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Tuesday, 31 January 2023

Investment banks eye terminal operator IPOs — and Qatar’s SWF is looking for a strategic stake

A unit of Qatar’s sovereign wealth fund is eyeing majority stakes in two state-owned terminal operators as investment bankers angle for IPO mandates in what could be the first sign so far this year of significant new activity in the Madbouly government’s privatization program.

The Qatar Investment Authority’s Maha Capital has submitted an offer to take majority stakes in terminal operators Port Said Containers & Cargo Holding Company (PSCCHC) and Damietta Container & Cargo Handling Company (DCHC), both subsidiaries of the Holding Company for Maritime Transport. The news was first made public by Al Mal. Senior officials at PSCCHC and DCHC were unavailable for comment yesterday.

A team from Maha Capital talked “cooperation and investment” with PSCCHC last October, according to the port operator’s website. Damietta Port issued a statement about a Maha Capital visit the same day. The visits came a month after it inked an MoU with the Transport Ministry to invest in the nation’s port infrastructure. Qatar has pledged to invest USD 5 bn here to help shield us from the fallout from the war in Ukraine.

WATCH THIS SPACE- The Transport Ministry reportedly has reservations about ceding control of the companies, Al Mal’s sources claim. It’s possible that the two sides reach an agreement that would see QIA acquire smaller stakes, leaving the government with majority ownership, according to the newspaper.

The news suggests a one-two punch: That the state could bring in a strategic operator to help the ports up their competitive metabolism while retaining a stake large enough to monetize at a higher valuation in a later initial public offering on the EGX. Speaking of IPOs…


EFG Hermes, CI Capital and at least one other investment bank are reportedly bidding to work on an IPO of Port Said Containers, Al Mal reports, citing PSCCHC CEO Tarek Shaheen. A PSCCHC spokesperson was unavailable for comment yesterday; spokespersons for EFG Hermes and CI Capital declined to comment.

REFRESHER- PSCCHC and the DCHC listed their shares on the EGX in early December as a prelude to a future offering of equity. The approval gives the maritime companies six months to meet listing requirements including minimum quotas for the number of listed shares and shareholders, and to obtain regulatory approvals for an offering to the public.

What’s at stake? Both companies plan to sell 25% of their shares on the EGX in 1Q 2023, according to the domestic press.

Question the timeline, but not the intent: It’s the last day of January, investment bankers haven’t been appointed, and Ramadan starts in March — it’s too tight to go to market in March, and quite possibly too late for the May IPO window. We think it’s more likely that investment bankers are looking for mandates to (a) advise the Holding Company for Maritime Transport on the strategic sales to Maha and then (b) help take the companies public a bit further down the road.

BACKGROUND- The EGX has momentum now: It’s the best-performing market in the region (in local-currency terms) since the devaluation of the EGP, up nearly 17% since the start of the year. Saudi’s Tadawul is up just over 3% and the DFM is down 1%. Volumes are healthy, if still driven largely by local institutional and individual investors — daily turnover is now routinely north of EGP 1 bn. Against that backdrop, the various arms of government are readying companies for IPO or sale to strategic investors. Among them are the potential IPOs of Banque du Caire, Misr Life Ins, Egyptian Drilling Company, and Egyptian Linear Alkylbenzene Company (ELAB).

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