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Tuesday, 20 March 2018

Gov’t to set first five companies of the IPO program in September, October

IPO WATCH- The government will select the first four or five companies that will part of phase one of the state IPO program in September or October, Finance Minister Amr El Garhy tells Al Masry Al Youm. El Garhy had announced on Sunday that the first of the stake sales may be offered within a couple of months, without stating which company had been slated to go first. Oil Minister Tarek El Molla has said the listing of 24% of Enppi would be the pilot IPO of the program. Banque du Caire, the first state bank to be listed, will not see an IPO before 4Q2018.

In a series of interviews with cabinet ministers conducted by the newspaper a day after the unveiling of 23 companies set to be part of the program, El Garhy added that the government hopes to see the aggregate market cap of the 23 companies it is putting into the program stand at c. EGP 3.5-4 tn within three years. He had said that the cumulative value of the listings, which will take place over the coming 24-30 months, is expected to reach EGP 80 bn and would raise their collective market capitalization to EGP 450 bn.

Planning Minister Hala Saeed said 12-13 of the program’s companies will list 5-15% of their shares. She noted that these companies are all subsidiaries of the ministry’s National Investment Bank (NIB). The program’s announcement on Sunday had noted that the companies, for the most part, would list 15-30% of their shares. We’re interpreting this as meaning that the government wants to ultimately see 15-30% of the shares of each company in private hands, while the 5-15% figure is probably the size of the secondary stakes the government will offer in already-listed companies such as EgyptAlum and Sidi Kerir. NIB subsidiary NI Capital had been the leading advisor on the program.

Reactions from the private sector have been positive, as expected. “We see the program as positive for the market, as it will lead to a larger market cap as a result of new IPOs and a larger float market cap due to secondary sales of stakes in already-listed securities,” EFG Hermes said in a research report on Monday picked up by Bloomberg. “This should help attract more inflows into Egypt, in our view, and raise market turnover.” Some, including Mohamed Ashmawy, head of institutional sales at Prime Securities, say further clarification is needed as the market had already been anticipating the announcement.

Already-listed state-owned enterprises get share price bounce: The lack of clarification that Ashmawy is seeking hasn’t stopped shares of state-owned companies already listed on the EGX from climbing: Egypt Aluminium surged 8.3% after the announcement and was the top gainer yesterday, while Heliopolis Housing rose 4.7% and Abou Kir Fertilizers advanced 1.8%.

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