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Wednesday, 10 August 2022

Saudi wealth fund to acquire 25% of Mopco

Another Gulf wealth fund wants a piece of Mopco: Saudi Arabia’s sovereign wealth fund will acquire a stake in the state-owned Misr Fertilizers Production Company (Mopco) through the EGX, a source at the bourse confirmed to Enterprise. The Public Investment Fund (PIF) will purchase 25% of the company through its new Egypt investment arm, the Saudi Egyptian Investment Company (SEIC), at a 25% premium to its current share price, Bloomberg Asharq reported yesterday, citing a senior government official. This would value the company at around EGP 3.82 bn, based on its EGP 104.89 closing price on Monday, according to our math. Our source declined to disclose the PIF’s offer price or the number of shares it will acquire.

Market reax: Mopco shares rose 1.0% to EGP 105.93 during trading yesterday.

Who’s selling? State-owned entities will exit or sell down their stakes in Mopco as follows, according to Asharq:

  • The National Investment Bank will exit its entire 12.81% stake.
  • The Finance Ministry will sell its entire 6.0% stake.
  • Egyptian Natural Gas Company (Gasco) will exit its entire 5.72% stake.
  • Misr Life Ins. Company will sell a 0.47% stake, leaving it with 0.52%.

PIF will become the second Gulf sovereign wealth fund to own shares in Mopco after Abu Dhabi wealth fund ADQ purchased a 20% stake for USD 266.6 mn in April. The fund bought the shares at an average price of USD 5.82 per share.

The state will still own 40% of the company, split between Chemical Industries Holding Company (30.8%), EGAS (7.6%), Misr Ins. (1.2%), and Misr Life (0.5%). Other stakeholders would retain c.15.0%.

The stake sale is set to go through as soon as it gets all the usual regulatory sign-offs, our source said. Asharq reported that could mean the transaction goes through as soon as today, citing a senior government official.

This is the PIF’s first transaction through SEIC which was set up last week to manage its investments in Egypt. The fund earlier this year pledged to invest USD 10 bn in Egypt as part of a USD 15 bn Saudi financing package to support Egypt’s external position, which has been rocked by soaring commodity prices and USD 20 bn of capital outflows. The fund was reported this week to be closing in on the acquisition of United Bank, and is also looking into potential investments in the infrastructure, real estate, healthcare, financial services, food and agriculture, manufacturing and pharma sectors.

The Gulf splurge doesn’t stop with the PIF: In June, a number of Saudi companies signed agreements that will see them invest USD 7.7 bn in Egypt, with the KSA at the time saying it intends to “lead” USD 30 bn in investments in Egypt, without giving any further details. Gulf state neighbors have pledged more than USD 22 bn to support the economy.

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