The Egyptian Cabinet announced, on February 8th, 2023, that it will offer 32 state-owned companies and banks for sale through Initial Public Offerings (IPOs) or to strategic investors; this process will take place within a year starting from Q1 2023 to Q1 2024.
In this Factsheet, Arab Finance provides the main milestones in the Egyptian government’s journey towards liberalizing its assets.
* The offered companies work in 18 economic sectors, including two military-owned companies and three banks, in addition to energy, insurance, and petrochemicals companies.
*Around 25% of these companies will be listed on the EGX within six months.
* Raising the contribution of the private sector from 30% to 65% within three years, through the government IPO program, is a strategic goal for the State Ownership Policy Document, which moves in line with the International Monetary Fund’s (IMF) recommendations under the $3 billion loan.
* Egypt has committed to securing $2.5 billion from selling its public assets by the end of fiscal year (FY) 2022/2023. Selling these assets takes place through the Sovereign Fund of Egypt’s (SFE) pre-IPO fund, which prepares the state-owned companies for listing.
* The roots of the government IPO program go back to 2016, when the government first announced its plan to sell state-owned assets and companies. This was initiated as part of the economic reform program implemented by the government under the $12 billion IMF loan.
* In 2018, the government announced its plan to offer minority shares in 23 public companies on the EGX to raise EGP 80 billion within two years. However, this step was postponed several times, as the global economic conditions were not in favor of the offering.
* To minimize the risk of unstable global market conditions, the Egyptian government tended to offer shares in listed companies through secondary offerings. In March 2019, the government offered a minority stake of only 4.5% in the tobacco business, Eastern Company. This offering was further followed by several delays due to the COVID-19 pandemic, which hit the global market and severely affected all economies.
* In October 2021, the state offered shares of its fintech company, e-finance. The company’s IPO achieved unprecedented results and was the largest in Egypt since 2015. This IPO was followed by another one in December, through which a 10% stake in Abu Qir Company for Fertilizers was offered for underwriting. The government in 2022 had a promising plan to offer 10 companies; however, this plan was hit by the Russian-Ukrainian war that started in February 2022 and pushed capital markets down. In 2022 alone, Ghazl El Mahalla Club was offered in June; however, the offering failed to achieve the required target.
By Amina Hussein