AM — Gov’t wants to raise USD 6 bn from stake sales by the middle of next year

Good morning, everyone and welcome to a reasonably quiet Monday morning. Think of it as a karmic (or cosmic) breather — with central and cabinet officials looking to get us out of the current bottleneck, 2023 planning in full swing at corporates, 3Q earnings season about to kick off, and the House set to come back into session on Saturday … it’s probably best we enjoy a light morning without complaint.

TODAY’S MUST READ- We’re running the results of our Enterprise Fall 2022 Reader Poll in today’s edition of EnterprisePM, which will be in your inboxes at 3:15pm CLT. Highlights include the EGP : USD rate you good people are using to prepare your 2023 budgets as well as your views on investment, M&A activity and whether you see yourselves outperforming your competition in the year ahead.

Reader surveys have been a regular part of Enterprise since we started publishing eight years ago this week. We’re looking forward in the coming weeks to running our first Enterprise Climate reader poll. Enterprise Climate is the first of our new series of daily, MENA-focused industry publications — taking deep dives into the region’s most important industries.

Your engagement with Enterprise Climate is off the charts — thank you, all of you, for having made it a success beyond our wildest dreams on launch day.

Do you think your industry is compelling enough to read about every day? Drop us a note on patrick@enterprisemea.com and let’s talk. We’re lining up our next two industries now, and one of them is still TBD.

Speaking of climate polls (not ours): CEOs around the world want governments to take the lead on climate action through smart regulation and good public policy, according to a Cambridge university study. That notion rings true with CEOs and other senior execs in Egypt: Even those among you who are making climate a significant part of your business tell us in private that the process would be a whole lot easier with (smart) government-mandated requirements. You can read more about Cambridge survey in this morning’s Enterprise Climate.

WATCH THIS SPACE #1- SODIC owner Aldar Properties is looking at the new administrative capital, CEO Tala Al Dhiyebi said during talks in Cairo yesterday, calling it “one of the most promising markets in the Arab world.”

WATCH THIS SPACE #2- The economic conference is happening — we just don’t know when: Prime Minister Moustafa Madbouly confirmed to reporters yesterday that the government is still planning to hold an economic conference before the end of the month (read: this week), but declined to give a date or a location. On the agenda: The final draft of the state ownership document, trade policy, and industrialization.

DATA POINT- Egypt’s LNG exports hit USD 8 bn in FY 2021-2022: Egypt’s liquefied natural gas (LNG) exports reached USD 8 bn last year, according to an infographic released by the cabinet yesterday. The figure is higher than the USD 6.5 bn recently cited by Oil Minister Tarek El Molla, who said the government will target USD 8.5–10 bn in natural gas revenues in FY 2022-2023.

Fall isn’t just PSL season — it’s time to load up on new books and TV shows. We’ve just finished Stephen King’s Fairy Tale and recommend it unreservedly. King, particularly when writing outside of the horror genre (as he is here), is simply one of the best English-language storytellers working today.

Looking to bulk up your TBR pile or watching queue? Start here:

• The New York Times recommends 40 TV shows to watch this fall, including a reboot of Quantum Leap (series Gen X nostalgia), the return of The Handmaid’s Tale, and the “shuffle to the finish line” of The Walking Dead.
• The Financial Times has just dropped its shortlist for best business book of 2022. Want to build that TBR pile even further? There are great choices on the longlist, too.

HAPPENING TODAY- Defense Minister Mohamed Zaki is en route to the UAE for talks expected to last several days.

HAPPENING THIS WEEK-

PSA- Get into (almost) all museums for free tomorrow: The Tourism Ministry is celebrating World Tourism Day on 27 September by waiving entrance fees to almost all of its museums. The National Museum of Egyptian Civilization and cultural museums aren’t participating. (Kelma Akhira | watch, runtime: 7:01)

Our friends at HSBC are hosting an energy transition webinar series this Tuesday through Thursday (27-29 September). The series will look at the “latest climate analysis in relation to the global energy market and transition to net zero” in six different sessions covering energy security, what is required to ensure the success of COP27, financing and investment needs for the energy transition, and the scaling up of renewables in the region, among other topics. You can register for the series here.

A Spanish business delegation will be in town this Tuesday and Wednesday (27-28 September) for the Egypt-Spain Multilateral Partnership Forum, organized by the Spanish Institute for Export and Investment, according to a press release (pdf). The two-day conference will include seminars and panel discussions on trade and investment in transport, energy, and water with Egyptian ministers and representatives from government bodies, alongside officials from international financing institutions and Spanish Secretary of State for Trade Xiana Méndez Bértolo. The agenda for the conference is available here (pdf).

The UN World Food Program and the International Cooperation Ministry are hosting a two-day conference on food security at the St. Regis Cairo Hotel on Wednesday and Thursday, according to a press release (pdf). The conference will mainly focus on the digitization of the agricultural sector, financial inclusion and social protection.

NEXT MONTH-

A call for women entrepreneurs: Looking for investors? Look no further. The Facility Investing for Employment will select a number of Egyptian projects that contribute to sustainable job creation to award financing ranging between EUR 1-10 mn, with a focus on women entrepreneurs and women-led businesses, according to a press release (pdf). Entrants can apply starting 14 November.

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-

Italy just elected the (spiritual) heir to Il Duce: The far-right Brothers of Italy party looks to have won the Italian general election, making its leader, Giorgia Meloni, Italy’s first-ever female prime minister and giving the country its most right-wing government since Mussolini’s fascist rule. Exit polls have the party comfortably ahead with more than a quarter of the vote, paving the way for it to enter government as part of a right-wing coalition with Silvio Berlusconi’s Forza Italia and Matteo Salvini’s League.

The story is dominating the front pages of the foreign press this morning: AP | Reuters | Bloomberg | FT | BBC | NYT | Wall Street Journal.

ICYMI-

Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at the government’s attempts to grow the country’s local electronics manufacturing industry.

*** 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: With the cap on tuition fees still in place, how are private + international schools coping with rising costs?

Gov’t wants to raise USD 6 bn from stake sales by mid-2023: The Madbouly government expects to raises as much as USD 6 bn by selling stakes in state-owned assets by mid-2023, Planning Minister and Sovereign Fund of Egypt (SFE) Chair Hala El Said told Bloomberg in an interview in New York. The government could sell shares to the public and to strategic investors, and plans to market companies to Gulf sovereign funds and investors in Europe and Asia during a roadshow in October, she said.

Siemens-built power plant up for grabs: El Said didn’t disclose which companies the government could offer stakes in but said that one of the three Siemens-built power plants will be among the first batch of assets that will be transferred to the SFE’s newly-established “pre-IPO” fund. Assets worth up to USD 3 bn will be handed over to the fund in the next three to six weeks, the minister said, without providing further details.

Pre-IPO fund? Announced by the SFE earlier this month, the pre-IPO fund is aimed at preparing state-owned enterprises for listing on the EGX and provides an alternative to public share sales while market conditions remain volatile. Shares held by the National Investment Bank worth up to USD 3 bn will be sold to strategic investors in the first phase, with a second similar sized phase coming later.

The SFE has had the Siemens plants on its radar for years: There has been talk of selling stakes in the power plants going back to 2019 when the SFE was first established. The fund has in the past suggested that it could acquire significant minority stakes in the plants as a prelude to their sale.

What other assets could be up for grabs? NIB holds stakes in a large number of state-owned companies across sectors including banking, media, fertilizers, food and agriculture, building materials, real estate, and transport, according to its website. Two of the companies listed — Egyptian Media Production City and Mopco — have recently been reported in local media to be the target of Gulf wealth funds, though none of the parties involved have publicly confirmed this.

The Saudi wealth fund could be interested: SFE head Ayman Soliman in April said the Saudi Public Investment Fund (PIF) could invest in all three plants as well as military-owned Wataniya Petroleum. This would come as part of Riyadh’s USD 10 bn investment pledge that has seen the Saudi fund buy minority stakes in four EGX-listed companies for USD 1.3 bn.

Gulf sovereign funds will likely be the priority targets of the strategic sale program, after GCC countries pledged more than USD 22 bn in direct investment to help the country weather global economic headwinds. The Abu Dhabi and Saudi funds have both supported the government’s pivot to strategic stake sales by snapping up holdings in EGX-listed, state-owned companies, and there’s talk of the Qatar Investment Authority following suit. “Sovereign wealth funds are usually long-term investors, they add value in terms of expertise, finance and technology,” Bloomberg quotes El Said as saying.

REMEMBER- Our privatization roadmap is ready: The Madbouly government this week finalized its state ownership policy after months of consultations with representatives from the public and private sectors. Strategic stake sales are a key pillar of the privatization plan, which envisions more than doubling the private sector’s role in the economy to 65% over the next three years, and attracting USD 40 bn in investment by 2026. Expanding the private sector is also in step with IMF guidance — something the government is paying close attention to as it looks to wrap talks over a fresh loan from the multilateral lender within the next month or two.

Al Masry Sporting Club has hired Zilla Capital as financial adviser on a planned EGP 4 bn sports complex in Port Said, the investment services firm said in a statement (pdf) yesterday.

About the project: The complex is set to include a 20k-capacity stadium, a 400-room hotel, and 800 residential and commercial units. It will take three years to complete, the statement said, without saying when construction is expected to begin.

Al Masry SC is seeking partners: “We are currently scouting for investors and high-end developers and hospitality management firms” to join the project, Zilla Capital’s head of marketing, Yasmin Khafagy, told Enterprise.

Ahmed Mohamed Ashmawy El Feky has been appointed chairman of Holding Company for Food Industries subsidiary Middle Egypt Flour Mills (CEFM), succeeding Bakry Hassan Ebaid, according to a bourse disclosure (pdf).

Last night’s talk shows gave us a little bit of this — and a little bit of that.

FinMin gives big thumbs up to CBE for easing import restrictions: The Central Bank of Egypt’s new rules for facilitating FX for imports is a welcome move for the Finance Ministry by helping to clear the backlog of goods held up at ports, FinMin advisor Mona Nasser told Al Hayah Al Youm. The ministry has in the past several weeks been conducting a sweep of imported shipments held up at customs to decide how to handle them on a case-by-case basis. The ministry recognizes that there are some hurdles beyond importers’ control — such as difficulties securing letters of credit or delays in finalizing import procedures — the importers “should not be punished for,” Nasser said (watch, runtime: 3:01). Under the Customs Act, goods that remain at ports for a certain period of time are deemed “abandoned” and typically sold at auction at a significant markdown. 

Anything COP-related is getting fast-tracked out of customs: The government will facilitate the entry of any goods or equipment coming in for use at COP27, Nasser told Ala Mas’ouleety (watch, runtime: 3:40). Items coming in for the climate summit spend no longer than a day in customs, she added.

Also on the airwaves last night:

• GEM update: Construction on the Grand Egyptian Museum (GEM) has been completed and so far it holds some 56k artifacts, including the entire Tutankhamun collection. (Kelma Akhira | watch, runtime: 6:49)
• More detainees released: Another 36 pre-trial detainees received a presidential pardon today. El Hekayah (watch, runtime: 4:51)

FACT CHECK- Your vehicle must be equipped with a first aid kit, a warning triangle and a fire extinguisher, in accordance with traffic regulations and any rumors saying otherwise are untrue. What’s changed? You can purchase them from from the Interior Ministry — or from a third party seller. (El Hekaya | watch, runtime: 2:53)

EDITOR’S NOTE- This story was amended on 26 September, 2022 to correct Finance Ministry advisor Mona Nasser’s comments on how the Finance Ministry sees the problems importers are currently facing. 

Driving the conversation on Egypt in the international press this morning: The Associated Press is the latest global media outlet to highlight the impact that Egypt’s economic and currency crisis is having on ordinary people.

High fares and sparsely-populated neighborhoods have meant that relatively few commuters have been riding the USD 1.24 bn light rail since it opened in July, leading the government to slash fares to boost passenger numbers, according to the National.

The annual date harvest season is the subject of a photo essay in the National.

Egyptian gaming startup InGame Sports has raised an undisclosed pre-seed round led by international VC Openner. The company said it had received the equivalent of USD 1 mn in “cash, in-kind resources and grants,” but declined to disclose how much money it had raised when asked by Enterprise yesterday. Multinational data provider Sportradar is providing the company with free access to its services and a grant as part of the round, co-founder and Managing Partner Mohab El Tawila (LinkedIn) told us.

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

• Egypt received a shipment of 42 wind turbine blades from Italy for the 262.5-MW Ras Ghareb wind farm. (Statement)
• Alexandria Mineral Oil Company will pay out EGP 710.3 mn in dividends after shareholders yesterday approved plans to pay out EGP 0.55 per share for FY 2021-2022. (Statement, pdf)
• The Suez Canal Authority wants to expand the Ismailia marina to host 60 yachts from 12 currently under government plans to draw more foreign yachts to the country. (Statement)
• Emirati waste management company Bee'ah and local firm Green Planet for Sustainable Environmental Solutions will provide waste management services in Sharm El Sheikh. (Statement)
• Etisalat customers now have access to streaming platform TOD under an agreement signed with Etisalat subsidiary Evision. (Hapi Journal)

Foreign Minister Sameh Shoukry met his Chinese counterpart Wang Yi on the sidelines of the UN General Assembly, according to a statement. The two followed up on the Egyptian-Chinese strategic dialogue held in January 2020 and discussed bilateral relations, and regional and international issues.

The IMF has never been this busy: IMF lending to struggling economies has climbed to a record high, with total loans — including those not yet disbursed — already at over USD 268 bn, the Financial Times reports. The fallout from the Russia-Ukraine war, the pandemic and a surge in interest rates globally have forced at least five countries into default, with others expected to follow.

That’s not including countries — like Egypt — that are in negotiations with the Fund: Egypt, Tunisia, Ghana and Bangladesh are among the countries in talks with the IMF for emergency loans, leaving the Fund needing to sign off on tens of bns of USD in fresh lending.

Sri Lanka has begun talks with its creditors on a restructuring agreement that the country hopes will pave the way to unlocking its USD 2.9 bn IMF bailout by mid-December, the Financial Times reports. The bulk of Sri Lanka’s USD 50 bn debt is owed to private creditors, while the country also owes money to countries including Japan, China, and India. Debt restructuring is a key condition of the bailout package Sri Lanka agreed with the IMF several weeks ago, after it defaulted on its external debt in May amid the country’s worst economic crisis in over seven decades.

MEANWHILE- One LNG cargo is better than nothing, but German Chancellor Olaf Scholz will have left the Gulf disappointed yesterday having failed to secure new long-term gas supplies as the country heads into winter without Russian hydrocarbons. After visiting the UAE, Qatar and Saudi Arabia over the weekend, Scholz left with a single 137k cbm LNG shipment, which Adnoc will deliver early next year. The Emirati company also signed an MoU to make more deliveries next year but it’s not clear how much gas it’s going to ship or over what time frame.