Sunday, 20 June 2021

EnterprisePM — E-Finance eyes an expansion into fintech through potential M&As

TL;DR

WHAT WE’RE TRACKING TONIGHT

It’s your typical slow Sunday, ladies and gents, with barely anything of note coming out of the foreign and local press today. We hope you enjoy the light read.

THE BIG STORY TODAY- e-finance is eyeing fintech acquisitions: Topping coverage this afternoon is more updates from e-finance Chairman and MD Ibrahim Sarhan, who revealed to Al Mal that its upcoming expansion will hit fintech. The company is eyeing companies to acquire in the sector. We have more in this afternoon’s Speed Round.

A potential resolution on the Ever Given coming soon? The Suez Canal Authority (SCA) has received a “suitable” compensation offer from the owners of Ever Given container ship, SCA legal counsel Khaled Abou Bakr told the local press today, without revealing any details. He added that the offer is currently under review by the authority.

This comes as a potential ruling on compensation by the Ismailia Economic Court has been postponed to 4 July on the request of representatives of both sides, who want more time to reach a settlement.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

  • Fifth consecutive hold on rates: The CBE’s Monetary Policy Committee (MPC) left interest rates unchanged on Thursday as it looks to preempt a possible rise in inflation on the back of spiraling global commodity prices.
  • New sectors eligible for export subsidies: Exporters in the automotive, ceramics, pharma, electronics, and chemicals industries can now enrol in the export subsidy program for the first time, under a decision approved by the Export Subsidy Fund on Friday.
  • Covid cases continued to decline over the weekend: Daily cases have now fallen 53% from their most recent peak during the Eid El Fitr holiday in mid-May, with the Health Ministry reporting 566 new covid-19 infections yesterday.

THE BIG STORY ABROAD- The Iran nuclear agreement has officially been pushed aside for the time being, with Tehran's delegation chief Abbas Araqchi telling Iranian state TV that negotiators for Iran and six world powers would return to their capitals for consultations, according to Reuters. "We are now closer than ever to an agreement but the distance that exists between us and an agreement remains and bridging it is not an easy job," he said. His statements come days after conservative hardliner Ebrahim Raissi won Iran’s presidential election and is expected to take a harsher stance on the West. Negotiations had been ongoing in Vienna since April as the US and Iran decide on the necessary steps to restore the 2015 nuclear pact.

🗓 CIRCLE YOUR CALENDAR-

The Clean Energy Business Council (CEBC) MENA are holding a webinar titled Energy Efficiency in the MENA region: Status and Outlook on 6 July at 3:30pm. The session will focus on energy efficiency developments and provide recommendations for businesses and policymakers. Later on next month, CEBC will also host the webinar Women Entrepreneurs in Clean Energy on 21 July at 3pm in cooperation with the initiative, Women in Clean Energy MENA and WiRE.

The British Egyptian Business Association (BEBA) is organizing a virtual education week from 5-6 July with three seminars planned. The first, taking place at 10am on 5 July, will discuss skills-based learning while the future of investment in education will be the topic on the table at 12:30pm the same day. On 6 July, a talk on the digitalization of education in Egypt will be held at 12pm.

The CIB PSA World Tour Finals 2020-2021 are taking place from 22-27 June at The Park in Mall of Arabia. Tickets are currently on sale for the final two days on TicketsMarche.

🚙 FOR YOUR COMMUTE-

A battle is brewing between activist investors and Big Tech over making ESG disclosures required in regulatory filings, the Financial Times reports, citing ESG positions Microsoft and Alphabet recently shared with the SEC. The two tech giants, along with others including Facebook and Intel, have sent letters to the regulator (here and here) that appear to be angling toward keeping climate reporting separate from annual and quarterly regulatory filings. That’s despite calls from asset managers Pimco and Invesco to include ESG statements in annual and 10-K reports and despite the two tech giants (and so-called sustainability leaders) having benefited from the recent surge in ESG investing.

The Big Short’s Michael Burry is warning that huge losses could beset retail investors should cryptocurrencies and meme stocks fail, saying that the consequences could be catastrophic, according to Bloomberg. In tweets that appear to have since been deleted, Burry warned that “all hype/speculation is doing is drawing in retail before the mother of all crashes … When crypto falls from trns, or meme stocks fall from tens of bns, #MainStreet losses will approach the size of countries.” Burry — who was played by Christian Bale in the movie The Big Short which depicted his successful calls against mortgages just ahead of the 2008 financial crisis — helped lay the foundation for the gamestop frenzy earlier this year with his bullish statements on the video game retailer.

Social activism done right: An Egyptian online group that helps victims of online [redacted] extortion, Qawem, is rightfully getting its moment in the sun, with a feature in Deutsche Welle. The organization’s volunteers contact the extorters and negotiate to get them to delete the blackmail material. Social activist Mohammed Elyamani created the group last year after a victim comitted suicide as a result of extortion. While Elyamani often urges women to go to the police, he says many shy away from the suggestion over fears of victim blaming or revealing their identity.

This is actually becoming a big problem here: Today, the group — which has 250k followers and 40 volunteers — says it receives a staggering 500 requests for help per day.

📺 ON THE TUBE TONIGHT-

The Elton John biopic, Rocketman, is currently on Netflix: The film starts off with Elton John’s childhood, when he was still Reginald Kenneth Dwight, and a young piano prodigy. His life was a tumultuous series of twists and turns, with sheer talent always battling against addictions and vices for center stage. Taron Egerton, plays the musician with a ton of gusto and takes every chance to show vulnerability. When asked, John refused to make the film “more PG13” opting instead to show most of the gory and scandalous details of his life. The Guardian talked to Elton John upon the release of Rocketman, discussing the production, content, and various anecdotes not depicted in the film.

Pyramids FC are playing against Morocco's Raja Casablanca tonight at 9pm in the CAF Confederation Cup semi-finals.

Two matches for you folks in the Euro 2020 cup today: Italy is playing against Wales at 6pm in Group A. The match could see Wales surpass Italy in the group’s standings if the team snags a victory. Meanwhile, also at 6pm and in Group A, Switzerland is going up against Turkey with both teams almost sure to round out spots three and four in the group, barring a strong comeback in the next few games.

This weekend’s fixtures: It was a quite unexpected weekend of matches, with several underdog teams managing to hold their own. On Thursday, Ukraine snagged a 2-1 victory against North Macedonia, while Belgium beat Denmark 2-1 and the Netherlands beat Austria 2-0. Sweden was Friday’s sole victor, beating Slovakia 1-0, while Croatia and Czech Republic tied 1-1 and England and Scotland tied 0-0. Finally, Saturday saw Hungary and France tie 1-1, Germany beat Portugal 4-2, and Spain and Poland tie 1-1.

🥑 EAT THIS TONIGHT-

Your one-stop shop for plant-based food: F&B marketplace Quanta Egypt has an entire section dedicated to vegan food products that look good enough to tempt even the most hardcore carnivore. The platform sells everything from Alpro milk alternatives to Beyond Meat’s burgers, sausages, and minced meat, and Heura’s vegan chicken. Also catching our eye, the brand Good Earth’s wide range of products, including cheese, meat balls, and beef strips. Quanta also sells a variety of cool ingredients for drinks such as purees, syrups, and sauces to elevate any coffee or beverage you’re making at home.

🎤 OUT AND ABOUT-

Yehya Khalil is performing alongside a jazz fusion band at the Cairo Opera House tonight at 8pm.

It’s another stand-up comedy night at The Room in New Cairo, featuring Comedy Bunker, at 8:30pm.

The Italian Cultural Institute in Zamalek is celebrating the International Day of Yoga tomorrow at 6pm with a Hatha yoga session that is open to everyone.

💡 UNDER THE LAMPLIGHT-

Rewire your brain for happiness: If you’re always running towards a goal that will eventually make you happy, you might have it the wrong way around. In his book, The Happiness Advantage Shawn Achor argues that “Happiness fuels success, not the other way around.” Being happy, and therefore less stressed and more focused, boosts productivity, creativity, and problem solving and brings you closer to reaping the advantages of said happiness in life and in work. Achor poses seven psychological principles that will help your brain build resilience against the bad times, detect potential successes, and spread the happiness around. If you’re interested in the topic, but don’t want to read the book, you can check out Achor’s Ted Talk (watch, runtime: 12:04).

☀️ TOMORROW’S WEATHER- The mercury will rise to 38°C during the day before falling to 23°C at night, according to our favorite weather app.

SPEED ROUND: M&A WATCH

e-Finance looks at potential fintech acquisitions as planned IPO approaches

State-owned e-Finance is eyeing potential acquisitions of companies in the fintech sector, specifically fintech businesses licensed to provide financial services such as e-payments, insurance and microfinance, chairman and managing director Ibrahim Sarhan told Al-Mal editor-in-chief Hazem Sherif (watch, runtime: 1:02:03). The e-payments firm — which plans to IPO in a move which would go a long way towards kickstarting the dormant state privatization program — has an ambitious expansion plan that involves acquisitions, setting up new subsidiaries, or adding new business lines, Sarhan said. E-finance is also planning an expansion into Africa, which will be funded using proceeds from its upcoming IPO, the top executive told us last week.

Speaking of the IPO, e-Finance’s planned debut on the EGX got a shot in the arm last week, when the government’s IPO committee approved a fair value assessment of the company’s shares, Sarhan told us then. Sarhan had told the local press back in April that the company would IPO sometime during 2H2021. If true, that raises hopes that e-Finance would be among the four IPOs that EGX Chairman Mohamed Farid said would be taking place in the second half of the year.

No word from e-Finance: We reached out to Sarhan, but he wasn’t available to comment as of dispatch time.

Advisors: CI Capital, Pharos and Renaissance Capital will manage the e-Finance IPO. Zaki Hashem & Partners, meanwhile, is legal counsel, and BDO is the independent financial advisor for preparing the fair value report.

SPEED ROUND: M&A WATCH

Compass Capital makes MTO on ANFI

Private equity firm Compass Capital has submitted a mandatory tender offer to acquire up to 100% of Alexandria National Company for Financial Investments (ANFI) for EGP 5.72 per share, according to a statement (pdf) by the Financial Regulatory Authority (FRA), making official reports we’ve been seeing in the local press last week. The offer values ANFI at EGP 29.9 mn. This comes shortly after Compass was said to be eyeing 90% of ANFI.

Who else is bidding? Compass is competing with a number of bidders to acquire ANFI, with the latest offer coming from Tycoon Holding, which wants to acquire a 90% stake for EGP 5.60 per share. Hong Kong’s Zeta Investments also launched last week an MTO for 90% of ANFI at EGP 5.48 per share. Then there’s Kayan Sustainable Development, Zaldi Capital, and a group of investors including Egyptian businessman Ahmed El Saba and Saudi Arabia’s Mostafa El Humeidan, who all expressed an interest in buying a stake in the company. Gulf lender Abu Dhabi Islamic Bank (ADIB) is the seller.

CATCH UP QUICK-

  • Bedaya Mortgage Finance Company launches a new app: The non-bank mortgage provider — a joint venture between EFG Hermes, Talaat Moustafa Group, and GB Capital — has rolled out a mortgage finance mobile application and online platform, according to a statement (pdf).

GO WITH THE FLOW

Go with the flow on 20 June

The EGX30 fell 0.7% at today’s close on turnover of EGP 1.35 bn (4% above the 90-day average). Foreign investors were net sellers. The index is down 9.7% YTD.

In the green: Ezz Steel (+4.0%), Qalaa Holdings (+2.0%) and Oriental Weavers (+1.5%).

In the red: Eastern Company (-3.6%), Fawry (-2.9%) and Orascom Investment Holding (-2.4%).

NUTRITION

Insects could fly us to greener food system

Fancy a bug burger? No? You might want to reconsider. With our food system stuck between how to produce less waste, but also more protein, insects have emerged as a more sustainable source of nutrition and a possible replacement for grains, soybeans, fish, both in human food and animal feed, the Financial Times reports. Growing environmental concerns and the rise of ESG investments have led entrepreneurs to pour their money into this unconventional market to produce animal feed, pet food and fertilizer with the least environmental impact.

The sector is growing slowly but surely: By 2030, 200k tonnes of insects annually will be used in fish feed, or 0.4% of the aquafeed industry, with 150k tonnes used in pet food, accounting for 0.5% of the total pet food sector, based on estimates by Dutch financial services company Rabobank. It expects only about 10k-20k tonnes of insects will be used for human food by then.

The sector has been attracting venture capital investments since 2018, with USD 210 mn worth of equity funding recorded in 2020 — mostly channeled to startups supplying feed for livestock, fish and pets, according to data group Dealroom. French producer of animal and plant nutrition InnovaFeed. The company, which raises black soldier flies for use in animal feed and fertilizer, landed last year a USD 140 mn investment while also securing a strategic partnership with US food corporation Cargill. French startup Ynsect, which transforms insects (mainly mealworms) into proteins for animals and fertilizer, last year raised more than USD 350 mn in equity and debt to scale up its production of beetle mealworm.

But some people are turning their noses up at crickets for their cats and dogs: “Most people find insects disgusting and some don’t want their pets eating them,” said Gorjan Nikolik, an analyst at Rabobank who has studied the market. This has led some manufacturers to refuse to use insects as an ingredient, though the pet food market still accounts for the largest share of demand for insect protein.

Widespread adoption will mean getting over the yuck factor: Insects aren’t widely perceived as a human food source due to the negative psychological and cultural perception in markets that haven’t traditionally consumed insects. But startups in the western world, from Germany to the UK, have been tapping into the market, promising to produce delicious, juicy, and totally not creepy crawly snacks from various insects for human consumption.

Insects could be more subtly integrated into our foods: Short-Horn, a UK-based company which offers insect-infused seasonings, has already grown 20% since its launch this year, and attracted a number of repeat customers, its founders said. Insects could be better used as ingredients and additives, instead of as complete food products, and integrated into processed food products such as pasta, porridge and pancakes to enhance their nutritional profile. Given their ease of digestion and nutritiousness, insect proteins could be used in food aimed at the elderly, and those who struggle with mainstream products.

And the environmental benefits could still sway some consumers: If businesses introduce tasty products with a lower footprint then consumer perception could change. “Most young people are thinking about [sustainability]— I’m just blown away by how they are looking at every possible solution to help reduce their footprint,” said Kees Aarts, founder of Dutch insect-rearing company Protix. Some experts say that people may eventually be obliged to consume insects due to the risks posed by climate change, soil erosion, pests and disease to the global agricultural system. Consumers in the west may have to add insects as an alternative protein source in their diets, to ensure their nutrition remains rich with essential amino acids.

Our Take? We’re sure whatever insect fare is on offer is both good for the planet, and good for us. So Hakuna Matata, we’d give it a go.

SCIENCE & TECH

Are we able to just pull water out of thin air (literally)?

What kind of sorcery is this? With the threat of extreme water scarcity looming near, new methods to increase our supply of freshwater, alongside improving efficiency in our consumption, are crucial to meet our growing needs. Atmospheric water harvesting (AWH) is one such method that has recently drawn more attention from private companies and scientists alike, who have touted the technology as an effective way of providing freshwater to difficult to reach coastal and desert regions.

So how do you get water from thin air? Atmospheric water harvesting (AWH) can be broken down into two separate techniques. There are condensation-based systems, which cool certain surfaces to a point that allows water droplets to form on their exterior after coming in contact with humid air. And then there are sorption-based methods, which use absorbent materials to collect water directly from the air.

Condensation-based systems tend to be highly energy intensive and expensive because they require maintaining low enough temperatures to facilitate the condensation process. Some companies offer solar powered solutions to the system, but it still reportedly faces limitations on effectively capturing water in areas where humidity is below 50%.

Sorption-based systems can be applied virtually anywhere. MIT researchers in 2017 discovered a porous, almost foam-like material — a kind of metal-organic framework (MOF) that passively absorbs moisture out of the air at night and releases it in the form of liquid water during the daytime once it makes contact with the sun’s heat. One kilogram of the MOF is capable of collecting about 2.72 kg of fresh water every 12 hours when humidity is at least 20%. Last year, that figure was doubled when the same researchers discovered an even more efficient system that used zeolite, instead of MOFs. Early test results coming out of King Abdullah University of Science and Technology in Saudi Arabia are showing a potential avenue for speeding up the cyclical process of absorption and release even further by using graphene-aerogel structures instead of zeolite.

More funding is needed to make our desert dreams a reality: The contraption responsible for collecting water in MIT’s trials is about the size of a desktop computer, if scaled upwards and tinkered with a little further it might soon become a practical source of water for remote desert towns, says one of the researchers behind last year’s breakthrough. Separately, a different group of scientists have been working on scaling down the device to the size of a backpack so it can be put to individual use instead.

In Egypt we’ve already seen plans for a USD 3.4 bn atmospheric water generator in New Alamein city underway. The Marriott Hills owned facility is expected to produce 50k liters of drinking water per day according to the company’s Chairman, who is looking into selling individual devices to residents in New Cairo and 6 October.

CALENDAR

17-20 June (Thursday-Sunday): The International Exhibition of Materials and Technologies for Finishing and Construction (Turnkey Expo), Cairo International Conference Center.

20 June (Sunday): Ismailia Economic Court to hold hearing on Ever Given compensation case.

20 June (Sunday): Deadline for Enpact + Tui + GIZ tourism recovery program (pdf).

22-27 June (Tuesday-Sunday): The CIB PSA World Tour Finals for 2020-2021 will take place in Cairo.

24 June (Thursday): End of the 2020-2021 academic year (public schools).

26-29 June (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center, Cairo, Egypt. The Big 5 Egypt Impact Awards will also be taking place at the event on 27 June.

30 June (Wednesday): The IMF will complete a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: The Cairo International Book Fair, Egypt International Exhibition Center.

July + August: Thanaweya Amma exams take place.

1 July: (Thursday): National holiday in observance of 30 June Revolution.

1 July (Thursday): Large taxpayers that have not yet signed on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

1 July (Thursday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

15 June (Saturday): EGX-listed will have to complete filing their financial disclosures for the period ended 31 March.

19 July (Monday): Arafat Day (national holiday).

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday).

23 July (Friday): Revolution Day (national holiday).

2-4 August (Monday-Wednesday): Egypt is hosting the Africa Food Manufacturing exhibition at the Egypt International Exhibition Center.

5 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

16 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

30 September-8 October (Thursday-Friday): The Cairo International Fair, Cairo International Conference Center, Cairo, Egypt.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

7 October (Thursday): National holiday in observance of Armed Forces Day.

12-14 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

28 October (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

29 November-2 December (Monday-Thursday): Egypt Defense Expo.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

16 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

**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 below 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. © 2021 Enterprise Ventures LLC.