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Monday, 28 June 2021

Only 10 EGX companies are attractive to foreign investors, says RenCap

Only 10 EGX-listed companies have the market cap and liquidity to be really attractive to foreign investors, Amr Helal, Renaissance Capital’s North Africa CEO, said at a conference yesterday, according to Al Shorouk.

Among the top of the list: Speaking at the Portfolio Egypt 2021 conference, Helal named leading private-sector bank CIB, state-run tobacco monopoly Eastern Company, e-payment firm Fawry and Cleopatra Hospitals Group as the most attractive EGX-listed stocks for foreign investors. Healthcare, education and fintech are all particularly hot internationally, he added.

The EGX has had a rough 2021 so far: The benchmark EGX30 is down 5% in 2021 YTD, with foreign and institutional investors typically accounting for less than 25% of trading volumes. The bourse’s regional competitors, meanwhile, are flying: The ADX is up almost 33% YTD, the Saudi Tadawul is up 26.2%, while the DFM has gained 15.2% since the start of the year.

The biggest problem? A lack of large, listed companies on the bourse, Helal said.

Are IPOs the solution? That’s the conventional wisdom — that it’s going to take large offerings of fresh paper to lure foreign investors back. Helal cautions, though, that new offerings on the EGX often fail to attract significant foreign interest when they’re overpriced.

As many as four companies could IPO on the EGX in the second half of this year, EGX boss Mohamed Farid said earlier this month. State-owned e-payments company E-Finance is planning to go public in 2H2021 while Ebtikar’s share sale is expected to take place in 4Q2021. Meanwhile, cosmeceutical giant Macro Group is looking to pull the trigger on its IPO in the fall after postponing it in April.

RenCap has four EGX IPOs in its pipeline, some of which could go to market by the end of this year, while others would make their market debuts in 2022, Helal said. We know already that the EM-focused investment bank is managing E-Finance’s share sale alongside CI Capital and Pharos, and will quarterback the Macro transaction alongside EFG Hermes.

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