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Thursday, 20 October 2022

Qatar could soon invest up to USD 2.5 bn in state-held firms

Qatar could invest as much as USD 2.5 bn in state-held firms: Qatar’s sovereign wealth fund is in advanced talks to buy up 20% of Vodafone Egypt from minority shareholder Telecom Egypt, as well as other state-held stakes in unlisted companies, in transactions worth up to USD 2.5 bn, sources close to the matter told Bloomberg. The sources did not disclose the other state-held firms Qatar is eyeing.

Telecom Egypt hasn’t received a formal offer from anyone yet: TE is in talks with three Arab sovereign funds to divest part of its stake in Vodafone Egypt, though the telecoms giant has yet to receive any official bids, a source close to the matter confirmed to Enterprise. We’ve previously reported that the Qatar Investment Authority (QIA), Saudi Arabia’s Public Investment Fund, and Abu Dhabi’s ADQ are all in talks with the government over a piece of Vodafone Egypt.

What’s the timeline on the Vodafone Egypt stake sale? TE could come to an agreement with one of the funds by the end of the year, our source confirmed.

We knew this was coming: The three funds have been in talks with the government — which owns 80% of TE — over the Vodafone stake for the past few months. Bloomberg Asharq reported previously that QIA is looking to acquire as much as 25% of the company, while our source tells us TE is open to selling up to a 20% stake in Vodafone Egypt “at the right price that would bring maximum returns to shareholders.” The EGX-listed telecoms giant holds a 45% stake in the company.

QIA has reportedly been eyeing several Egyptian companies: The fund was rumored to be looking at the EGX as an entry point to deploy capital as part of moves by our neighbors in the region to help shore up our economy with an influx of FDI. Local media outlets have reported that the Qatari fund is interested in purchasing stakes in Alexandria Containers and Eastern Company — though a source at Eastern’s majority shareholder, Chemical Industries Holding, denied knowledge of the talks when we reached out recently. The fund’s investment arm last month signed an MoU with the Transport Ministry to explore investment in Egypt’s container terminals.

Background: Qatar earlier this year pledged to invest as much as USD 5 bn in Egyptian companies as part of wider Gulf efforts to shore up our economy and provide us with vital FX. Both PIF and ADQ have already made their to the EGX, investing bns of USD in a number of locally listed companies this year. PIF is reportedly still eyeing stakes in at least three high profile local firms. Gulf state neighbors have pledged over USD 22 bn in total to support the economy amid the fallout from the crisis in Ukraine.

This all comes as part of the government’s privatization push, which should see it more than double the private sector’s role in the economy to 65% over the next three years and attract USD 40 bn in investment by 2026.

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