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Thursday, 24 December 2020

Buyers are lining up for Safi

Mansour Group, Pepsico, CocaCola Egypt, Nestlé, and steel conglomerate El Garhy Group are reportedly interested in buying a stake in army-affiliated Safi. The five companies — four of which own household bottled water brands — are currently in talks with the Sovereign Fund of Egypt (SFE) to take minority stakes of as much as 30% as part of the SFE’s plan to open up military-affiliated businesses for private ownership, the local press reports, citing unnamed sources. The purchase of up to 30% of Safi, aka the National Company for Producing and Bottling Water, is expected to wrap up during 1Q2021, as soon as due diligence is complete, the sources said.

Talks with Mansour have “come a long way,” according to the sources. The family-built giant already produces Hayat bottled water, while Nestlé, Pepsico and CocaCola have Nestlé Pure Life, Aquafina, and Dasani water in the Egyptian market.

Do steel and water mix? Safi would be a leftfield investment for steelmaker El Garhy, and it remains unclear what the reasoning is for a potential foray into a market as foreign as water. Enterprise tried to contact the company yesterday but a representative couldn't be reached for comment.

Background: Safi is one of two subsidiaries of the Defense Ministry’s National Service Products Organization (NSPO) slated to open up for private ownership in 2021. The company, along with Wataniya Petroleum, will sell shares to a private investor under an MoU the SFE signed with NSPO last February. The fund could still take minority stakes of 20-30% in both Safi and Wataniya, and offer the rest to private investors. It will then look at other army-owned companies, with the goal of marketing 10 of NSPO’s subsidiaries as an initial phase. The privatization plan will see the companies ultimately listed on the EGX.

In other SFE news-

The SFE can now partner with private sector companies on projects tendered by the Internal Trade Development Authority. The two organizations signed an agreement yesterday that will allow the SFE to invest in ITDA projects to encourage private sector participation, a cabinet statement said, without providing further details.

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