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Monday, 30 May 2022

Gov’t could sell 20-25% of Egyptalum, potentially to an Arab sovereign fund + 25% of new state-owned hotels company will be listed on the EGX

The state plans to sell a stake in EGX-listed Egypt Aluminum (EgyptAlum) to a “strategic investor,” Public Enterprises Minister Hisham Tawfik said at a conference yesterday, according to a press release (pdf). The ministry could sell a 20-25% stake to the investor, Tawfik separately told CNBC Arabia (watch, runtime: 3:55) on the sidelines of the conference. The transaction will take place through a capital increase, Tawfik added, without providing a timeframe for the sale. The company is currently “studying” the potential capital increase, it said in a disclosure to the EGX (pdf).

Shares rose in trading: Egyptalum shares closed up 4.1% at EGP 18.21 on Sunday following the news.

Who’s buying? An “Arab sovereign fund,” Al Borsa cites Tawfik as saying at the event, without providing further details.

By “Arab,” think “Gulf.” Our friends in the Gulf are eyeing investment in private and public local firms under agreements earlier this year to provide emergency liquidity and economic support to mitigate the fallout from Russia’s war in Ukraine. The Saudi sovereign wealth fund recently inked an agreement to invest up to USD 10 bn in our healthcare, education, agriculture and financial services sectors — and the Qatari wealth fund in March agreed to invest USD 5 bn here “in the coming period.” Abu Dhabi wealth fund ADQ has already invested USD 1.8 bn in five EGX-listed companies.

A big overhaul coming? The state-owned company is looking into an overhaul worth as much as USD 300 mn, to be financed through a combination of debt and proceeds from the stake sale. The upgrade is designed in part to help EgyptAlum maintain its 320k-ton annual production capacity. The company has tapped engineering giant Bechtel to conduct a feasibility study for the upgrades.

The sale comes as the Madbouly government launches its privatization strategy, which aims to attract USD 40 bn of fresh foreign investment into the country over the next four years by selling stakes in state-owned assets to local and international investors. The final text of the state ownership policy document which details the strategy is expected sometime this week.

25% OF NEW HOTEL CO. FOR SALE?

The state will offer via initial public offering a 25% stake in the company it will create through a merger of seven or eight state-owned hotels, according to the press release. The state is currently working on restructuring the hotels, which have not yet been named, in preparation for the merger. The new entity will be offered to investors in coordination with the Sovereign Fund of Egypt in the coming months.

ALSO FROM THE CONFERENCE:

  • The gov’t is in talks with an unnamed Indian investor to manufacture 10-15 pharma raw materials in a bid to reduce imports and localize the pharma industry, Tawfik said.
  • New EV partner to come in July? State-owned El Nasr Automotive will in July sign two contracts — one for licensing and another for manufacturing — with an unnamed Chinese company to locally assemble electric vehicles (EVs). We had been expecting final contracts to be signed in April.

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