IPO WATCH- EGX needs larger companies to attract more foreign investment -EFG Hermes CEO: The Egyptian bourse needs to attract larger companies to list on the index if it is going to increase foreign inflows into Egyptian equities, EFG Hermes CEO Karim Awad said at a conference yesterday, Al Mal reports. Awad pointed out that the largest company currently listed on the EGX is valued at just USD 5.5 bn, asking: “Where are the companies to invest in?” He also suggested that lowering interest rates will not necessarily push investors to exit government debt and enter equities, given that interest rates are not the only factor that attract capital to the bond market. The right company and the right transaction, however, will attract investor interest.

Volumes and liquidity on the EGX will improve as more IPOs to go to market and as the CBE pushes through more interest rate cuts, Compass Capital Managing Partner Tarek Abdel Rahman said on the same panel, according to an emailed statement (pdf). Abdel Rahman also noted that pension funds account for only a fraction of total investment in the EGX at 2%, “well below the global rate of 20% and the US rate of 49%.” Private equity will play an important role in bringing new offerings to market, he suggested, saying that the last two IPOs executed on the EGX, Fawry and Rameda, both involved companies backed by private equity players.”