Back to the complete issue
Wednesday, 27 October 2021

Ghazl El Mahalla FC lines up EGX’s second IPO this quarter

Two IPOs on the EGX in as many months? State-owned sports club Ghazl El Mahalla could debut on the EGX in November, a month after fintech firm e-Finance completed the exchange’s largest IPO in six years, according to Masrawy, citing the head of bookrunner Prime Holding. Prime’s investment banking arm has begun promoting the share sale to institutional players and hopes to initiate the offering on the exchange at the beginning of next month, CEO Mohamed Maher told the newspaper, without providing further information. Enterprise was unable to reach Prime or club owner El Mahalla Spinning and Weaving Company for comment.

Let’s keep size in context: The sale is expected to raise EGP 135 mn, which would be done via newly-issued shares that would see up to two-thirds of the club listed on the exchange. Prime will place EGP 37 mn worth of shares in a sale to institutional investors, while another EGP 98 mn will be earmarked for sale to individual retail investors, Maher had told us over the summer. E-Finance’s EGP 5.8 mn (USD 370 mn) IPO was the largest the market has seen since 2015; that’s when TMG raised about EGP 4.5 bn (or about USD 850 mn given the exchange rate at the time).

The biggest-ever IPO in Egypt? That would be Telecom Egypt, which raised the equivalent of nearly USD 900 mn in 2005.

Ghazl El Mahalla FC is spinning off from its parent company (the state-owned textiles business of the same name) and will be listed as a new company with initial capital of EGP 200 mn. The remaining capital not issued in freefloat shares will come in the form of an in-kind contribution from Spinning and Weaving to give it a stake.

e-Finance’s success on the EGX has given energy to the state privatization program. The state-owned firm’s listing this month encouraged Ghazl El Mahalla to go ahead with its own IPO, Maher told Masrawy. E-Finance met with substantial institutional and retail appetite. Four more state-owned companies could hit the bourse before the end of the current fiscal year in June, Public Enterprise Minister Hisham Tawfik said previously. Aside from the football club, Banque du Caire is a candidate, after its IPO was postponed in the wake of covid-induced market turmoil. There are also offerings in the pipeline for several large government-owned firms beyond that date, Tawfik said.

But the real question is which private-sector companies are in the funnel to go public. The parent company of health foods brand Abu Auf said earlier this fall it will list in the first half of 2022, with EFG Hermes in the driver’s seat. Macro Pharma also has plans to list, having made a last-minute u-turn on its IPO in April and later hired EFG Hermes to quarterback the sale. And non-bank financial services player Ebtikar has also said it plans to go public.

Okay, but is Ghazl El Mahalla even a good football club? After being relegated for several years, Ghazl El Mahalla made it back into the Egyptian Premier League last season and finished the year in the lower-middle of the table. They play their first match of the new season (which got underway on Monday) tomorrow against Al Masry. Ghazl El Mahalla won the league once, back in 1973, and remain a team with a large and loyal local fan base. The IPO would make it Mahalla the first Egyptian football club to go public.

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; 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.