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Tuesday, 24 July 2018

Gov’t unveils timeline of first wave of state privatization program

Gov’t unveils timeline of first wave of state privatization program: Public Enterprises Minister Hisham Tawfik unveiled the timeline for the initial wave of five companies that will see a stake sale as part of the government privatization program. Heliopolis for Housing and Development and Eastern Company will kick off the program with stake sales in October, Tawfik tells Bloomberg. Alexandria Mineral Oils Company (AMOC) and Alexandria Container and Cargo Handling (ACCH) will sell shares on the EGX in November, while Abu Qir Fertilizers will sell a stake in December.

Gov’t to offer investors majority stake in Heliopolis Housing: The government intends to allow investors to buy up a majority stake of around 33% Heliopolis for Housing and Development, Tawfik said. The government intends to retain ownership of 40% of the company, which currently has around 28% of its shares already listed on the EGX, Finance Minister Mohamed Maait told Bloomberg in a Thursday interview. “We saw that Heliopolis, given the strength of the real-estate sector in Egypt, could be developed more by offering a bigger stake to investors,” Maait told the news service, noting the previous successful sale of a majority stake to Madinet Nasr Housing and Development (MNHD).

Could more companies see a majority stake put on offer? While so far, a majority offering is available only in Heliopolis Housing, Tawfik hinted at the possibility of more majority offerings in the future. In a bid to maximize private sector presence on the boards of state companies, the government is “giving investors stakes in these companies and allowing them to have majority ownership in some of them,” Tawfik added.

Meanwhile, Eastern Company appears to have upped the stake it plans to sell in October to 4.5% from an initial 4%, according to the timeline put forth by Tawfik. AMOC and Abu Qir will each sell a 30% stake, while ACCH will sell 20% of its stake to investors.

As for the rest of the program? The second wave of the 23 state companies selling shares will go on offer in 1Q2019, although officials have yet to decide on which firms or the sizes of stakes to be sold, Tawfik added. In the next nine months, the government will study the performance of the 121 Public Enterprises Ministry companies. “Strategic investors will be invited in, through management contracts,” to run some of the companies that are unlikely to turn a profit under their current leaderships, he said.

State companies to sell EGP 75 bn in assets: In addition to the stake sales, Public Enterprises Ministry companies will sell some EGP 75 bn in assets, Tawfik said, according to Al Mal. Around half of the proceeds of the sale will go towards paying off overdue gas and electricity bills, as well settling debt payments to the state National Investment Bank. The ministry is currently tallying up the assets it plans to put up for sale, he added. The Ismail Cabinet had set up a timeline in May for state-owned companies to pay overdue gas and electricity bills so that the government can accelerate payments to foreign energy companies and other contractors, including Siemens and GE, among others. The move comes as the Electricity Ministry will reportedly settle some EGP 117 bn in overdue gas bills owed to the Oil Ministry before the end of 2018, in order to allow the latter to repay its arrears to international oil companies, which came in at USD 1.2 bn as of the end of FY2017-18, government sources told Al Masry Al Youm on Friday.

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