AM — Expedition Investments consortium acquires 33% of Domty

Good morning, wonderful people, and a very happy THURSDAY to you all.

We feel a little bit as if we’re swimming through molasses this morning after staying up way past our bedtime last night chewing over life, the universe and everything with a large group of you at the wonderful Villa M. To everyone who attended: Thank you for your kindness — and your super-smart questions. And to everyone who chooses to start (or end) their days with us: We cannot thank you enough. Writing you is the highlight of our professional careers.

We’re also very excited this morning: The EFG Hermes One on One takes place in Dubai next week, and it’s the first time since before the pandemic that the world’s premier frontier and emerging markets investor conference will take place face-to-face.

Do you live and work in Dubai? Want to have coffee next week? A bunch of us will be in town for the One on One. Drop us a line on patrick@enterprisemea.com and let’s see if our schedules can sync up.

HAPPENING TODAY-

M&A WATCH- It’s decision day for B Investments: Expect an announcement today from the private equity player on whether it will preempt Adnoc’s bid for TotalEnergies Egypt and acquire the shares itself.

THE STORY SO FAR- Adnoc wants TotalEnergies Egypt: Adnoc’s distribution arm in late July agreed to acquire 50% of TotalEnergies Egypt for up to USD 203 mn. This includes a 34.6% stake owned by Total Energies Marketing Afrique (TEMA) and a 15.4% share held by B Investments.

B Investments has the right of first refusal: B Investments’ shareholder agreement gives it the right to pre-empt Adnoc’s bid and acquire TEMA’s shares for itself — but has to come to a decision within a specified period of time.

Now it’s deadline day: The company has been deliberating on what to do for the past 6.5 weeks and has to decide whether to acquire TEMA’s shares or allow Adnoc to proceed with the acquisition.

Speaking of TotalEnergies: We don’t think the company gets enough tub-tubs for breaking the gender barrier by employing so many women at its filling stations. More of this, please, from all of us — in every sector.

THAT’S NOT THE ONLY DEADLINE today:

• Today is the final day for companies to apply for the fifth phase of the export subsidy program.
• It’s the last chance for companies to submit bids for the government contract to renovate the Grand Continental Hotel.

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WATCH THIS SPACE- Is the PM about to get a new council of economic advisors? A single local press outlet is reporting that Prime Minister Moustafa Madbouly is forming an economic advisory council whose members are entirely drawn from the business community. The outlet suggests that some very smart, high-profile folks are members. The catch: We reached out to a number of them, and they said they hadn’t heard the news. We’ll poke into this a bit further and report back if there’s anything to say.

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The fourth Egypt- and UN-led regional climate roundtable takes place today in Beirut: The one-day event will see climate negotiators discuss climate finance with private- and public-sector stakeholders ahead of the COP27 summit in November.

THE BIG STORY ABROAD- It’s a mixed bag in the global front pages this morning: US media is focused on an impending rail strike (NYT | Washington Post | WSJ), the Financial Times leads with the new UK chancellor’s pledge to scrap caps on bankers’ bonuses, while the latest from Ukraine continues to be big news following the stunning retreat of Russian forces earlier this week (Reuters | Associated Press).

THE END OF COVID WATCH? The head of the World Health Organization (WHO) just gave his most optimistic assessment of the covid-19 pandemic ever, telling reporters in a presser yesterday that it is closer than ever to being over. “We are not there yet. But the end is in sight,” Reuters quoted Director-General Tedros Adhanom Ghebreyesus as saying. Despite optimism, he urged countries to maintain their alertness and fully vaccinate high-risk groups while continuing to test for the virus. "Now is the time to run harder and make sure we cross the line and reap the rewards of all our hard work,” he said.

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CIRCLE YOUR CALENDAR-

Intellectual property strategy coming soon: Egypt will launch its intellectual property strategy next Wednesday, Prime Minister Moustafa Madbouly said yesterday, according to a cabinet statement. World Intellectual Property Organization (WIPO) Director-General Daren Tang will make an appearance at a ceremony being put on to launch the program, the PM said.

We’ve been expecting this for a while: Madbouly first flagged that changes to intellectual property rights were in the works in his big privatization speech back in May. The strategy was finalized by the Justice Ministry and sent to the Cabinet in June.

ADD Art is hosting its inaugural AlDau International Art Festival in Hurghada from 22 September until 7 October, according to a statement (pdf). The festival will begin with a weeklong workshop with nearly 40 artists from countries including the US, UK, France, Jordan, Tunisia, Uzbekistan, and Congo. The workshop will be followed by an exhibition from 2-7 October at the AlDau Art Promenade in Hurghada. ADD Art is a subsidiary of AlDau Developments.

PSA- Tech startups have two weeks to apply for DMZ Cairo’s second eight-month incubation program, which begins in November. Applications for the cycle are open until Thursday, 29 September, according to a statement (pdf). The incubator is based at the Universities of Canada in Egypt and is backed by the Academy of Scientific Research and Technology and the National Technological Incubators Program.

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

Expedition bags (almost) all of its targeted shares in Domty: Shareholders in EGX-listed Domty agreed to sell 93.0 mn shares to a consortium of investors led by Expedition Investments in a mandatory tender offer that closed yesterday, according to an EGX bulletin. That’s 97% of the 96.2 mn shares the consortium was targeting, handing it a 32.9% stake in the firm. At Expedition’s revised offer price of EGP 5.50 per share, the transaction was worth some EGP 511.6 mn by our math.

REFRESHER- Domty shareholders had from mid-August until end of close on Wednesday to sell their shares under the mandatory tender offer (MTO). Expedition upped its original offer price by 10% last week to EGP 5.50 a share, after BDO valued the company at EGP 6.90 per share.

Damatis dominate Domty: The Damati family — which founded Domty and already controlled 56% of the company — are part of the consortium that acquired the 33% stake and own minority stakes in Expedition, meaning they now control some 89% of the company’s shares. Expedition is a special purpose vehicle domiciled in Mauritius and controlled by undisclosed investors in Egypt and the Gulf.

Advisors: Our friends at EFG Hermes quarterbacked the transaction and Matouk Bassiouny & Hennawy acted as counsel to Expedition.

When one Gulf acquisition wraps, another one opens: Abu Dhabi Ports (ADP) finalized its takeover of a major local shipping and logistics outfit — and the Kuwaiti Investment Authority (KIA) took a leaf out the book of its Gulf sovereign fund neighbors, buying a 4.8% stake in EGX-listed Rameda Pharma.

ADP’s majority acquisition of IACC is final: Abu Dhabi Ports (ADP) has completed its first international acquisition, buying a 70% stake in local shipping and logistics firm International Associated Cargo Carrier (IACC) for AED 514 mn (USD 140 mn), it said in a statement (pdf) on the Abu Dhabi stock exchange yesterday. The transaction was first agreed in July, with the company at the time saying it would be funded from its reserves of more than AED 3 bn (USD 816.7 mn).

What ADP got: IACC Holdings is an investment company that focuses on shipping and logistics, founded and led by our friends at El Ahwal family. It is the sole owner of Egypt-based shipping firm Transmar and terminal operator Transcargo International (TCI) and also owns two other shipping companies, Safina and IACC Logistics, according to its website. Transmar and TCI are on track to deliver combined revenues of around USD 137 mn and EBITDA of USD 65 mn in 2022, according to the statement.

No changing of the guard: The Ahwal family and its executive team will continue to manage Transmar and TCI “under the guidance and support of the board and in conjunction with [ADP],” the statement confirmed.

This isn’t the first time ADP has called at our ports: The company has so far this year signed several contracts with port authorities and the Transport Ministry to build and run multi-purpose terminals in the Safaga and Ain Sokhna ports, cruise ship berths and terminals in various Red Sea ports, and a river port in Minya. ADP is majority-owned by Abu Dhabi sovereign wealth fund ADQ, which bought 32% of Alexandria Container & Cargo Handling as part of its USD 1.8 bn investment in five EGX-listed companies in April. ADQ also acquired our friends at SODIC, the upmarket developer, in a blockbuster transaction nearly a year ago.

Advisors: Transmar and TCI had EFG Hermes (pdf) acting as the exclusive financial advisor and White & Case as counsel. KPMG acted as the financial advisor to ADP, while PwC acted as the buyer’s commercial advisor and Matouk Bassiouny and Hennawy as its legal advisor.

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KIA buys stake in Rameda: The Kuwaiti sovereign wealth fund acquired a 4.81% stake in Rameda Pharma yesterday, Hapi Journal reported. The transaction was made by Ekuity Holding, a subsidiary of the Kuwait Investment Authority (KIA), which according to data published by the EGX (pdf) purchased 48.14 mn shares at EGP 3.00 apiece. This is a 12% premium to Rameda’s closing share price on Tuesday.

Who’s the seller? Sources told the newspaper that a “Swedish asset manager” sold its shares, without disclosing its identity. Publicly available data suggests that Swedbank Robur Fonder, holds a 4.81% stake in the company.

Advisors: EFG Hermes brokered the transaction.

Kuwait joins the Gulf investment party? Gulf sovereign funds have been piling into Egypt after GCC countries pledged more than USD 22 bn in direct investment to help the country weather global economic headwinds. While Kuwait wasn’t part of those pledges, some analysts had said it could pitch in with up to USD 2 bn. The Saudi and Abu Dhabi funds have spent more than USD 3 bn to snap up holdings in big-name EGX-listed firms this year. The Saudi wealth fund also recently bought an 11.0% stake in Rameda over two transactions.

Ekuity has had expansion plans here since before 2022 went to hell: Last year, the company said it was eyeing acquisitions of minority stakes in four to five food and pharma companies in Egypt over the following two years. The KIA subsidiary, which owns close to 50% of local lender AAIB, acquired 30% of Egypt’s Nile Aluminum and Metals Company (AluNile) back in 2019.

The UAE’s Tabreed lands EGP 1.6 bn CapitalMed contract: Dubai-listed district cooling firm Tabreed will design, build and operate a heating and cooling plant at the Badr city medical complex as part of an AED 306.4 mn (EGP 1.6 bn) contract signed with project developer Egyptians for Healthcare Services (EHCS), it said in a disclosure to the Dubai stock exchange (pdf). Shaker Consultancy will join Tabreed on the project design, according to a press release (pdf).

Tabreed likes it here: The agreement comes as Tabreed looks to expand its local operations, after entering our market in February with a contract to provide cooling services for Marakez’s D5M Mall in New Cairo.

About CapitalMed: The EGP 18 bn private medical complex aims to serve as many as 20 mn people and include a general hospital and 19 specialist centers. Construction has begun on the first phase, which should open its doors next year. The International Finance Corporation came on board in June to help EHCS design, structure, budget, and manage the project, as well as to manage the equity side of its financing. EHCS Chairman and Managing Director Hassan El Kalla has described it as “the largest-ever development for healthcare in Egypt.”

El Sisi’s visit to Qatar bears fruit, with details to come: An agreement between the good folks at the Sovereign Fund of Egypt (SFE) and the Qatar Investment Authority (QIA) was among three MoUs signed by Egypt and Qatar during President Abdel Fattah El Sisi’s visit to Doha yesterday, Ittihadiya said in a statement. The two sides also signed an agreement to cooperate on ports and another “in the field of social affairs,” it said, without providing further details.

El Sisi’s primary mission: Line up investment. Investment was top of the agenda for the president as he headed to Doha for the first time since the two countries normalized ties last year. Qatar has joined with the UAE and Saudi Arabia and pledged to invest USD 5 bn here to help shield us from the fallout from the war in Ukraine. Unlike the other two Gulf monarchies, the Qataris are yet to act: The two governments have reportedly been in talks for weeks over potential investments from Qatari firms and the QIA but nothing has yet been announced.

Investment was indeed part of the conversation between El Sisi and Qatari Emir Tamim bin Hamad Al Thani yesterday, according to a statement from the emir’s office. It also noted that the two discussed transport and social affairs, but didn’t provide any further information. El Sisi also held meetings with Qatari business leaders yesterday, talking up investment prospects in Egypt’s agriculture, commercial, real estate and industrial sectors, the Qatar News Agency reported.

An olive branch: Egypt has released Al Jazeera journalist Ahmed Al Nagdy who had been held in pretrial detention since August 2020, Reuters reported, citing statements by Al Nagdy’s lawyer to Al Jazeera.

The visit was everywhere on the airwaves last night, though the talking heads didn’t add much to what we already know transpired at the meetings: Masaa DMC (watch, runtime: 2:56), Ala Mas’ouleety (watch, runtime: 3:35), Yahduth Fi Masr (watch, runtime: 2:58) and Al Hayah Al Youm (watch, runtime: 5:39) all covered the story.

The news got ink from the international press: Bloomberg | Reuters | AFP.

US TO CONTINUES CUT TO MILITARY AID-

The US State Department has decided to offer Egypt USD 170 mn in conditional military aid, the same amount as 2021 after it withheld USD 130 mn due to human rights concerns, Reuters and New York Times reported last night. Though several Democratic lawmakers were calling (pdf) on the Biden administration to suspend the entire USD 300 mn in conditional aid, Secretary of State Anthony Blinken reportedly decided to provide USD 75 mn because of the government’s progress releasing political detainees. Another USD 95 mn will be transferred for counterterrorism and border security.

EGYPT SIDES WITH IRAN AS WEST DEMANDS ANSWERS ON URANIUM TRACES-

Egypt refused to endorse a non-binding statement by major Western powers pressuring Iran to provide an explanation on why traces of enriched uranium were found at previously undeclared sites in 2019, Reuters reports. Two-thirds of the 35-nation board of the International Atomic Energy Agency backed the statement put forward by the US, UK, France and Germany; while Egypt and 11 others didn’t give their support. Among them: Brazil, South Africa, Argentina and Mexico.

EGYPT IS NOW A MEMBER OF THE SCO-

Egypt has officially joined the Shanghai Cooperation Organization: The Foreign Ministry signed a MoU to join the Shanghai Cooperation Organization (SCO) as a dialogue member ahead of its annual summit in Uzbekistan, according to a ministry statement. Egypt, along with Saudi Arabia and Qatar, were approved to become dialogue partners last year and have now acceded to the SCO, giving them a seat at the table at this week’s summit.

Uh, the SC-what? Founded in 1996, the SCO was originally designed to increase cooperation between Russia, China and the former USSR states in Eurasia but has expanded to include other regional powers such as India, Iran, Turkey and Pakistan. Egypt and Saudi Arabia are the first Arab states to become SCO members.

What does this get us? A seat at the table. Egypt will now be able to attend meetings of member states and working groups, though we won’t have much input into decision-making.

That’s not the only new international alliance we’re trying to get involved with: Egypt reportedly wants to become a member of the BRICS (Brazil, Russia, India, China, South Africa) group of emerging economies.

Exports of food staples are back on the menu: The Madbouly government has lifted a ban on the export of food staples that it had introduced earlier this year in response to the global food crisis triggered by the war in Ukraine, Reuters reports, citing a Trade Ministry document. Producers are now able to sell wheat, flour, corn, lentils, pasta, fava beans and vegetable oils to overseas buyers, according to the document. The three-month ban was introduced in March and then extended for another three months in June in a bid to conserve local supplies amid spiraling prices and global shortages caused by the conflict. Al Mal also has the story.

Lifting the ban is a signal the government’s concerns about food insecurity are easing: Authorities have been working to shore up the country’s reserves of basic food commodities, enacting emergency measures to boost domestic wheat production and negotiating directly with overseas suppliers to secure grain cargoes. We now have a seven-month stockpile of wheat reserves, according to statements by Supply Minister Ali El Moselhy, and enough vegetable oils to last for about six months.

Egypt wasn’t the only “food nationalist” of 2022: At least 19 food producers imposed export restrictions this year in response to the crisis, worsening global shortages and fuelling further inflation.

MEANWHILE- The Consumer Protection Agency (CPA) is warning shops to abide by new price controls on rice that the state imposed last week. The price of packed rice is capped at EGP 15 per kg, while unpacked rice can sell for no more than 12 per kg under an order published in the Official Gazette on Thursday. Traders caught selling rice at higher prices will be at risk of fines of between EGP 100k and EGP 5 mn.

We’re getting an EGP 2 coin and an Egyptian-British mint in the Suez Canal Economic Zone (SCZone) after cabinet approved the moves at its weekly meeting yesterday, according to a statement. The Royal British Mint, the Egyptian Mint, and the Public Treasury Authority will partner on the roll-out and operation of the new mint as part of the Sisi administration’s bid to localize industries, the statement read.

The announcement of the new coin got lots of airtime on the talk shows last night: (Yahduth Fi Masr | watch, runtime: 5:13 | Salet El Tahrir | watch, runtime: 6:57 | Masaa DMC | watch, runtime: 6:10)

ALSO- The government wants tourists to spend more: Cabinet also gave the greenlight to establish a local branch of payments company Global Blue, which will digitize the VAT drawback system for tourists, making it easier for them to claim refunds.

REFRESHER- Under amendments to the VAT and the Stamp Tax laws ratified in February, tourists can claim VAT rebates on their way out of the country for purchases of select items worth more than EGP 1.5k or more, down from a previous EGP 5k threshold.

HSBC Qatar got kudos at The Asset’s Triple A Sustainable Investing awards. The bank’s Qatari branch was named best sub-custodian, best domestic custodian, and best fund administrator for retail funds for the second consecutive year, it said in a statement (pdf). HSBC received 35 awards in total across various markets. See the full list of awardees here.

Flat6Labs and healthcare firm Organon have announced the three winners of the MENA region’s first femtech accelerator program: Greek-Lebanese firm Omgyno, which offers at-home gynecological testing and telehealth services, Lebanese mental health platform Siira, and Maternally, whose platform provides mental health support for pre- and postnatal women were selected by the organizers, according to a press release (pdf) Tuesday. The four-month virtual accelerator supported 10 women-led digital healthcare start-ups operating in MENA to build products, test market fit and improve business models.

Femtech? The female technology (femtech) market in MENA could be worth USD 3.8 bn by 2031, according to Flat6Labs. We’ve done your homework for you on the growing local femtech industry: Check out what we found here.

President Abdel Fattah El Sisi’s two-day trip to Qatar was the big story of the night (more on that in this morning’s news well, above), though plans for an EGP 2 coin and the collapse of Capiter also got attention.

The economic conference set to be held at the end of this month once again got coverage, though there was little in the way of new information. In an interview on Ala Mas’ouleety (watch, runtime: 4:25), Cabinet spokesman Nader Saad said that the event would last three days and that participants would discuss the final draft of the government’s state ownership document. Masaa DMC (watch, runtime: 2:07) and Al Hayah Al Youm (watch, runtime: 2:59) also covered the conference.

Startups for dummies: In a startup-focused segment inspired by the Capiter chaos, Yahduth Fi Masr’s Sherif Amer asked questions both big (what does a post-Capiter Egyptian startup scene look like?) and small (how does a startup work, exactly?). Joining the show to discuss Capiter, Eslam Darwish, founding partner of fintech fund Nclude, put the company’s collapse down to “poor governance” and said that the fact the company was able to raise USD 33 mn is a sign of optimism for Egypt’s startup scene (watch, runtime: 2:56). Meanwhile, RiseUp’s Abdelhameed Sharara was on hand to explain to the layman how startups work (watch, runtime: 2:34).

ALSO LAST NIGHT- Cabinet spokesman Nader Saad said that the government’s electricity rationing plan has saved Egypt a lot of gas, though he didn’t provide any figures (Ala Mas’ouleety | watch, runtime: 2:24).

Leading the international press this morning, once again, is COP27, with Foreign Policy commenting on recent claims by environmental experts that authorities are clamping down on environmental civil society groups ahead of the summit and speculating on possible responses from Western governments.

Meanwhile, the Madbouly government is distancing itself from a decision to hike hotel rates amid accusations of price gouging, according to Climate Home News. Following the introduction of new minimum rates by the Egyptian Hotel Association in February, COP delegates have complained that their reservations have been canceled and their rooms re-advertised for 3-6x the price. Cue a he-said-she-said situation, with both the EHA and the government denying responsibility for the decision.

(Wait, what? Prices in a resort town spiking when the entire world descends on it for a few weeks at the start of the traditional high season? What a surprise…)

Also making headlines:

• Why are the Gulf states coming to our rescue? Egypt’s economic and geopolitical clout underpin the decisions by Saudi Arabia, the UAE and Qatar to provide bns of USD to support the economy, says Carnegie scholar Yasmine Farouk. (Wall Street Journal)
• The charges against Mada Masr journalists got ink in the German press. (Deutsche Welle)

FROM THE DEPT. OF DUH- Auto assembly in Egypt is hurting right now: Al Amal Auto could be forced to shutter its factory due to import restrictions, Chairman Amr Soliman told Al Mal. The sole agent and distributor of BYD and Lada brandpassenger cars and King Long microbuses in Egypt, Al Amal can’t bring in components thanks to import restrictions. Al Amal had already suspended the assembly of the Lada Granta on the back of Western sanctions on Russia, he said.

REMEMBER- New rules mandating the use of L/Cs for imports were imposed by the central bank earlier this year and have made it much harder for distributors to import vehicles and assemblers to access components. Several global car manufacturers have suspended sales to Egypt after local dealers were unable to pay.

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

• Egypt’s Ambassador to Greece discussed Egypt-Greece interconnection projects with the CEO of Greek infrastructure investor and project developer Copelouzos Group. (Statement)
• Japanese conglomerate Sumitomo Corporation wants in on renewable energy and electricity interconnection projects in Egypt. (Statement)
• Abu Dhabi Commercial Bank Egypt and the European Bank for Reconstruction and Development are providing finance to Elsewedy Technical Academy to fund the first semester of vocational training for special needs students. (Hapi Journal)
• The Administrative Capital for Urban Development Company has allocated land in the new capital for the construction of a branch of Italy’s Bambino Gesù hospital. (Statement)
• Amazon Egypt has started offering local sellers the option to increase their visibility on its platform through sponsored ads. (Statement, pdf)

The US is considering imposing sanctions on China as tensions escalate over Taiwan, Reuters reports, citing sources close to the deliberations. It’s not yet clear what form any sanctions could take, though some analysts suggested they could seek to limit the Chinese military’s access to technology that could be used in an operation against Taiwan. Taipei is lobbying the EU to take similar action.

Sanctioning the world’s second largest economy is no picnic: Imposing sanctions would be “a far more complex exercise than sanctions on Russia, given US and allies' extensive entanglement with the Chinese economy,” said one former senior official.

Armenia asks Russia for help amid border clashes with Azerbaijan: Armenia has appealed to Russia and allies to help it in deadly border clashes with Azerbaijani forces that have killed more than 100 of its troops, Bloomberg reported. The country’s PM Nikol Pashinyan invoked a defense treaty calling Moscow and others to send military assistance after two days of fighting. The ex-Soviet nations have exchanged blame for the fighting, which has escalated into the deadliest violence since the 44-day war in 2020.