Let’s just say it outright: 2022 was not a great year for the EGX. Last year, we were cheering the fact that Egypt saw four IPOs — but we’re ending 2022 on a less positive note, albeit not as bad as the zero we ended 2020 with.

The two IPOs that hit the EGX in 2022: Al Khair River for Development and Investment (Nahr El Khair) got the ball rolling with our first listing of 2022 in January, followed by cosmeceutical giant Macro Group Pharma’s EGP 1.3 bn EGX debut in February.

There were others who tried to push through: Ghazl El Mahalla FC braved difficult market conditions with its planned micro-IPO, in which it was seeking to raise EGP 135 mn by selling a 67.5% stake. The club raised EGP 37 mn during the institutional component of the offering in November and retail investors put in orders for just 18% of the shares made available to the public, despite being extended twice due to weak investor interest. The planned IPO was by all means a small transaction, but could have played a significant role in encouraging other sporting clubs — including Al Ahly — to follow suit.

We started 2022 with an optimistic outlook on Egypt’s IPO pipeline, not least because of the state privatization program: At the start of the year, the government envisioned as many as 10 state-owned companies selling shares on the bourse in 2022, either via IPOs or secondary stake sales. Officials including Finance Minister Mohamed Maait and Planning Minister Hala El Said each signaled the state privatization program would be revived early in the year.

Among the offerings that were originally in the government’s pipeline: Heliopolis Housing, which was planning to pull the trigger on its secondary offering by the middle of 2022, while state fertilizer Mopco was originally in the chute to tap the EGX in 1H 2022. There were also signs the hotly-anticipated IPO of Banque du Caire could be back on after it was postponed due to the pandemic, and Misr Ins. Holding subsidiary Misr Life Ins. was eyeing a 2H 2022 window for its IPO.

There were also high hopes for military-owned companies going public: Fuel retailer Wataniya and bottled water company Safi, which have been part of the Sovereign Fund of Egypt-led program to open up military-affiliated companies for privatization since late 2020, were scheduled to go public before the end of 2022. El Said earlier signaled the two companies could IPO on the EGX after an initial stake sale to a strategic investor, while Prime Minister Moustafa Madbouly suggested in September that the companies would go through with a full-on IPO.

Things soon began to shift with Russia’s invasion of Ukraine in late February, which triggered a general risk-off sentiment and the retreat of foreign institutional investors from emerging markets. The market turmoil drove the benchmark EGX30 into a bear market, and by the mid-point of the year it had fallen to lows not seen since November 2016.

The SFE shifted its tactics in response to the new realities: The SFE said around midway through the year that it would pivot from public share sales to selling stakes to strategic investors in response to market turbulence and global economic volatility. Among the companies the SFE flagged for a private share sale was the new holding company that the government plans to create out of seven or eight state-owned hotels.

Others opted to sit on the sidelines until things got better: A handful of companies — both state-owned and from the private sector — decided to postpone their stake sale plans to next year amid market volatility. These include Abu Auf’s parent company AUF, which said in April it is pushing its planned EGX debut until 2H 2022, Aman Holding, and state-owned Banque du Caire, which decided in July to postpone the sale until market conditions improve. BdC has until 31 March 2023 to finish its IPO procedures.

Throughout the volatility, regulators tried to breathe fresh life into the markets: The Financial Regulatory Authority (FRA), now headed by former EGX boss Mohamed Farid, began introducing regulatory changes designed to boost liquidity on the bourse. Under the changes, companies can now “temporarily” list their shares on the EGX before getting regulatory approval from the FRA and have six months to meet listing requirements, including minimum quotas for the number of listed shares and shareholders. The regulatory body also scrapped proposed limits on margin trading, allowed any of the Finance Ministry’s issued securities to be listed on the EGX — paving the way for an active secondary market for debt — and signaled it could resuscitate short selling.

…And tried to attract more institutions to invest in capital markets: EGX officials met with state-owned institutions in a bid to encourage state institutions to invest in capital markets to increase the amount of domestic institutional money in Egypt’s equity market. Meanwhile, the FRA’s eased listing requirements helped kick off “serious talks” with as many as six private sector companies looking to list on the bourse, EGX head Ramy El Dokany said in September.

The bright spot: The EGX has been on a tear in recent weeks, becoming one of the world’s best-performing exchanges in the wake of October’s currency devaluation and the announcement of a USD 3 bn IMF bailout package. The EGX 30 has surged 68% since its July low, and is now up 21.9% year-to-date.

ALSO- Remember SPACs? Despite being all the rage in 2020 and 2021, leading regulators here at home to set up a regulatory framework to allow SPACs, the blank-check companies never properly landed in Egypt. Last we heard in March, the paperwork for Egypt’s first SPAC had been filed and was waiting on FRA signoff. The firm had been set to list on the EGX by the end of January or early February this year.

CORPORATE DEBT-

Faced with an anemic bourse, plenty of corporates pursued other avenues for raising capital, including debt issuances.

Egypt’s securitization market has been on fire this year: Companies have sold a record EGP 45.42 bn of securitized bonds to investors (mainly banks) so far this year. That’s almost three times the volume issued in 2021, which totaled EGP 15.81 bn. The New Urban Communities Authority was behind the largest issuance of the year (and the largest ever in the Egyptian market), pulling off a EGP 20 bn sale in September to finance new developments.

2022 saw a new type of security make its Egypt debut: CIRA Education took to market Egypt’s first-ever future flow security, selling EGP 800 mn to local and regional banks. Future flow securities allow companies to securitize off-balance sheet cashflows, potentially opening up structured finance to a wider range of sectors such as utilities, telecoms and healthcare.

Other areas of the corporate debt market? Not so much. GB Auto’s Drive Finance was responsible for the lone corporate bond issuance of 2022, selling bonds worth EGP 700 mn in June. The corporate sukuk picked up a little from 2021, with Palm Hills Development and Contact Financial taking to market the year’s only two issuances worth a combined EGP 5.3 bn. Contact was the only company to sell sukuk in 2021 with a EGP 2.5 bn issuance.

So, what’s in store for 2023? The government looks like it’s getting its ducks in a row to kick off stake sales on the EGX, with Maait saying earlier this month the government could sell stakes in unnamed companies in the banking and oil sectors before March 2023. Meanwhile, Damietta Container & Cargo Handling Company and Port Said Container & Cargo Handling Company — both subsidiaries of the Holding Company for Maritime Transport — could sell 25% stakes on the EGX in 1Q 2023. The Suez Canal Authority had also previously signaled it would IPO the Canal Mooring & Lights Company on the EGX at the end of this year, but we’re going to go on a limb and assume those plans have been pushed to 2023.