Back to the complete issue
Sunday, 2 December 2018

Beltone goes on offensive against IB division’s suspension, says it is bad news for ECM and M&A activity market-wide

Beltone goes on offensive against IB division’s suspension, says it is bad news for ECM and M&A activity market-wide: The six-month suspension handed down by the Financial Regulatory Authority (FRA) to Beltone Financial’s investment banking unit threatens to derail a number of IPO and M&A transactions in the investment bank’s pipeline, Beltone CEO Bassem Azab said in an interview with Bloomberg. The decision could delay an industrial company’s listing that was set for November, along with four M&A transactions, said Azab. (Our internal IPO tracker suggests Azab is referring to the Giza Spinning and Weaving IPO, which was initially set for November. News reports later put the listing date in December.) Azab also stressed that the decision could also have implications for the state privatization program, as it sends the wrong message to investors.

The decision seems to be based on “the regulator’s lack of understanding” of the private-placement process and an absence of codified rules on book building, he said. He denied the FRA’s allegations that Beltone Financial committed irregularities during bookbuilding for Sarwa Capital’s IPO, which prompted the suspension. “What if Sarwa went up? Would the regulator have communicated what they called ‘irregularities’ and taken such immediate action based on what they stated as a ‘preliminary review’?” Azab said. Sarwa’s shares fell 11% in their first day of trading. Misr for Central Clearing, Depository & Registry and the Egyptian Capital Markets Association both said last month they found no evidence of wrongdoing.

A watershed case for bookbuilding in Egypt: The current dispute will likely lead to new regulations on how bookbuilding is run for private placements, as the process is in a legal “grey area,” said the director of research at Naeem Holding’s brokerage unit Allan Sandeep, who claimed that oversubscription figures are routinely inflated.

Appeals are still pending: The Administrative Court postponed yesterday its ruling on an appeal to suspend the FRA’s suspension of Beltone’s IB unit, pending its review of the documents presented by each side, according to Al Mal. The ruling is now expected on 15 December, and the FRA itself is also looking at an appeal on the decision on 10 December.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.