Back to the complete issue
Thursday, 15 July 2021

Egypt’s first football listing worth EGP 200 mn?

Ghazl El Mahalla FC is looking to make an EGP 200 mn EGX debut, Prime Holding CEO Mohamed Maher tells us. Prime is quarterbacking the company’s listing on the bourse.

Wait, how can the company know the value of the transaction before it even gets the green light for the IPO? In a standard initial public offering, a company would set out to offer a certain percentage for sale, then go on to price the shares (based on market feedback to its investment bankers and a separate fair value report), then allocate shares to interested buyers.

But Ghazl El Mahalla FC will be listing as a new company with initial capital of EGP 200 mn. Prime will place EGP 37 mn worth of shares via a private placement to institutional investors, while another EGP 98 mn will be earmarked for sale to individual retail investors.

That means the company expects to rake in EGP 135 mn in cash from new shareholders, while El Mahalla Spinning and Weaving Company, the football club’s current operator, will make an EGP 65 mn in-kind contribution to the company’s capital.

The in-kind contribution includes the 20-year concession for the stadium, training areas and player premises.

Isn’t it unusual for a company with no financials and no track record to list on the EGX? Yup. But Maher says Ghazl El Mahalla FC can go ahead provided it checks certain boxes, including having an FRA-approved business plan and at least 1k shareholders. Also: 40% of the new company’s capital will be subject to a two-year lockup agreement. Shares that are part of the lockup will include those held by El Mahalla Spinning and Weaving and a part of the private placement shares.

The minimum of 1k shareholders is definitely doable, Maher tells us. The company itself has 15k employees and the government is very keen on the offering.

Public subscription is expected to take place before the new season of Egypt’s Premier League in October, Maher added. Al Mal had previously noted that the IPO could go to market in the next two months as the club finalizes procedures with the Financial Regulatory Authority (FRA) ahead of the sale.

The IPO would make Ghazl El Mahalla the first publicly traded Egyptian football club. The owner, El Mahalla Spinning and Weaving Company, completed in recent months a restructuring of the club and upgraded its facilities.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.