Safi + Wataniya prepare for offering
Safi + Wataniya to begin offering prep on Wednesday: The government will start preparing military-owned bottled drinks firm Safi and fuel retailer Wataniya for offering on Wednesday, 15 March, cabinet said yesterday. The advisor or advisors working on the sales will start outreach to strategic investors in the marketing phase of the transaction, it suggested. The statement did not name advisors or make clear whether the state had mandated separate advisors for each transaction.
That’s not all: The government will offer four “large” companies to investors through international investment banks, cabinet said. The statement didn’t disclose which companies would be offered, provide a timeframe, or name the advisors.
Size of the stake still up in the air: The government is yet to confirm how much of the Safi and Wataniya it is prepared to offer to strategic investors. That makes sense: One of the jobs of the investment bankers will be to suss-out appetite among potential investors.
Strategic investors first, public share sale second: Safi and Wataniya — both owned by the military’s National Services Projects Organization — were reported in January to have been added to the pre-IPO fund managed by the Sovereign Fund of Egypt, which has been restructuring the companies ahead of a share sale. The fund was earlier reported to have planned to sell a 20-30% stake in the companies to strategic investors before proceeding with public share sales when global market conditions have improved. Prime Minister Moustafa Madbouly recently expressed said the state prefers to sell stakes in state-owned companies to strategic investors over public share sales.
REMEMBER- Prime Minister Moustafa Madbouly last month unveiled the government’s plan to sell stakes in 32 state-owned companies through sales to strategic investors and offerings on the EGX by the end of 1Q 2024. The privatization drive comes as part of Egypt’s USD 3 bn loan program with the IMF, under which it pledged to reduce the involvement of state- and military-owned enterprises in the economy.
Time is of the essence: Pressure on the EGP is unlikely to ease until the government starts showing progress in delivering on its privatization pledges. Foreign investors are continuing to sit on the sidelines in part due to concerns about stalling privatization momentum — see United Bank and Vodafone Egypt — and pressure is now building again on local debt and the currency.
The news got international coverage: Bloomberg.