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Wednesday, 19 October 2022

Swvl could get booted off the Nasdaq + OIH joins the EGX buyback club

US- and locally-listed firms are steering their stock through choppy waters: Over on Wall Street, Cairo-born Swvl is reportedly considering combining (through a reverse stock split) or canceling some of its shares as it looks to avoid delisting due to low trading price. Closer to home, Orascom Investment Holding is the latest EGX-listed firm to announce a buyback program to support its stock.

Swvl could face delisting from the Nasdaq unless it can goose its share price: The ride-hailing startup has consistently traded below USD 1.00 per share since 20 September and is currently changing hands at around USD 0.64 per share. According to Nasdaq delisting rules, the index sends a deficiency notice to any company whose share price remains below USD 1.00 for 30 consecutive business days. The listed firm then has 180 calendar days to get its share price back up above the minimum threshold, or face delisting.

By our count, Swvl has until Monday, 31 October to bring its share price up before the Nasdaq sends it a deficiency notice.

Swvl wants to hold on: The company is looking into options including a reverse split or canceling shares in order to bump its share price and avoid getting kicked off the index, Al Mal reports, citing sources it says are in the know. Swvl shares have been steadily declining since the company’s Nasdaq debut at nearly USD 10.00 per share via a SPAC merger back in April.

Swvl is far from the only newly public firm that could stage a retreat: More than three quarters of US corporations that listed during pandemic bull times are now trading below their offering price, forcing the likes of ForgeRock, Poshmark and Casper Sleep to reverse course and return to the private markets, the Financial Times reports. Some 76% of the c. 400 US companies that listed between 2019 and 2021 and have raised a minimum of USD 100 mn have lost value, with a median return of -44% since their initial debut, the news outlet said, citing its analysis of Dealogic data.

PE firms are circling: Wall Street insiders say that private equity groups are on the lookout for bargains as valuations continue to tank amid a broader market rout. “When you think about the amount of private capital that has been raised that hasn’t been deployed, then look at how public equity valuations have re-rated, it feels like it’s going to be a natural pairing up,” said David Bauer, head of equity capital markets at PE giant KKR.


HERE AT HOME- Orascom Investment Holding (OIH) plans to buy back as much as 10% of its shares over the next 12 months, it said in a disclosure (pdf) to the EGX yesterday. The company said that the board has approved a plan that will see it purchase from the market up to 524.6 mn shares between now and 17 October, 2023. OIH did not disclose how much it expects to spend on the buyback program. Enterprise was unable to reach a company representative for comment.

OIH’s shares are down 9% YTD (better than the 15% dip of the wider EGX30). The company’s shares rose 3.9% during trading to close at EGP 0.21 yesterday.

The market downturn has led a number of companies to launch buyback programs this year: Egyptian Kuwait Holding, e-Finance, and Edita are among the major listed companies to have announced plans to buy back some of their shares in a bid to prop up their share prices.

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