Egypt prepares the biggest IPO in its history
A pharaonic project that could also become the biggest IPO in the history of Egypt! At the end of the year, the Egyptian government will move the centers of power from Cairo to a whole new metropolitan area, to the east, in the desert. This new administrative capital, emerging from the earth, is the most expensive project ever undertaken by Egyptian President Abdel Fattah Al Sisi since he took over as head of the country in 2014.
The state-owned company that manages this project plans to go public next year. This joint venture owned by the army and the Ministry of Housing, called "the administrative capital for urban development" (Acud), could then give rise to the largest IPO in the country. It would dethrone Telecom Egypt, which raised, in December 2005, 895 million dollars.
Selection of advice
"We are currently in the planning phase and we will be able to start the selection procedures for the consultant bankers and decide on the size of the offer at the beginning of next year," said Ahmed Zaki Abdeen, chairman of the joint venture, in a telephone interview with Bloomberg. "The placing on the financial markets will take place on the Egyptian Stock Exchange and very probably also on another international market," added the leader. We are studying this option. "
The Administrative Capital for Urban Development plans to transform a 700 square kilometer strip of desert - roughly the size of Singapore - into a modern hub for government buildings, foreign embassies, large corporations.
Four more IPOs before the end of the year
While 14 companies were to go public in 2020, only one operation ended up materializing: that of Emerald Real Estate Investments, which raised $ 13 million in the first quarter of 2020. Since then, the primary market has not been not very dynamic. Last April, the president of the Egyptian market gendarme, Mohamed Farid Saleh, said he had given the Bank of Cairo and three other companies until the end of the year to finalize their IPOs. Namely, Sky Light Touristic Development, New Castle for Investment Sports and City Trade Securities and Brokerage, according to Reuters.
A big IPO like the one in the administrative capital for urban development would help boost liquidity in Egyptian equity markets and add a new heavyweight to the main index. This would obviously attract new local and international investors. Egypt's benchmark stock index has underperformed its regional and global counterparts this year. Investors generally prefer bonds issued in the country rather than its equities.