Another push for privatization in the sports industry: Government-drafted amendments to the 2017 Sports Act will allow the Egyptian FA and others to set up and list companies on the EGX for the first time in a bid to attract more private investment into the sector, Rep. Mahmoud Hussein, who chairs the House Youth and Sports Committee, said yesterday.

REMEMBER- The government is preparing to reboot its state privatization program which will see fresh IPOs on the EGX as it pushes with efforts to revitalize investments on the EGX which is seeing one of the strongest rallies in recent years on the back of the EGP devaluation.

What’s what: The amendments would pave the way for sports institutions to set up investment companies and list them on the bourse, according to Hussein, who estimated the value of private investment in the local sports sector at EGP 28 bn. “But we can do more through the new amendments and other measures to boost these investments to be a major contributor to the national economy," he said. Hussein’s statements came during a committee meeting held yesterday to discuss the amendments with industry stakeholders.

This reads like Egypt’s bid to set up a Qatar Sports Investment or a City Football Group: “Private investments in the sporting sector have become one of the most important profitable economic activities in the world in recent years … They have even become the backbone of some states as they come first in terms of contribution to the national economy,” Hussein said.

REMEMBER- The 2017 Sports Act loosened the state’s grip on private sports clubs, allowing them to have more authority over financial affairs and operate as an institutionalized company. This has encouraged some to think about the prospect of going public.

Ghazl El Mahalla has provided the blueprint for how not to IPO: Ghazl El Mahalla FC botched its attempt to become the first publicly-traded sports club in Egypt last year. The state-owned club opted to IPO during the most challenging market conditions since the covid-19 pandemic, and was left unable to find buyers for its meager EGP 135 mn share sale. Just 18% of the retail offering was covered after several extensions, forcing the club to abandon the sale.

Others have expressed an interest in going public: The chairman of Al Ahly said last year that the board is considering offering 49% of the company on the EGX.

PROPOSALS FOR LICENSE FEES AREN’T POPULAR-

The bill isn’t all private-sector friendly: The legislative amendments would require private sports clubs to pay a licensing fee equal to 5% of the value of their businesses, an expense that industry representatives complained would slow investment in the sector. Tamer Mohamed, an owner of a private sporting services company, complained that the ministry offers no services in return for such a high fee, while Saad Shalaby, the executive director of Al Ahly Sporting Club, pointed out that investing bns of EGP in new facilities would see companies pay hundreds of mns in fees to the ministry.

And the bureaucracy remains: “Bureaucratic obstacles are also to blame for restricting the flow of private investments into the sporting sector,” said Shalaby. “In order to set up Al-Ahly Football Company, we had to get nine licenses from nine state departments,” he said during the meeting.