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Sunday, 10 June 2018

Egypt sovereign wealth fund to be launched at the end of the year, lots of room for private sector participation –Planning Minister

Egypt will launch its sovereign wealth fund at the end of the year and will begin a roadshow in 1H2019 to draw in private investment, Planning Minister Hala El Saeed tells Bloomberg in an interview. The fund, which will have authorized capital of EGP 200 bn and initial paid-in capital of EGP 5 bn, will be heavily dependent on under-utilized state assets, El Saeed says. “Egypt has a wealth of assets and companies that have not been properly used and mismanaged over many years, and we are ready to start a real partnership with the private sector to render them productive and more advanced.” In that way, the fund is more akin to that of Malaysia (without the controversy) or India, and less like the GCC, which invests surplus oil revenues.

Egypt fund looks to partner with private sector: While the Egypt Fund will be wholly-owned by the state, the private sector will be allowed to buy stakes of over 50% in sub-funds and affiliated companies, said El Saeed. The fund will also address some of the issues the private sector have had with investing, namely the red tape. With its own legislative framework, the fund has "flexibility and will make the fund and its affiliated entities free from bureaucratic regulations that impede investors in Egypt", she added. "The fund will work with investors in an environment that will be equal to any opportunity abroad,” El-Saeed said.

Private sector involvement right from the get go: “The fund will be managed independently and several sovereign wealth funds and major financial institutions have expressed an interest in either injecting capital or providing technical expertise,” she said. The Abu Dhabi Investment Authority and the Oman Investment Fund helped in the drafting of the law and are providing technical support. Saudi Arabia had expressed interest in investing with and taking part in the fund, the Trade and Ministry said last month. Mahmoud Bassiouny, head of finance and projects and name partner at Matouk Bassiouny, provided legal counsel to the investment and planning ministries on drafting the legislation.

What’s up for grabs? The Egypt Fund will initially invest domestically in priority sectors such as tourism, manufacturing, petrochemicals, pharmaceuticals and agribusiness that offer the potential for quicker returns, but could later explore international opportunities, El Saeed said.

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