Egypt’s government is gearing up to implement the second wave of Initial Public Offerings (IPO) in September.
Minister of the Public Business Sector Hisham Tawfik has said on Monday that preparations are underway to offer stakes in two state-owned companies, including Banque du Caire.
Tawfik declared in April that the second wave will involve new sectors that are not listed on the Egyptian Stock Market (EGX) in a bid to attract more investments and energise the stock market, as well as provide cash liquidity in the domestic market.
The governor of the Central Bank of Egypt (CBE) has announced that Banque du Caire will offer a stake of its shares, ranging between 30 and 40 percent, which is expected to garner between $300 million and $400 million at the most.
Official sources say that the government will also offer a share of 10 to 15 percent of E-finance, a national company which is operating the Egyptian government's financial network with a paid capital of EGP 350.5 million, to be the second company offered alongside Banque du Caire.
Head of E-finance Ibrahim Sarhan told Ahram Online that the offering "is subject to the government’s will, it is not a final order."
“We are already working on studying the market. We will finish our work within a month-and-a-half and all the results of our study will be announced in a press conference before the offering process,” Sarhan added.
The second phase of the IPO will include new sectors that do not exist on the Egyptian stock exchange, which will attract more investors, Minister Tawfik said.
Tawfik added that the strategic objectives of the government’s IPO programme are to expand the ownership base, increase governance practices and private sector participation in management, and provide the necessary financing to restructure and develop companies.
He stressed that the offering will be for profitable companies only, noting that good preparation and timing are among the most important guarantees for the success of the proposal process.
“It also depends on external factors, including macro-economic, global markets, and other internal factors related to the stability of the company's operations," he said.
The minister also emphasised the importance of the role of the investor relations officer.
In 2016, Egypt announced the launch of the IPO programme by offering a portion of state-owned company’s shares in the EGX to revive the market as part of the country's economic reform programme.
The goal from the IPO is to attract investments flows to the domestic market and make ultimate use of state assets.
The programme is scheduled to be fully implemented within three to five years over 23 companies and banks in various sectors, including real estate, services, petroleum, and chemicals, targeting to collect approximately EGP 8 billion, according to the financial initial statement of the fiscal year FY2019/20 budget.
Previously, in March, Egypt offered a stake of 4.5 percent of Eastern Company’s shares on the EGX with a total value of EGP 1.72 billion. Emirati Mohamed Alabbar and Saudi Arabian investors had acquired more than 25 percent of the company's shares with a total of EGP 400 million.