Sunday, 26 September 2021

TONIGHT: Ezdehar completes first close on its Egypt Mid-Cap Fund II. Also: Germany’s elections too close to call + Pessimism post-Evergrand

It’s all quiet on the local front, ladies and gentlemen, with a dearth of worthwhile stories coming in as of dispatch. We don’t anticipate this will be the case this week (or even today), so enjoy a light issue while you can.

THE BIG STORY TODAY-

#1- Private equity firm Ezdehar plans to reach the first USD 100-120 mn close on its Ezdehar Egypt Mid-Cap Fund II fund by November, founder and Managing Director Emad Barsoum told us, explaining that the second and final close of the fund is expected happen within 1Q2022. The firm hopes to raise a total of USD 160-180 mn after its second close. Among the investors in this first close is Naguib Sawiris who will invest around USD 20 mn, UK’s CDC with USD 25 mn and the European Investment Bank with USD 15 mn. Other potential investors include the Egyptian-American Enterprise Fund, the European Bank for Reconstruction and Development and the World Bank’s International Finance Corporation.

^^We dive deeper into the story in tomorrow’s EnterpriseAM.

DEBT WATCH- Banque Misr has confirmed that it is in the process of obtaining its largest-ever syndicated loan worth about USD 1 bn in a statement last week. 22 banks from 11 countries, including banks from the US, Europe, Middle East and Asia have signed on to provide the loan, the statement reads. Shahid Law are legal counsel to Banque Misr on the facility.

REMINDERs-

#1- The House of Representatives is reconvening this week after its summer recess, by decree of President Abdel Fattah El Sisi. The House’s first session is scheduled for Saturday, 2 October. The Senate will reconvene next week on Tuesday, 5 October. Look for our tracker of business-related legislation on what could potentially be on the docket this week.

#2- Same-day vaccinations are now a thing from today: Anyone who has not yet registered for vaccination can go to walk-in clinics at youth centers for same-day vaccination starting this morning, with 850 vaccination centers, including 175 for travel vaccination, now operational for pre-scheduled appointments.

** CATCH UP QUICK on the other top stories from today’s EnterpriseAM:

  • Egypt sells USD 3 bn of eurobonds: Last Thursday’s issuance was 3x oversubscribed, with Egypt receiving offers for USD 9 bn on USD-denominated bonds, with 6-, 12-, and 30-year tenors.
  • Shell is out of the Western Desert: Cheiron and partner Cairn Energy have acquired Shell’s oil and gas assets in the Western Desert under an agreement in March that could be worth up to USD 926 mn.

THE BIG STORY ABROAD– Germany’s national elections are too close to call, with the elections expected to yield a splintered parliament. Elections for Merkel’s potential successor is a three-horse race between centre-right Christian Democrats’ Armin Laschet, center-left Social Democrats’ Olaf Scholz (Merkel’s Vice Chancellor and Finance Minister)and the Greens’ Annalena Baerbock. If the elections divide the parliament, a three-way coalition is expected to take place though that isn’t the preferred option for Scholz (the front-runner). Reuters has the story.

The Washington Post is warning of the far-right and how they might be inspired to take elections in their own hands or disrupt the proceedings as did Trump supporters on 6 January. It suggests that extremists are unlikely to play a role in swaying the vote but their influence is still too strong than what the polls may have implied.

Who’s next up in the so-called ‘Evergrande contagion’? China’s Evergrande continues to dominate the conversation among market watchers this morning, with the discussion centering on what is the next domino to fall (so, it is all bears today). Goldman Sachs sees other Chinese property developer stocks as being the next to fall, with the Hang Seng Property Index dropping to its lowest in five years earlier this month, Bloomberg reports. Citi sees property lenders and investors as being next, including China Minsheng Banking, Ping An Bank and China Everbright Bank.

Beyond property and property financing, the supply chain industries feeding them are expected to come under risk, including Asian suppliers to China’s developers, including US industries and EU mining firms.

Not helping matters are continued global supply chain and logistics disruptions that have shipping firms sound the alarm. Government intervention might be necessary to solve the global supply chain turmoil, argues Takeshi Hashimoto, president of Mitsui OSK Lines, in an interview with the FT. It’s been a major debate within the industry whether government involvement is necessary, but Hashimoto believes that leaving the crisis in the hands of individual companies that will each take a different approach will cause more turmoil and “an out-of-control situation,” he said. Instead, companies should coordinate with governments to ensure that the much-needed infrastructure is in place. The logistics industry should also plan ahead in a way where investment is somewhat stable and predictable as opposed to pouring in investments at a time of a boom, Hashimoto said.


Another Chinese crisis as big as Evergrande (the bear clickbait is strong today)? China could be headed for an electricity crisis that could potentially wreak as much havoc on markets as the Evergrande fiasco, according to Bloomberg. Almost half of China’s 23 provinces missed energy intensity targets set by Beijing and are now under pressure to curb power use. “With market attention now laser-focused on Evergrande and Beijing’s unprecedented curbs on the property sector, another major supply-side shock may have been underestimated or even missed,” Nomura Holding analysts said in a note. China’s electricity pressures come as Europe struggles with its own energy crisis on account of natural gas shortages.

Speaking of which, Italy is feeling the bite of gas shortages: Italy’s government has warned that gas prices might increase 40% over the next three months, reports the Financial Times. Last week, Prime Minister Mario Draghi announced a EUR 3 bn package to aid lower income households and small businesses to pay their bills. The plan freezes electricity costs for 3 mn houses, waives fixed charges for some houses and businesses, and reduces VAT on natural gas to 5% instead of up to 22%. The implementation of the plan will take place in 4Q2021, but until then, businesses and families are worried that they might not be able to stay afloat.

🗓 CIRCLE YOUR CALENDAR-

White House National Security adviser Jake Sullivan will visit Cairo this week as part of a brief Middle East tour that will take him to Saudi Arabia and the UAE, sources with knowledge of the matter tell Axios.

The deadline to register for the AUC Business School’s Private Equity Diploma is coming up on Tuesday, 28 September.

ITIDA’s DevOpsDays Cairo 2021, will take place on Wednesday, 29 September.

Winter opening hours for shops and restaurants will begin this Thursday, 30 September. Shops and malls will close one hour earlier at 10pm (11pm on Thursdays, Fridays and national holidays) while cafes and restaurants will shutter at midnight rather than 1am. Essential services such as grocery stories, supermarkets and pharmacies are exempt.

The Cairo International Fair opens on Thursday, 30 September at the Cairo International Conference Center. It runs through 8 October.

The Egypt Projects 2021 construction expo also opens on Thursday at the Egypt International Exhibition Center and wraps on Saturday, 2 October.

Dubai’s Expo 2020 opens on Friday, 1 October. The event, which takes place somewhere on the planet once every five years, runs for six months and will be open seven days a week. You can learn more here.

Shipping companies need to send information to the Advance Cargo Information (ACI) system starting 1 October. This includes cargo data and documents such as the commercial invoice and bill of lading, with the paperwork required to be filed at least 48 hours before the goods are shipped.

PSA- Next week is a short workweek. You can expect to have a three-day weekend 7-9 October in observance of Armed Forces Day, which is on 6 October.

A BIT FURTHER OUT- The first phase of the planned electric rail line between Salam City and Tenth of Ramadan City will be inaugurated at the end of October, Prime Minister Mostafa Madbouly said in a cabinet statement. The line, which connects Adly Mansour station to the new administrative capital, will open next month for a three-month trial, Madbouly said.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

☀️ TOMORROW’S WEATHER- Expect daytime highs of 32°C and nighttime lows of 21°C tomorrow, our favorite weather app tells us.

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