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Wednesday, 30 March 2022

Qatar to invest USD 5 bn in Egypt + Cemex, Harmony Gold to invest more here

Qatar to invest USD 5 bn in Egypt: Qatar has agreed to invest USD 5 bn here “in the coming period,” becoming the second country in the Gulf to commit funds as we grapple with the impact of surging food and energy prices on the back of Russia’s war in Ukraine. The governments will consult each other via a new joint committee, cabinet said in a statement yesterday following talks between Prime Minister Moustafa Madbouly and Qatari Foreign Minister Mohamed bin Abdulrahman Al Thani.

Details are so far thin: The statement didn’t disclose where the money would be invested or when the transactions would be closed, but Planning Minister Hala El Said told Bloomberg that the Qatar Investment Authority — the country’s sovereign wealth fund — would acquire the assets.

Egypt’s fiscal position has come under pressure as surging food and energy prices, lower tourism revenues and portfolio outflows threaten to strain our balance of payments.

Qatar isn’t the first Gulf state to offer Egypt financial support: Abu Dhabi sovereign fund ADQ has agreed to purchase government-held stakes in EGX-listed companies. The fund will reportedly spend USD 2 bn acquiring shares in five companies, including up to 18% of leading private sector bank CIB, as well as unspecified stakes in Abu Qir Fertilizers, Mopco, and Alexandria Containers. State-owned Banque Misr recently acquired an nearly 9% stake in Fawry, upping its total holding to nearly 15.8% ahead of what we believe is a sale of that stake to ADQ, which has shown strong appetite for Egyptian investments in the past couple of years.

Another USD 5 bn inbound from the GCC? Saudi Arabia and Kuwait may soon join the UAE and Qatar in providing emergency financial support to Egypt, BNP Paribas said in a note yesterday reviewed by Enterprise. The French bank said there is a “reasonable chance” that Egypt will receive USD 3 bn from the Public Investment Fund and USD 2 bn from Kuwait in the coming weeks. President Abdel Fattah El Sisi traveled to Kuwait and Saudi Arabia for high-level talks in recent weeks.

BNP puts Egypt’s total funding gap at USD 17.6 bn in FY2021-2022, which suggests that Abu Dhabi, KSA, Kuwait and Qatar will together plug just over 68% of that gap if all of the funding comes through.

On top of the IMF: A fresh IMF program is now looking highly likely after the government and the lender confirmed last week that talks are ongoing for financial assistance. It is unclear how much the IMF will allow Egypt to borrow and what kind of facility would be used. This would be the country’s third program in six years, having borrowed USD 12 bn through an extended fund facility in 2016 and USD 8 bn in covid-related financing in 2020.


Doha didn’t waste time entering the Med: Qatar Energy announced that it had agreed to acquire a 40% working interest in an Exxon–owned exploration block in the Mediterranean. The US energy giant acquired the North Marakia offshore block in late 2019, and will continue to operate the remaining 60% under the agreement, which is still subject to regulatory approvals, the statement said.

Or the Red Sea: This comes a few months after the company made its first moves into Egypt’s upstream oil and gas sector, announcing in December that it had agreed to acquire a 17% stake in two Shell-operated Red Sea oil and gas exploration blocks.


IN OTHER INVESTMENT NEWS-

Assiut Cement owner Cemex plans to invest up to USD 20 mn in Egypt this year, despite the sector facing headwinds from the conflict in Ukraine, the company’s president for Egypt and the UAE, Carlos Gonzalez, told Ahram Online. The Mexican cement giant has spent around USD 1.5 bn in Egypt since it acquired Assiut Cement in 1999.

** READ MORE about how the jump in global commodity shock is pushing up the prices of cement and building materials in Egypt here.

South African gold miner Harmony Gold is considering investing in Egypt for the first time, company CEO Peter Steenkamp said in a meeting with Oil Minister Tarek El Molla, according to a ministry statement. Steenkamp said the company is eyeing investing in gold exploration in Egypt as it looks to expand beyond South Africa and Australia. Amendments to the Mineral Resources Act offering investors more attractive terms have helped bring in more foreign investment into the sector, with a number of companies being awarded exploration concessions in a bid round last year.

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