In keeping with the overall theme of the year, 2021 was the year of a hobbled recovery for Egypt’s IPO pipeline. Although we’re ending the year with fewer IPOs and stake sales having gone to market than had been slated, four equity capital market transactions are more than zero.

The four transactions of 2021?

• Two IPOs (Taaleem and e-Finance)
• One technical listing (Cairo-headquartered IDH)
• One stake sale as part of the state privatization program (Abu Qir Fertilizers).

ALSO- Ghazl El Mahalla Football Club kicked off its institutional subscription last week for its micro-IPO and subscription to the retail portion of the offering is currently ongoing, suggesting it’s unlikely to close until very early in 2022.

Reminder: 2020 was an awful year for public equities. The EGX was among the world’s worst-performing exchanges last year, ending the year down more than 23%, with foreigners selling out of the market and trading throughout the year largely dominated by retail traders.

The EGX is now up 9.9% YTD — an improvement, certainly, but still lagging behind its regional peers, which are all ending the year with double-digit YTD growth. The Tadawul is up 30.2%, the ADX is up 66.3% and the DFM is up 28.4% so far.

It ain’t much, but it’s something: We finally saw our first real IPO on the EGX since Rameda’s 2019 debut when higher education outfit Taaleem debuted on the stock market in April, bringing an end to a long drought of new paper entering the market. LSE-listed Integrated Diagnostics Holding (IDH) followed on Taaleem’s heel with a technical listing the following month, transferring 5% of its existing shares to the EGX.

Critically, 2021 was the year the state privatization program roared back to life. Since being announced in 2018, the program — which includes fresh IPOs and secondary sales of already-listed companies — had only seen one offering go through: Eastern Tobacco’s 4.5% secondary offering in March 2019. Last year, the program was shelved as the pandemic roiled global markets. This year finally breathed new life into the stake-sale program, starting with e-payments firm e-Finance’s blockbuster IPO in October, which saw the company raise some EGP 5.8 bn. Abu Qir Fertilizers came next, completing the sale of 10% of its shares for EGP 2.25 bn earlier this month.

Is Kima being added to that list? Egyptian Chemical Industries (Kima) could sell more shares on the EGX “when profitability grows enough,” Public Enterprises Minister Hisham Tawfik said during yesterday’s inauguration of expansions to Kima’s ammonia and urea industrial complex in Aswan and a textiles plant (watch, runtime: 23:45). The company will move forward with the stake sale, which would be limited to a retail offering, as soon as it sees an “increase” in earnings, Hapi cited Tawfik as saying.

How are the company’s financials looking now? The company ended 2020 deeply in the red, reporting a EGP 631 mn loss after carrying over EGP 1.4 bn in prior losses. It’s hoped that Kima 2, which was completed at the start of the year and has a production capacity of 1.2 tonnes per day of ammonia and 1.5k tonnes of granular urea, will help generate stronger returns.

How are things looking for 2022? In a word, it’s looking mixed. Globally, there’s concern among analysts that the Great IPO Rush of 2021 could peter out next year, as central banks rein in stimulus programs and look to hike interest rates (as the US Federal Reserve announced it will next year). These shifting conditions could dry up the surplus liquidity that had helped companies raise record figures in bourse debuts. Then there’s the fact hat as half of this year’s IPOs in major global centers are trading below their offering price — and increasing regulatory scrutiny for SPACs in the west.

Here at home, the IPO and secondary sale pipeline is a bit less anemic heading into 2022 than it was heading into the year now ending. Chief among those is the hotly anticipated IPO of Banque du Caire, which has been postponed multiple times but could finally materialize if the government continues to capitalize on the momentum created by this year’s stake sales in state companies. Misr Ins. Holding could pull the trigger on its plan to offer a stake in its subsidiary, Misr Life Ins., in 2022, but has also yet to follow through on the EGX debut of Misr Ins., which was pushed from their original 2020 timeline.

Also from the state privatization program: Heliopolis Housing and Development is looking to pull the trigger on a secondary offering by the middle of 2022, in a revival of its plan to tap the EGX, Tawfik said last month. The company had initially intended to offer another 15% of its shares on the EGX last year alongside the sale of a 10% stake to a private investor, but scrapped the plans after seemingly failing to find an interested buyer. The government hasn’t decided whether it will change the size of the stake sale. Mopco is also in the chute to tap the EGX before the end of the current fiscal year, the minister said last month.

Over in the private sector, we have cosmeceuticals giant Macro Pharma, which is planning to offer up to 45.8% in an IPO some time in 1Q2022. The company has a regulatory deadline to pull the trigger before 23 January, but could (like others, the regulator recently suggested) ask for an extension.

Healthy food brand Abu Auf is also marching towards the EGX with an eye to list in 2Q2022, having recently tapped EFG Hermes to quarterback the transaction. Non-bank financial services player Ebtikar is also reportedly on deck to go to market in early 2022.

We haven’t heard a peep in a while from: Agrifood player Galina Holding, which was angling for an early 2021 EGX debut but has since gone quiet. Al Gioshy Steel has also been toying with the idea of an IPO for more than two years, but has delayed the decision until it sees an improvement in the market.

Also a promising development for next year’s IPO pipeline: The entry of SPACs to the Egyptian market in November. Within just one day of the Financial Regulatory Authority (FRA) approving regs for SPACs, news emerged that at least two companies are eyeing setting up the black-check firms and list on the EGX. The availability of SPACs could provide startups — which otherwise have a hard time listing on the bourse — a chance to go public on the EGX, Farid had said.

Then there’s the lineup of military-owned companies in the Sovereign Fund of Egypt-led program to open them up to private ownership, more likely through sale of a stake to a strategic investor than via IPO. Safi, the bottled water brand, was gearing up to sell a minority stake to a strategic investor this year, with plenty of appetite from the market, while Wataniya Petroleum was expected to sell a major stake to a strategic investor in 2H2021, having attracted several GCC and homegrown players looking to buy in. The SFE said last month it’s “nearly done” restructuring the two companies, but didn’t give any indicator on the expected timeline. President Abdel Fattah El Sisi has previously said that Egypt will look to IPO military-owned companies. Planning Minister Hala El Said had said at this time last year that both Safi and Wataniya could potentially offer stakes on the EGX after an initial stake sale to a strategic investor. Our friends at EFG Hermes are quarterbacking the transactions.

The (domestic) wild card: The introduction of the capital gains tax on 1 January. The government confirmed in September that it will move ahead with the introduction of the 10% tax on capital gains made by resident investors. After much fretting from investors, analysts, and MPs alike over the potential negative impact of the tithe on trading volumes, the government rolled out a package of tax breaks and fee cuts to cushion the blow for retail investors, which account for the majority of activity in the market on most days. Market reaction to the measures was largely muted, in large part because they’re going to have a much smaller impact on costs than will the capital gains tax.

The (global) wild card: Duh — Omicron. The recently-emerged variant has already led several countries to impose travel restrictions (and some moved towards full lockdowns) in scenes that were painfully reminiscent of the spring of 2020. The information that has emerged so far on the new covid-19 variant indicates that it is not more lethal than other variants, but it has yet to be seen whether it will eventually trigger significant equity sell-offs.