We finally got our first future flow issuance, courtesy of CIRA
CIRA Education closes Egypt’s maiden EGP 800 mn future flow securitization issuance: EGX-listed education provider CIRA Education has closed its maiden EGP 800 mn future flow issuance as part of a larger EGP 2 bn future flow securitized bond program, the company said in a statement (pdf) yesterday. The full program will take place over the course of three years.
Who bought into the offering? QNB Al Ahli, Banque du Caire, Ahli United Bank, and aiBank, which is majority controlled by our friends at EFG Hermes.
Once more for those in the back — what is future flow? Unlike traditional securitization, future flow allows the securitization of payments that aren’t yet on the company’s balance sheet, giving companies access to liquidity without needing a big portfolio of accounts receivables. Future income — whether from club memberships, phone bills, utility payments, tuition fees or rents — is packaged into securities and offered to investors in order to raise capital. Tap or click here to check out our full explainer, and catch our deep dive on what makes education a prime candidate for future flow securitization in our recent Blackboard vertical here.
DATA POINT- The year in securitization (so far): The issuance brings the total value of securitized bonds brought to market so far this year to some EGP 42.8 bn, according to data tracked by Enterprise. That dwarfs the EGP 15.8 bn taken to market during the whole of 2021.
About the issuance: The three-tranche issuance is backed by future tuition revenues, and consisted of seven-year securities sold at EGP 100 each. The issuance received an A rating from Middle East Rating Services (MERIS). The funds raised from this first issuance will be used to cover CIRA’s growth plans in the next three years, including expanding its university and K-12 offering, CEO Mohamed El Kalla previously told us.
What expansions? CIRA is looking to open three new schools at the beginning of the coming school year in September, an international school in Assiut in 2024. It’s also partnering with investment company Elsewedy Capital Holding to build and run a private university in New Damietta, and plans to launch Egypt’s first private sector technical college in September 2023.
Advisors: EFG Hermes is the financial advisor on the transaction, Zulficar & Partners is providing counsel, and PwC is the auditor. QNB AlAhli, Banque Misr, and Ahli United Bank, acted as underwriters, while Ahli United Bank also acted as custodian.
MORE FUTURE FLOWS COMING OUR WAY? The government is reportedly considering issuing future flows for utility firms in the water, electricity and gas sectors, Al Mal reports, citing sources it says are in the know. Contact Financial Holding is also in talks with the FRA to securitize future flows in 2H 2022 on behalf of “one of the largest corporate firms in Egypt,” CFO Ayman Elsawy told Enterprise earlier this year.
Correction: 7 November, 2022
A previous version of this story incorrectly said the Arab International Bank (AIB) acted as custodian on the transaction. The story was corrected to reflect that Ahli United Bank was custodian.