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Sunday, 1 March 2020

EFG Hermes, JPMorgan, Citi, Goldman compete to advise on Arab Refining IPO

IPO WATCH- EFG Hermes, JPMorgan, Citi, Goldman compete to advise on Arab Refining Co. IPO: Bulge bracket fixtures JPMorgan, Citigroup and Goldman Sachs are among those competing to advise Qalaa Holdings’ Arab Refining Company (ARC) on its initial public offering, Bloomberg reports, citing a person familiar with the matter. EFG Hermes, HSBC and Renaissance Capital will also submit bids, the source said. The company will choose up to three banks in 2Q2020 to provide advice on the listing.

The IPO is currently scheduled to take place during 4Q2020. Qalaa chairman Ahmed Heikal said back in 2018 that ARC could offer a 30% stake in an IPO but has since not commented on the size of the offering. ARC owns a 67% stake in the Egyptian Refining Company (ERC), which built the USD 4.4 bn Mostorod refinery which is expected to generate EGP 50-55 bn in revenues this year.

ARC isn’t the only Qalaa subsidiary slated to IPO this year: Qalaa is expected to list 30-40% of energy company TAQA Arabia on the EGX during 2Q this year. EFG Hermes and HSBC are on board to manage the IPO.

But keep your eye on timing when it comes to any pre-summer IPO. What’s going on in global markets right now (see above) is likely to send more companies running to the back half of the year.

Qalaa will invest EGP 10 bn in its subsidiaries over the next two years, Heikal said at the weekend, according to Al Shorouk. Speaking during the Metal and Steel Egypt Exhibition over the weekend, Heikal said that the investment will enable Qalaa to add an additional 1.2 mn tonne-capacity to the 4.7 mn-tonne ERC, and expand Dina Farms by 2k acres from its current 100k, develop its agricultural productivity and grow its logistics companies. The investment will be made using the company’s capital and not via bank loans,

Qalaa is looking to pile into gold exploration in Ethiopia through its Ascom Precious Metals (APM) company and its partners, Heikal said. It is on track to be completed within two years, he said. Heikal added that the Qalaa is also looking to increase the energy capacity of its Al Takamol cement plant in Sudan, without providing details or a timeframe.

Qalaa is open to working with Egypt’s Sovereign Wealth Fund, Heikal told Hapi separately, adding that it would be a partnership the company would give “priority,” without providing details.

Meanwhile, Qalaa subsidiary GlassRock will be supplying insulation material to “national and strategic projects” in the new administrative capital, he said. These include the government district, and an undisclosed military facility among others.

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