We finally know which companies are included in the state’s privatization plans + El Sisi’s off to Dubai next week
LAST WEEK IN 3 MINUTES–
#1- IT WAS ALL ABOUT PRIVATIZATION, with Prime Minister Moustafa Madbouly unveiling plans to sell stakes in 32 state-owned companies over the next year. The rebooted privatization program will begin during the current quarter and continue through to the end of 1Q 2024, Madbouly said, adding that the government wants to pull the trigger on at least a quarter of the share sales within the first six months of the program. The line-up spans a wide variety of sectors including banking, oil and petrochemicals, real estate, ins. and ports.
#2- OUR GULF FRIENDS WANT (BIG) PIECES of a few of our state-owned players. The Qatar Investment Authority still hasn’t reached an agreement to buy Telecom Egypt’s entire 45% stake in Vodafone Egypt. The hangup? TE is reluctant to part with more than 25%. A report this week suggests that’s left room for Abu Dhabi’s ADQ to mount a competitive bid. Gulf sovereign funds are also reportedly interested in acquiring an undisclosed stake in El Nasr for Fertilizers and Chemical Industries (Semadco).
THE CATCH- We don’t see strategic investors interested in small minority stakes, and most will want management control.
#3- IT WAS A MIXED WEEK FOR ECONOMIC NEWS.
The good: Non-oil exports rose 50% in 2022 and our current account deficit narrowed by 20% in 1Q2022-2023. Our foreign reserves inched up once again to USD 34.2 bn in January, while policymakers are considering a temporary waiver for the capital gains tax to mitigate the negative impact of the EGP’s devaluation on local investors.
The bad: inflation reached a fresh five-year high (more on that in Sunday’s EnterpriseAM edition) and pushed our non-oil private sector deeper into contraction territory for the 26th consecutive month in January.
The ugly: Moody’s downgraded our credit rating for the first time in a decade on the back of our “reduced external buffers and shock absorption capacity.”
#4- IT WAS ALSO AN INTERESTING WEEK ON THE M&A FRONT: BPE Partners’ B Investments finalized the sale of its entire 6.38% stake in TotalEnergies Egypt to TotalEnergies Marketing Afrique (TEMA), as a separate BPE Partners-backed vehicle’s also exited its 9% stake to TEMA. Meanwhile, Palm Hills’ second-largest shareholder, AAIB, is looking to sell its entire 12.7% stake in EGX-listed Palm Hills Developments to Emirati investment company Al Ain Holding, while International Company for Medical Industries will go ahead with an acquisition of a 72% stake in Mansoura-based medical textiles company Banff Non Wovens for EGP 23.4 mn. Finally, Sri Lankan conglomerate LOLC Group reportedly said it wants to acquire several unnamed local firms under a yet-to-be-established holding company in the near future.
#5- THE MADBOULY GOV’T LOBBIED FOR INVESTMENTS: Prime Minister Moustafa Madbouly discussed potential Croatian investments in the Suez Canal area with the country’s president, Zoran Milanović, while Planning Minister Hala El Said pushed Qatari business leaders to step up their investments in Egypt during talks in Doha.
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WHAT’S HAPPENING NEXT WEEK-
We expect there to be continued speculation on the rebooted privatization program in the local press as the Madbouly government gets ready to sell down stakes in eight companies over the next seven weeks. Remember: We think selldowns of state positions in already-listed companies and direct stake sales to strategics can happen anytime. But we don’t expect IPOs before May / June at the absolute earliest — September is a more likely timeframe.
President Abdel Fattah El Sisi will be in Dubai to attend the World Government Summit, which runs 13-15 February. Twenty heads of state will be in town for the Davos-like gathering, which will see policymakers from around the world discuss global trends in policymaking, according to Emirati state news agency WAM.
Petro-show next week: Oil and gas industry figures from Egypt and the region will congregate at the Egypt International Exhibition Center for the Egypt Petroleum Show (Egyps) starting next Monday. The three-day conference runs 13-15 February.
MPs are back next week: The House will reconvene on Sunday, 12 February.
???? WE HAVE TWO CALENDARS NOW- Our Weekend Edition and EnterprisePM calendar (at the bottom of this email) include a full rundown interesting events coming up in Cairo, from art exhibitions to concerts and marathons.
Find our regular business calendar, which includes a comprehensive listing of upcoming news events and news triggers, in EnterpriseAM and on the web.
- Privatization was on everyone’s minds, with our earlier report on PM Madbouly’s planned presser to unveil the state’s privatization program getting the most clicks.
- A lot of you seem to be interested in attending Cirque Du Soleil in March.
- Some of you were curious about Emirates NBD Egypt’s new CEO, Amr El Shafei.
- Egypt’s 1Q 2022-2023 balance of payments report (pdf) got some attention.
- The EGX’s annual report (pdf), which listed some of the companies that will be included in the state’s IPO pipeline.
AROUND THE WORLD IN SEVEN DAYS-
It was a grim week in the international news, with the death toll from Monday’s twin earthquakes in Turkey and Syria surpassing 17k yesterday. In business news, a battle between Microsoft and Google — both of which unveiled their AI chatbots this past week — reached its crescendo when shares in Google parent Alphabet plunged after the company’s chatbot made a factual error in a promotional video at a company event.
Also getting attention last week: Tensions between China and the US continue to rise. The week kicked off with the US downing a suspected Chinese spy balloon — the flap prompted the US to cancel US Secretary of State Antony Blinken’s planned visit to Beijing. Later, US President Joe Biden made several warnings to China in his State of the Union speech, drawing ire from Beijing.
???? YOUR WEEKEND WEATHER– Catch some sun today: It’s going to be a sunny day, with highs of 19°C, before it hits a nighttime low of 7°C. The sun will partly be covered by clouds tomorrow, with highs of 17°C and a nighttime low of 8°C.