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Thursday, 9 December 2021

Abu Qir to sell up to 10% stake in secondary offering

Abu Qir Fertilizers will sell up to 10% of its shares in a secondary offering on the EGX, the company announced in a bourse disclosure (pdf) yesterday. The state-owned company didn’t give any indication of when the sale might go ahead, but Emad El Din Mostafa, the head of the Chemical Industries Holding Company — an Abu Qir shareholder — told us last week that the transaction could close before the end of the year, with a virtual roadshow targeting potential institutional investors currently underway. Mostafa also confirmed earlier this week that this plan hasn’t been affected by the emergence of Omicron.

We now know who’s marketing the shares: The state-owned company has appointed EFG Hermes, CI Capital, Renaissance Capital, and Al Ahly Pharos to underwrite the transaction, according to the disclosure. Several of the investment banks we contacted yesterday declined to comment on where they’re promoting the sale and would not provide any color on the transaction.

Abu Qir’s secondary offering will come as part of this year’s revival of the state privatization program, starting with e-Finance, which completed the EGX’s biggest IPO in years in October, raising some USD 370 mn. Football club Ghazl El Mahalla is also set to make its debut on the EGX in a “micro-IPO” in two weeks.

The stake sale has been years in the making: Abu Qir has pushed back the secondary stake sale several times since first announcing it in 2018, with the state’s privatization program suffering delays thanks largely to global market turmoil and then the pandemic.

Abu Qir’s earnings have been consistently strong recently. The company reported a 30% rise in net income during FY2020-2021, and saw its quarterly earnings almost double to EGP 1.3 bn in 1Q2021-2022, which it attributed to higher international prices and strong demand.

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