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Monday, 19 November 2018

Egypt’s Eastern Tobacco stake sale is “in the offing” as share price recovers

IPO WATCH- Eastern Tobacco stake sale is “in the offing” as share price recovers: The sale by the state of an additional 4.5% stake in the Eastern Tobacco Company on the EGX is “in the offing,” Public Enterprises Minister Hisham Tawfik said yesterday, according to Al Mal. Tawfik did not disclose any further details, but said his ministry will discuss the matter with the transaction’s manager — EFG Hermes. The revival of the sale comes as Eastern’s share price has rebounded from its plunge in October, according to Chemical Industries Holding Company (CIHC) head Emad El-Din Mostafa. Regulations for the state privatization program bar any company from proceeding with a stake sale if its shares rise or fall beyond a threshold of 10% of its average value in the month preceding the transaction.

Background: The government had announced last month that the transaction — which is expected to pilot the privatization program — had been put on ice “indefinitely” after Eastern’s share price plunged as much as 11.5% in a week, pressured by the wider emerging market selloff, a high interest rate environment, a looming trade war, and the introduction of protectionist measures in various countries. Our sources had told us at the time that cabinet, while completely committed to the program, had made the decision to push the timeline after consulting with investment bankers. Tawfik had also said that the government would follow through with the listing as soon as market conditions improved.

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