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Wednesday, 27 October 2021

Madinet Nasr to acquire real estate firm Minka, gets new CEO as part of the transaction

Madinet Nasr Housing and Development (MNHD) is looking to acquire real estate firm Minka Development for EGP 200-220 mn, the company’s head of investor relations, Salah Katamish, told us yesterday following a regulatory filing (pdf) from the company on Sunday. MNHD has appointed Baker Tilly Wahid Abdel Ghaffar & Co to conduct a fair value study of Minka and expects the results within four weeks, Katamish said, without disclosing when MNHD expects to complete acquisition.

MNHD and Minka know each other well: Minka agreed to purchase two land plots in MNHD’s Taj City development over the past two years for EGP 1.33 bn: The Hoft for EGP 184.8 mn in 2019, and the larger Kinda project for EGP 1.15 bn last year.

So why is the transaction in the EGP 200 mn range? So far, Minka has only paid EGP 200-220 mn for the plots, Katamish tells us. By acquiring the company, MNHD is essentially buying back the two plots it originally sold. The third project owned by Minka — Kensington, outside Taj City — will be separated from Minka ahead of the acquisition.

How is the acquisition being funded? MNHD will go ahead with a EGP 374.4 mn capital increase, part of which will be used to fund the acquisition, it said in a separate disclosure (pdf) yesterday. The remaining EGP 154-174 mn will go towards MNHD’s residential project in West Assiut.

Minka’s owners will then reinvest in MNHD: The Sallam family will use the proceeds from the sale of their company — plus an additional EGP 50 mn — to purchase a minimum 5% stake in MNHD. This will make them the third largest minority shareholder in the company after BPE Partners’ managed fund’s 29% and National Company for Construction and Developments’ 15%.

Minka’s CEO has also become MNHD’s CEO: MNHD’s board also approved the appointment of Minka head Abdallah Sallam (LinkedIn) as its CEO, according to another filing (pdf) on Monday. He will start his term on Sunday, Katamish said.

Market reaction: MNHD’s shares are off 16% this trading week so far, closing at EGP 2.22 yesterday, down from EGP 2.64 before the long weekend, according to data from Reuters. MNHD’s 52-week high was EGP 3.96.

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