Egypt’s government launched its first public offering on Sunday within the Egyptian Stock Exchange with a 4.5 percent share of the Eastern Company’s contribution as part of the initial public offering (IPO) program for government companies placed on the stock exchange.
The sources added that there will be a number of preliminary offerings for companies not listed on the Egyptian stock exchange, which will help to achieve returns of more than LE 10 billion.
The next offering is expected to be a share of Heliopolis Company for Housing and Development, listed on the stock exchange according to the sources, who added that the company owns a huge portfolio of land exceeding a total of 20 million square meters.
The IPO program includes 20 companies and three banks in seven fields including the Engineering Company for Petroleum and Chemical Industries (ENPPI), the Egyptian Drilling Company, Middle East Oil Refinery (MIDOR), Assiut Oil Refining Company, AMOC, Sidi Kerir Petrochemicals, Egyptian Ethylene and Derivatives Company, Abu Bakr Fertilizers Company, El Wady for Phosphate Industries and Fertilizers, Methanex, and others.
The Alexandria Mineral Oils Company (AMOC) has been excluded from the IPO due to achieving tangible profits, which would help restructure the company using its profits, sources said.
Minister of Finance Amr al-Garhy said that the IPO program for government companies placed on the stock exchange is not limited to the offered companies only, and will have extended accessibility for others.
The program does not include selling to a strategic investor or privatization, he stressed, but aims to expand the ownership base and increase the market capitalization of the Egyptian stock exchange, as well as size of daily trading.
Between four to five of the companies to be included in the first stage of the public offering program will be determined in September or October at the latest, Garhy told Al-Masry Al-Youm.
He explained that the target proceeds from the public offering will go to the owners of these companies, whether they be holding companies or the National Investment Bank.
Minister of Investment and International Cooperation Sahar Nasr said that the government recently announced the public offering program to support investment, which represented a message that the political leadership backs investment.
The continuation of economic reforms and the government’s public offering program will highlight the political leadership’s support for non-bank financial instruments, including the stock exchange, within the framework of its financial inclusion strategy in the next phase of economic reform.
Mohsen Adel, Vice President of the stock exchange, said that the new public offering program will contribute to the revival of the market and the return of investors, as these offers are attractive to smaller investors who see the stock market as a profitable investment.
The Investment Ministry announced in August 2016 that the government would target state-owned firms in the banking, petroleum and electricity sectors for the first wave of its privatization program, selecting several companies for IPOs on the Egyptian stock exchange.
The privatization program comes within the framework of the state’s plan to diversify investment sources and raise growth rates by attracting investment in industry. According to government figures, the program is expected to attract nearly $10 billion over three years.
Edited translation from Al-Masry Al-Youm