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Sunday, 25 November 2018

Egypt to hold off on Eastern Tobacco stake sale until the market stabilizes, says EFG

IPO WATCH – No Eastern Tobacco stake sale until the market stabilizes, says EFG: The state will not proceed with the sale of an additional 4.5% stake in the Eastern Tobacco Company on the EGX until the market stabilizes, EFG Hermes’ Investment Banking Co-Head Moustafa Gad told Masrawy. Gad acknowledged that the company’s share price has improved from its October plunge, but stressed that the investment bank — which is managing the transaction — has advised the government against moving ahead with the sale until market conditions ensure a successful offering. Public Enterprises Minister Hisham Tawfik had said last week that the transaction is “in the offing” but that his ministry would discuss the matter with EFG. 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 11.5% in one 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.

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