IPO WATCH- Qalaa plans to list some of its subsidiaries on the EGX beginning 2H2019: Qalaa Holdings is planning to list multiple subsidiaries on the EGX while retaining stakes in them, our friend Ahmed Heikal tells Al Shorouk. The Qalaa founder and chairman said he expects to begin listing these companies as of 2H2019, noting that all of Qalaa’s subsidiaries are “expanding significantly,” which supports the company’s optimistic mid-term outlook for its business. Heikal admitted that Qalaa has become “difficult for many investors to understand,” adding that the listing of subsidiaries should make the underlying investment thesis clearer.

Qalaa’s USD 4.3 bn Egyptian Refining Company in Mostorod should start trial operations by November 2018 and is currently around 97% complete, according to Heikal. Trial operations will span six months. Once the facility is up and running, it will produce 4.7 mn tonnes of petroleum products and derivatives, which will plug 14% of Egypt’s overall supply needs. The project’s cost has risen from an initial estimate of USD 3.7 bn on the back of a 22-month delay due to financing issues. Qalaa had announced in March that ERC took on new finance and equity commitments. Rising oil prices will help make ERC more profitable than originally expected, as will new demand for the low-sulphur diesel ERC will produce: Global environmental regulations bar ships’ use of high-sulfur diesel.

More investments in the pipeline: Once the Mostorod facility is up and running, Qalaa plans to invest at least EGP 500 mn in waste recycling projects over the next two years. Qalaa will also invest EGP 4 bn over the next four years to expand operations at three of its factories in Sadat City. The company is also looking into expanding its business with projects in several other sectors, including the construction of an Alexandria-Damietta railway line that is currently under study, Heikal said.

Heikal sees Qalaa becoming one of Africa’s 10 biggest companies within five years, by which time the company is expected to have EGP 80-100 bn worth of annual business.