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Thursday, 21 November 2019

Raya Holding and subsidiaries may delist from EGX in 2020

Medhat Khalil warns Raya Holding could delist from EGX in 2020: Raya Holding is considering delisting from the EGX, founder and CEO Medhat Khalil told Al Mal. Khalil is also quoted as saying he would pull back from IPOs of other subsidiaries in the future. (The newspaper also quotes Khalil as saying that Raya could delist Raya Data Center, but we believe Raya Contact Center, a comparatively new entrant to the EGX, is the company to which Khalil was referring.)

Raya had told Enterprise back in 2019 that it had no plans to delist from the exchange after a transaction that saw Khalil acquire an additional 27% of the company’s shares in a mandatory tender offer into which he had been forced by the regulator.

Now, Khalil has reportedly told Al Mal he doesn’t see the EGX as being attractive to issuers, citing low turnover and insufficient investment- and tax-incentives. The delisting could take place in 2020 if the company decides to go ahead with the move, the paper quotes him as having said.

Background: Raya and related companies continue to invest in Egypt (announcing or mulling commitments to an automotive assembly venture, electric vehicles, recyclables and the food business, among others, and landing funding from EBRD), but founder Khalil is still seething after having been ordered by the Financial Regulatory Authority in 2018 to submit an MTO for Raya or sell down his stake. The FRA argued at the time that Khalil and related parties controlled a combined 42% of the company — a level of control that triggers the requirement for an MTO under securities regulations. Khalil had asked the Justice Ministry to mediate in an ongoing dispute with the FRA over an EGP 11 mn fine with which he was hit in connection with the MTO.

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