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Wednesday, 26 January 2022

It’s privatization, the speed-metal version

Gov’t to step up privatization efforts in coming months: The Madbouly government is planning to sell stakes in state-owned companies every month or two, Planning Minister Hala El Said told Reuters.

Riding the e-Finance wave: State-owned e-payments firm e-Finance completed the EGX’s biggest IPO since 2015 in October, attracting strong demand from foreign institutional investors and seemingly breathing new life into the government’s stalled privatization agenda.

It’s these investors the government wants: “We're trying to select the right companies that can attract good institutional and good private sector [investors], and at the same time help in deepening the capital market in Egypt,” she told the newswire. “We're almost targeting a company every month, or every two months.”

But no names: El Said declined to tell Reuters which companies the government is considering offering to investors.

Military firms to be part-privatized this year: Stakes in the National Service Projects Organization’s bottled water company Safi and oil company Wataniya Petroleum could be offered to investors later this year, El Said said. The Sovereign Fund of Egypt is currently restructuring the companies ahead of the sales, which could involve buy-ins by strategic investors ahead of possible IPOs on the EGX.

The program, stalled since launch in 2018 by market conditions and then the pandemic, gained momentum last year following e-Finance’s IPO, which raised almost USD 370 mn for the fintech firm. Several weeks later, state petrochem firm Abu Qir sold a 10% stake in a secondary offering. State-owned Ghazl El Mahalla FC is set to offer a 67.5% stake in early February in its IPO, which is expected to raise a total of EGP 135 mn after attracting EGP 37 mn from institutional investors during the private placement.

Also from El Said:

  • Gov’t to make clear where private investment is welcome — and where it isn’t: The government will soon publish a document explaining to private investors which areas of the economy they can invest in. Coming under the framework of its three-year IMF-backed reform program, the document “will say this is a green light where this is totally private sector, this is a red zone where this is totally for the government to invest, and this is a yellow zone where we can work together with guidelines and a level playing field,” El Said said.
  • NIB restructure to take another four years: The government will finish restructuring the heavily-indebted National Investment Bank by 2026, as part of a plan agreed with the IMF to reduce fiscal risks. El Said — who chairs the bank — said that the government has completed around half of the work, which involves gradually reducing the bank’s liabilities and offloading assets over time.

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