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Thursday, 11 November 2021

THIS MORNING: What’s happening with Aldar-ADQ’s play for SODIC? US inflation at 30-year high; Deadline for Anghami SPAC merger.

Good morning, wonderful people. We’ve nearly made it through another workweek together, and our reward is a blockbuster issue on a morning that’s simply jam-packed with news.

SOMETHING THAT DELIGHTED US this morning: EFG Hermes is hosting a PHYSICAL One on One. Save the dates went out yesterday for the sixteenth edition of the world’s largest investor conference focused on frontier emerging markets. The gathering will take place in Dubai from 28 February through 3 March. We’re looking forward to seeing many of you there.

More and more foreign investors are coming to Egypt these days to kick the tires on potential investments. Fund managers and strategics alike are arriving in numbers we haven’t seen in at least four years to talk with local management teams, according to friends on the buy- and sell-sides as well as top corporates. They’re coming individually and in quietly-organized roadshows. There’s a palpable change in sentiment taking place right now, and we really hope global sentiment holds up at what’s increasingly feeling like an inflection point. After nearly two years of isolation, there’s no better time to hear that we’re going to be meeting face to face in Dubai.

THINGS MAKING US SMILE on this fine morning: Vodafone Egypt is indeed going to be part South African-owned, it seems. ALSO: a Saudi tech company is moving its operations lock, stock and barrel to Egypt — so it can IPO on the EGX.

SMART POLICY- The government is moving to minimize the impact of the capital gains tax on the EGX ahead of the measure coming into effect on 1 January. The measures also suggest the government wants to make life a bit easier for listed companies. Interestingly, the statement outlining a wide basket of measures is couched in language that suggest policymakers understand the long-term importance to the economy of functional capital markets.

*** AND A HUGE WELCOME THIS MORNING to our friends at Abu Auf, the healthy foods brand, who join us this morning as the sponsor of our very popular My Morning Routine section. The generous support of companies including Abu Auf ensure not just that we keep the A/Cs running and team fed here at Enterprise World Headquarters, but also that your favourite morning read remains available to you free of charge every weekday around 6am CLT. Thank you, all.

WHAT’S HAPPENING TODAY-

Where do things stand with the Aldar-ADQ acquisition of SODIC? It’s now been almost two months since we have heard anything official on the mandatory tender offer that the UAE’s Aldar Properties and Abu Dhabi’s sovereign wealth fund ADQ launched to acquire 90% of upmarket real estate developer SODIC. We reached out yesterday to the parties involved for an update on what would be a landmark inbound M&A for the real estate sector.

The transaction is now on the desk of the Financial Regulatory Authority (FRA), we were told, and we reached out to the FRA to understand where things stand. An official, speaking on condition they not be named, told us there are procedural matters in the balance and that more information would be forthcoming in the form of an announcement when the regulator is ready. The official would not comment on when to expect the approval process to wrap up, nor would they specify what the FRA is looking into.

The concern is that significant further delay could pose a risk to the transaction, a source close to the matter told Enterprise.

The acquisition has been in the works now for over eight months: Aldar submitted a non-binding offer back in March to acquire at least 51% of Sodic’s shares in an offer that initially valued the company at EGP 6.6 bn.

What’s at stake? The all-cash offer saw the consortium — which is 70% controlled by Al Dar and 30% owned by ADQ — up its offer to EGP 20.00 per share from a previous range of EGP 18.00-19.00, and values SODIC at EGP 7.1 bn (USD 453 mn). Sodic’s shares on the EGX closed yesterday at EGP 17.90.

The transaction could be good news for the industry, Karim Nehma, managing partner at Act Financial, told us back when the MTO was announced. Nehma suggested there has been a view that real estate players are undervalued and that the industry has been lagging. Activist investor Act holds a 15% stake in Sodic, making it the developer’s largest effective shareholder. Olayan Saudi Investment holds 14%, while the Abanumay family has 10% and Ripplewood 9%.

And then there’s the fact that ADQ and Aldar have both telegraphed they have lots of appetite for Egypt: The SODIC transaction “is a part of Aldar’s overall expansion strategy into the attractive Egyptian real estate market, with Aldar currently assessing several opportunities,” Aldar said in a disclosure (pdf) a few months back. ADQ, meanwhile, has mounted bids for drugmaker Amoun (in partnership with the Sovereign Fund of Egypt) and food outfit Atyab, among others.

ALSO TODAY- It’s the deadline for the Anghami SPAC merger: Anghami’s deadline to pull the trigger on a merger with blank-check firm Vista Media Acquisition Company and list on the Nasdaq expires today. The company had previously extended the deadline in August and there’s been silence in the period since.

THE BIG STORIES ABROAD-

US inflation hit levels not seen for more than 30 years last month — and stocks are not happy. Scroll down to this morning’s Planet Finance for the story, which is leading the front pages in the financial press this morning: FT | Wall Street Journal | Bloomberg.

Amazon-backed EV startup Rivian could raise as much as USD 11.9 bn from its upcoming IPO after pricing its shares at USD 78.00 apiece — above the initial range of USD 72.00-74.00 it previously announced, according to the Financial Times. This would be the largest amount raised by a US company in an IPO since Facebook went public in 2012 and the seventh-largest in the history of US stock exchanges. The pricing gives Rivian a market valuation of around USD 77 bn on a fully diluted basis, the Wall Street Journal says.

Rivian isn’t in the black yet: The company’s losses widened in 1H2021 to USD 1 bn and it expects to continue posting losses over the next several years until it ramps up production.

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 HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; 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; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.