enterprises Minister Hisham Tawfik said last month that when the government resumes offering shares on the EGX will depend on when demand picks up. The government began 2022 targeting as many as 10 stake sales through the year but the deterioration of market conditions has put its plans on hold.

The BdC sale has been a long time coming: The state has waned to sell a stake in the bank since 2016 but has pulled back multiple times, primarily due to poor market conditions. BdC, Egypt’s third largest state-owned bank, was hoping to raise some USD 500 mn from the sale back in 2020 — making it the country’s biggest sale of state assets since 2006 — before the covid-19 pandemic forced it to delay its plans. At the time, the European Bank for Reconstruction and Development, the Sovereign Fund of Egypt and Abu Dhabi Development Holding were reportedly considering purchasing a stake.

M&A WATCH

MNHD wants SODIC to cough up a lot more

SODIC might have to up its offer 4x if it wants MNHD: Madinet Nasr for Housing and Development’s (MNHD) portfolio of undeveloped land is worth between 3-4 times more than what SODIC wants to pay for the company, the real estate developer’s managing director, Abdullah Salam, told CNBC Arabia yesterday (watch, runtime: 9:19). MNHD’s undeveloped land has “very promising potential to be developed and become residential and commercial projects,” Salam said, adding that this is what makes it so valuable.

SODIC earlier this month launched a takeover bid for MNHD and offered to pay EGP 3.20-3.40 per share, valuing the cross-town company at as much as EGP 6.36 bn.

But MNHD wants more: MNHD this week rejected the offer and called on SODIC to submit a new bid that reflects the fair value of the company.

What’s a fair value? Salam’s statements yesterday seem to suggest that the company might demand an offer as high as EGP 12.40 a share for it to agree to a sale, valuing it as much as EGP 25 bn.

Putting this in context: That’s more than three times greater than SODIC’s valuation priced by Aldar Properties and ADQ when they acquired the company last year.

MNHD’s shares closed at EGP 2.87 yesterday on the EGX (+7%). Its shares have gained about 17% since SODIC made its offer.

MNHD’s land bank: MNHD owns around 10 mn square meters of land, 5 mn of which are developed or under development, while 4.5 mn square meters are still undeveloped, mainly split between two main projects Taj City and Sarai, Salam said.

Sallam took the helm at MNHD and became a shareholder as the developer acquired his Minka Developments in a transaction announced late last fall. Sallam used MNHD’s 1Q 2022 earnings release (pdf) to signpost what he called “exciting times” for the developer, saying the company is entering “period of change and reinvention that will challenge our team to envision new ways for our business to grow sustainably and create value for stakeholders.” MNHD wants to double deliveries in 2022 and develop recurring revenue streams (including through a push into the commercial property market and through community management fees).

SODIC, meanwhile, is ramping up its competitive metabolism under new ownership. The company’s new Emirati owners are supporting CEO Magued Sherif and his team to think aggressively about growth opportunities. The high-end developer, now celebrating 25 years in the business, reported record 1Q gross contracted sales and profitability, it said in its first-quarter earnings release (pdf), setting up what Sherif said at the time would be a “record year for SODIC” despite a industry backdrop that is being marred by high inflation, rising interest rates and supply chain kinks.

Watch this space: MNHD will convene its general assembly on 16 August to decide whether to allow SODIC to go ahead with due diligence on its takeover bid, MNHD said in a disclosure (pdf) to the EGX yesterday.

MNHD and SODIC have been dancing (on and off) for years: With different shareholding structures on both sides and a different management team at MNHD at the time, the two started talking about combining their businesses in early 2018, which months later saw SODIC make an offer to acquire at least 51% of MNHD through a direct share swap that the two positioned as what would have been Egypt’s largest-ever M&A at the time. Talks fell through after they failed to reach an agreement on the share-swap ratio.

enterprise

M&A WATCH

Shareholder to block SDX merger with Tenaz

SDX shareholder to block planned merger with Tenaz: A planned merger between UK-based, Egypt-focused SDX Energy with Canadian firm Tenaz Energy has been thrown into doubt after a group of shareholders said they would vote to block the transaction. SDX was sent a letter by trading group Aleph Commodities informing it that Aleph holds some 25.65% of SDX and intends to vote against the transaction at a meeting of shareholders scheduled for 29 July, SDX said in a statement to the London Stock Exchange.

Aleph says no: Fully 75% of shareholders need to okay the merger for it to go through, giving Aleph the power to block it, Tenaz said in a response filed to the London bourse.

The story so far: SDX agreed to the all-share takeover with Tenaz in May in a transaction that would value the London-listed company at around GBP 21.4 mn. SDX shareholders would receive roughly 0.075 shares in Tenaz for each SDX share, handing them ownership of around 36% of the new company. Tenaz shareholders would hold the remaining 64%. At the end of June, the companies announced a cash alternative that would allow SDX shareholders to receive cash instead of shares.

Why do we care? SDX owns 36.9% of the South Disouq concession in Egypt’s Nile Delta, and 50% of the West Gharib concession in the Eastern Desert, where it first struck oil last month.

Aleph doesn’t want to dilute SDX: “[We welcome] the opportunity to engage with management and the board of directors to explore opportunities to provide financial, commercial and technical support to SDX to ensure the growth of the company and its production base, with minimal dilution,” SDX reported Aleph as saying in the letter.

What’s next? Both SDX and Tenaz will go ahead with their shareholder meetings on 29 July to vote on the merger, though it now seems unlikely to go through. Tenaz said it was exploring all its options with regard to the transaction.

CAPITAL MARKETS

Investors to bid for rating agency license this quarter

A second local credit rating agency could be in the works: A group of investors led by MGM Banking and Financial Consultants Chairman Gamal Moharram is in talks with the Financial Regulatory Authority (FRA) for a license to operate a credit rating agency, Dreny and Partners Founding Partner Moataz Dreny told Enterprise. The investors are finalizing the company’s structure and plan to file a request for a license sometime this quarter, he said, without disclosing their identities. They will also hire an ex-Moody’s industry expert to head the firm, Dreny said.

The FRA wants more local rating agencies: The Financial Regulatory Authority (FRA) in February made it easier for credit rating companies to get operating licenses in Egypt by scrapping a requirement for them to be at least 10% owned by international firms.

Egypt currently only has one credit rating agency: Middle East Rating and Investors Service (MERIS), a joint venture between Moody’s and Finance and Banking Consultants International (FinBi).

The rationale: A single rating agency can only rate so many bonds, and with the growing popularity of asset-backed securities in Egypt more firms are needed to expand capacity.

IN OTHER CAPITAL MARKETS NEWS-

Egyptian Modern Education Systems has completed the move from small-cap index Nilex to the EGX, with an initial market cap of EGP 100.5 mn, it said in a disclosure (pdf) yesterday. Shares closed up 0.7% on Monday at EGP 0.14.

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LAST NIGHT’S TALK SHOWS

Diplomacy and sports dominated the airwaves last night with the nation’s talking heads focused on President Abdel Fattah El Sisi’s trip to Berlin and Egypt’s victory in African Handball Championship final.

El Sisi in Berlin: El Sisi co-chaired the Petersberg Climate Dialogue in Berlin and held talks with German Chancellor Olaf Scholz yesterday. The news received coverage from El Hekaya (watch, runtime: 2:25), Kelma Akhira (watch, runtime: 6:40, Masaa DMC (watch, runtime: 2:06) and Al Hayah Al Youm (watch, runtime: 2:08). We have more in this morning’s Diplomacy section, below.

Egypt was crowned African handball champion for the second year running last night, defeating first-time finalists Cape Verde 37-25. This is the eighth time the Pharaohs have taken home the trophy. Omar El Wakil was named the man of the match. Masaa DMC (watch, runtime: 0:53), Ala Mas’ouleety (watch, runtime: 1:33), El Hekaya (watch, runtime: 2:25) and Kelma Akhira (watch, runtime: 0:59) all had the story.

GEM delayed again: The Grand Egyptian Museum (GEM) is set to be completely finished before the end of the year, Tourism Minister Khaled El Enany told El Hekaya’s Amr Adib (watch, runtime: 2:32). The inauguration date would be determined by global conditions and other events the state is working on, he said. Secretary-general of the Supreme Council for Antiquities Mostafa Waziri said just a few weeks ago that the museum will be finished within three months.

EGYPT IN THE NEWS

ُEl Sisi’s meeting with German Chancellor Olaf Scholz is leading the conversation on Egypt in the foreign press this morning: President Abdel Fattah El Sisi held a meeting followed by a joint presser with German Chancellor Olaf Scholz on the sidelines of the Petersberg Climate Dialogue in Berlin yesterday. Reuters covers the chancellor's comments about Egypt’s nascent green hydrogen industry, and the National reports on El Sisi’s response to questions from German reporters on Egypt’s human rights record.

Also making headlines:

  • Higher oil prices have been good for Swvl: More people are switching from driving to using Swvl for their commute in bigger markets such as Egypt and Pakistan amid rising inflation and surging oil prices. (Reuters)
  • Luxor grounds hot air balloons after accident: Authorities have suspended hot air ballooning in Luxor while they investigate an incident that left two tourists with minor injuries. (Associated Press)
  • Beau Rivage beach is being sacrificed for clearer streets: Alexandria locals are up in arms about the decision to build a bridge across the popular Beau Rivage beach, which they say will ruin the area. (The National)

ALSO ON OUR RADAR

It could be getting easier for foreign photographers + film crews to get permits: Ministers are planning to introduce new regulations that would see the photography permit process for foreign media outlets and film and TV producers streamlined, introducing a single-window system for applications and fee payments that could be accessed digitally, according to a cabinet statement. The decision would include rules obliging producers not to film children, adults without their consent, or scenes considered “offensive” to the country and its people, Tourism Minister Khaled El Enany said.

PLANET FINANCE

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US private equity firms are collectively looking to raise some USD 1 tn in fresh funding despite a shaky market, the Wall Street Journal reports. Some 2.8k firms are now trying to fundraise, including nine megafunds looking to raise USD 216 bn — a jump of over 60% compared to the beginning of 2021, swamping potential limited partners at pension funds, family offices and endowments with meeting requests.

But fundraising is already down c. 43% year-on-year in 1H 2022, according to industry date.

A messy backdrop: The fundraising drive by PE players comes despite a paucity of exits (whether through private por public markets). Valuations are falling (good for would-be acquirers, bad for folks with holdings they need to exit), debt finance is getting more expensive every time the Fed meets, and global buyouts tanked in the second quarter.

So who’s going to close? Heavyweights with proven track records including Blackstone and Apollo, the WSJ suggests.

EARNINGS WATCH- Goldman, BoA report better-than-expected earnings: Bulge bracket stalwart Goldman Sachs reported a 47% drop in net income in 2Q, beating analysts’ estimates, according to its latest financial results (pdf). The bank reported a USD 2.9 bn profit for the quarter due a fall in dealmaking and said it would slow hiring and could make job cuts. Analysts had predicted income to fall to USD 2.6 bn. It was a similar story at Bank of America, where analysts were surprised to the upside by a 32% fall in earnings to USD 6.2 bn, its financial results (pdf) showed. CNBC and the Wall Street Journal have more.

AND- Has crypto bottomed out? (Don’t hold your breath.) Major cryptocurrencies staged a recovery on Monday following a three-month long crash, Bloomberg reports. BTC, the largest of the bunch, surged as much as 7% to trade above USD 22k for the first time since early June, while ETH jumped 10%. Some digital currencies had seen more than 50% of their value wiped out so far this year as risky assets plummet on surging inflation, rising interest rates and geopolitical crises.

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THE CLOSING BELL-

The EGX30 rose 1.1% at yesterday’s close on turnover of EGP 930.2 mn (11.7% above the 90-day average). Local investors were net buyers. The index is down 25.8% YTD.

In the green: Credit Agricole Egypt (+ 13.4%), Madinet Nasr for Housing and Development (+7.1%) and GB Auto (+5.1%).

In the red: Abu Dhabi Islamic Bank-Egypt (-1.1%), Telecom Egypt (-1.1%) and Cleopatra Hospital (-0.7%).

Asian markets are mostly in the red this morning, and it’s looking a similarly patchy open for European markets, according to stock futures. US shares are on course to open in the green later today.

DIPLOMACY

Energy dominated the conversation in El Sisi’s sit-down with German chancellor: Energy, COP27 and the Grand Ethiopian Renaissance Dam (GERD) were all up for discussion yesterday during talks between President Abdel Fattah El Sisi and German Chancellor Olaf Scholz in the German capital.

Egypt, Germany to cooperate on green hydrogen: El Sisi, who is in Berlin for the annual Petersberg Climate Dialogue, discussed cooperation over liquefied natural gas, clean energy and green hydrogen with the German leader, Ittihadiya said in a statement. In a joint presser following the meeting (watch, runtime: 22:16), Scholz told reporters that the two sides agreed to cooperate on developing Egypt’s green hydrogen industry in a bid to help Europe diversify its energy supplies away from Russia. Exporting hydrogen to Germany will be a “very big opportunity” for countries like Egypt, he said.

Egypt wants to help ease the current European gas crisis, El Sisi said during the press conference, adding that the country “could export all the natural gas that it can produce from the Eastern Mediterranean.” Egypt recently signed an agreement with Israel and the EU to increase gas exports to Europe as the continent looks to phase out its reliance on Russian fossil fuels. The agreement will see Israel send more gas to Egypt’s LNG facilities before exporting it on tankers to European shores.

El Sisi called on international financial institutions to help Egypt overcome the current crisis: “We’re asking our friends in Europe and international financial institutions, like the IMF and the World Bank, to help us until the current crisis is over.” Egypt and the IMF are currently in talks over a fresh assistance program to prevent a balance of payments crisis caused by soaring food and energy prices.

Also from Berlin: The president met the heads of major German industrial companies during a business roundtable, who expressed interest in expanding their activities in Egypt, according to Ittihadiya.

AROUND THE WORLD

One step closer towards resolving the seven-year war in Yemen? The UN is pushing warring parties in Yemen to extend the current truce by another six months, sources familiar with the matter told Reuters. The truce would mark the most prominent step in the UN’s efforts towards resolving the ongoing conflict between the Yemeni government and the Houthi movement. The UN’s Yemen envoy, Hans Grundberg, will be heading to Oman soon to talk to the Houthis' chief negotiator, followed by a visit to the Yemeni southern city of Aden, where the Yemeni government is headquartered.

France, UAE boost energy cooperation: France and the UAE signed a strategic agreement to strengthen energy ties during UAE President Mohamed bin Zayed’s visit to the French capital yesterday, Reuters reports. The pact will see the two countries work together on investment projects in the hydrogen, renewable and nuclear energy sectors. Abu Dhabi National Oil Company (ADNOC) and the French TotalEnergies also signed a strategic partnership, according to Emirati state news agency WAM.

greenEconomy

Our neighbors in MENA are following our lead on wind and solar energy — and could overtake us: Egypt is a solar and wind powerhouse, with local utility-scale projects generating a total of around 3.5 GW of energy each year, according to a new report (pdf) from US-based nonprofit Global Energy Monitor, which tracks renewables projects. That’s more than any other Arabic-speaking country, and nearly 1 GW more than second-place UAE. But as the Arab League pursues an ambitious plan to push regional renewable energy capacity to 80 GW by 2030, megaprojects slated by our neighbors could see us slip regionally, the report says.

Right now, we’re leading the pack: Egypt “is the region’s wind leader,” according to the report, with a current capacity of 1.6 GW. And when it comes to solar we generate 1.9 GW, second only to the UAE, which produces some 2.6 GW of renewable energy from the sun’s rays (but has no current wind power capacity).

There’s a huge amount of fresh capacity in the works across the region: Total utility-scale solar and wind capacity across the region is currently only 12 GW, but that figure could grow more than sixfold to hit 73 GW by 2030 if all the projects that have been slated come to fruition, Global Energy Monitor says.

New kids on the block: Oil rich countries with little current renewables capacity like Oman, Algeria, and Kuwait have big plans to pivot to renewables through mega wind and solar projects, while Morocco is also angling to become a regional renewables leader. Morocco plans to add some 15.3 GW by 2030 — which would make it the new regional leader in wind and solar with 16.3 GW.

The report projects that we’ll have slipped to fifth place by 2030 with a total 6.8 GW of wind and solar capacity — nearly double our current capacity, but not enough to keep up with those emerging new top four. That said, 100% of the additional 3.3 GW the report expects us to add should come online by 2024 — meaning there’s plenty of upside potential for us to overshoot. And another caveat: The report only covers large-scale projects of more than 10 MW.

Prospective wind projects in Egypt are estimated to bring about 2.3 GW in new capacity by 2030, with some 750 MW of that already in construction or development, and the rest announced but not yet underway.

Not as much new solar capacity is coming online by the end of the decade, with only around 800 MW in construction or development and another 100 MW announced. Meanwhile, some 740 MW worth of new local solar projects have been shelved and almost 550 MW canceled, according to the data.

Why have we slowed our game? The global collapse of oil prices and reduced electricity demand during the pandemic saw overcapacity become an issue. The government in summer 2020 set limits on renewables generation to tackle that, leading sector insiders to predict a slowdown in investment in the following 18-24 months.

Though we’re now seeing signs of what could be the start of a rebound: Players from the Gulf have been investing more heavily in our local renewables sector in recent weeks, as the state pushes for more FDI amid global volatility. Alhokair Group subsidiary FAS Energy recently announced plans to invest some USD 450 mn to construct a 500 MW solar plant. Meanwhile, Saudi Arabia’s ACWA Power and Hassan Allam Holding last month said they would develop a 1.1 GW wind farm in the Gulf of Suez. The USD 1.5 bn project will be one of the largest onshore wind farms in the world, and the largest in the Middle East.

That’s not counting other forms of renewables: Egypt’s overall renewable capacity is set to rise by 68% or 4 GW over the coming five years, according to an International Energy Agency (IEA) report we covered in Going Green late last year. That would bring the country’s total renewables capacity to around 10.1 GW from 6.1 GW currently, including wind, solar, biofuels, and hydropower.

And we’re forging new frontiers in green energy: “When it comes to green energy storage, Egypt again looks to be a frontrunner in the region’s renewables energy space,” the report reads, noting plans by the Sovereign Fund of Egypt alongside Scatec, Fertiglobe and Orascom Construction to launch our first green hydrogen plant in Ain Sokhna as soon as this year. The government has signed some USD 14 bn worth of preliminary agreements for further green hydro and green ammonia projects, giving it a potential pipeline of 11.6 GW (equal to around 1.57 mn tons of hydrogen a year). That’s more than triple the planned wind and solar expansion, giving a sense of how the state’s priorities have shifted.

So what’s behind this “race to the top” in regional solar and wind generation? Europe’s scramble to replace Russian fossil fuels, in part. Setting up renewable energy capacity for export to foreign markets is partially behind the push, “especially given the increasing urgency with which European countries are seeking alternatives to gas imports,” the report says, in a nod to the continent’s need to find alternative energy sources to reduce its reliance on Russian gas after relations soured over the invasion of Ukraine.

We’re no exception: Hopes of becoming a green energy hub for export to our friends across the Med is driving some of our most ambitious green hydrogen and other green energy investments right now.


Your top green economy stories for the week:

  • SuperJet goes green: Transport Ministry affiliated SuperJet plans to invest EGP 1 bn in electric buses.
  • Sharm airport solar plant: Infinity, Hassan Allam Holding and Madkour will reportedly bid to install a solar power plant at Sharm El Sheikh International Airport ahead of COP27.

CALENDAR

OUR CALENDAR APPEARS in two sections:

  • Events with specific dates or months are right here up top
  • Events happening in a quarter or other range of time with no specific date / month appear at the bottom of the calendar.

JULY

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

18-19 July (Monday-Tuesday): Petersberg Climate Dialogue, Berlin.

19 July (Tuesday): The government hosts public consultations on its state ownership policy document with wholesale and retail players.

19 July (Tuesday): The national dialogue’s board to reconvene.

21 July (Thursday): European Central Bank monetary policy meeting.

21 July (Thursday): The government hosts public consultations on its state ownership policy document with medical device manufacturers.

21-22 July (Thursday-Friday): The Arab Organisation for Human Rights (AOHR) and Supreme Standing Committee for Human Rights (SSCHR) human rights conference.

24 July (Sunday): The government hosts public consultations on its state ownership policy document with healthcare players.

26 July (Tuesday): The government hosts public consultations on its state ownership policy document with pharma players.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

28 July (Thursday): The government hosts public consultations on its state ownership policy document with experts and think tanks.

29 July (Friday): Aleph Commodities shareholder meeting to vote on potential merger with Tenaz Energy Corp.

30 July (Saturday): Islamic New Year.

Late July-14 August: 2Q2022 earnings season.

AUGUST

August: Work to extend the capacity of the Egypt-Sudan electricity interconnection to 600 MW to be completed.

August: Sharm El Sheikh will host the African Sumo Championship.

14 August (Sunday): Conference of Egyptian entities abroad.

16 August (Tuesday): MNHD’s general assembly meeting to decide whether to allow SODIC to go ahead with due diligence on its takeover bid.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

SEPTEMBER

September: Naval Power, Egypt’s first naval defense expo

September: Central Bank of Egypt’s Innovation and Financial Technology Center to launch incubator for 25 fintech startups.

September: Egyptian-German Joint Economic Committee.

September: A delegation from Germany’s Aldi will visit Egypt to look at potential investments.

September: Government to launch an international promotional campaign for Egyptian tourism.

6-9 September (Tuesday-Friday): Gate Travel Expo 2022, El Kobba Palace, Cairo.

7-9 September (Wednesday-Friday): African Finance Ministers to meet in Cairo to coordinate an African-led position during COP27.

8 September (Thursday): European Central Bank monetary policy meeting.

18 September (Sunday): Deadline for brokerage firms, asset managers and financial advisors to register with the Egyptian Securities Federation.

20-21 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

26–27 September (Monday-Tuesday): The Africa Women Innovation and Entrepreneurship Forum (AWIEF) at the Cairo Marriott Hotel.

OCTOBER

October: Air Sphinx, EgyptAir’s low-cost subsidiary to commence operations.

October: Fuel pricing committee meets to decide quarterly fuel prices.

1 October (Saturday): Use of Nafeza becomes compulsory for air freight.

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

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

10-16 October (Monday-Sunday): World Bank and IMF annual meetings chaired by CBE Governor Tarek Amer, Washington, DC.

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

27 October (Thursday): European Central Bank monetary policy meeting.

Late October-14 November: 3Q2022 earnings season.

NOVEMBER

November: Cairo Water Week 2022.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

3-5 November (Thursday-Saturday): Egypt Fashion Week.

4-6 November (Friday-Sunday): Autotech auto exhibition, Cairo International Exhibition and Convention Center.

6-18 November (Sunday-Friday): Egypt will host COP27 in Sharm El Sheikh.

7-13 November (Mon-Sun): The International University Sports Federation (FISU) World University Squash Championships, New Giza.

21 November-18 December (Monday-Sunday): 2022 Fifa World Cup, Qatar.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 December (Thursday): European Central Bank monetary policy meeting.

DECEMBER

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

December: The Sixth of October dry port will begin operations.

JANUARY 2023

January EGX-listed companies and non-bank lenders will submit ESG reports for the first time.

January: Fuel pricing committee meets to decide quarterly fuel prices.

MAY 2023

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

EVENTS WITH NO SET DATE

2H2022: The inauguration of the Grand Egyptian Museum.

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

2H2022: The government will have vaccinated 70% of the population.

3Q2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release its first financing product.

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

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

**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 above 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. © 2022 Enterprise Ventures LLC.

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