Archive for the 'Egypt' Category

Egyptian Exchange holds workshops with mutual funds to boost liquidity

The Egyptian Exchange (www.egx.com.eg) is busy with workshops for mutual funds, investment banks and managers of investment institutions, aiming to boost trading volumes through better communications between market participants and listed companies.

Trading floor of Egyptian Exchange - Dec 2012  pic: Tom Minney

Trading floor of Egyptian Exchange – Dec 2012 pic: ACMN, Tom Minney

The workshops gave investor relations (IR) officials of the listed companies a chance to present their work plans and investment options and the fund managers could also discuss latest developments and current market variables.
According to an EGX press release, Dr. Mohammed Omran, EGX Chairman, said the EGX is keen to boost stock market liquidity. Fund managers praised the communication with listed companies and said it adds to the disclosure provided by EGX. It gives a legal framework for officials of listed companies to answer questions from the institutional investors.
This is a high priority in the current Egyptian economy where all market participants need to work hard to keep the Egyptian Exchange strong and active capital market in the short and medium term.

Egypt’s Nilex exchange for SMEs adds 23rd listing

The Egyptian Exchange (EGX –www.egx.com.eg) has approved the listing of the 23rd company on Nilex (the Nile Exchange – www.nilex.com.eg), the EGX market for growing medium and small companies. A meeting of the listing committee on 17 January approved to list the shares of Al Fanar Contracting Construction Trade Import And Export Co, which has 8 million shares, at a par value of EGP1.00 (USD0.15) each, according to the Nilex news feed. The shares were due to be added to the database with effect from 20 January but were not to be traded until the company and its Nominated Advisor comply with listings requirements.
Listing standards set by the Egyptian Financial Supervisory Authority (www.efsa.gov.eg) require a disclosure report and an approved study on the fair value of the company’s shares. The company has 6 months to meet other conditions set by EFSA (Board of Directors decree no 81 of 17 Oct 2011) or its listing “should be considered as if it never took place”.
For instance, also on 17 Jan the Listing Committee decided that the listing of the shares of National Investment and Reconstruction (Nirco) shall be terminated and it should be considered never to have been listed and it was removed from the EGX database effective 20 Jan 2013.
The previous Nilex listing was International Company for Medical Industries (ICMI), approved on 30 Dec and listed on the database from 31 Dec, with a share capital of EGP4m ($604,000) at par value. Trading would wait for the requirements to be complied with. The Egyptian Modern Education Systems (MOED) was approved on 12 Dec and added to the database on 16 Dec.
Companies wishing to list on the Nilex must work with a Nominated Advisor and new rules and requirements have been issued. There are 35 approved nominated advisors listed here. According to the Nominated Advisor requirements, the Nominated Advisor acts as coordinator between issuer and the exchange, advises and helps the company on all responsibilities during the application process and after listing, helps the company fulfill ongoing disclosure obligations, informs the regulators of non-compliance, helps the company with its initial public offering, and must provide research coverage. These obligations last for 2 years from date of listing.
Nilex started trading on 3 Jun 2010 and the trading sessions were set from 11am-noon with an automatic close period from 11:50-noon. The initial listings were: El Badr Plastic; Masria Card; TN Holdings for Investment; Kato Agriculture Development Co.; Utopia Real Estate Investment and Tourism; Ameco Medical Industries; International Company for Fertilizers and Chemicals; Al Oroba Trading Mining and Supplying; Al Moasher for Programming and Information Dissemination and El-Barbary Investment Group (B.I.G) with trading suspended in the last 2 until they submitted the disclosure reports. All started trading at par value.
According to the latest market report (posted 21 Jan here but updating daily on this link), the most active company yesterday was Marseille Almasreia Alkhalegeya For Holding Investment with 34 trades totaling EGP141,061 ($21,300) in value, followed by Utopia with 24 trades totaling EGP111,398.

Egypt aims for 800,000 jobs

CAIRO – The short-term challenge for the Egyptian Government is to mobilize domestic and foreign investment to create 800,000 jobs. This was the energizing call from Hesham Kandil, the Prime Minister of Egypt, opening the 16th African Stock Exchanges Association conference in Cairo 2012 #ASEA2012 today (3 Dec). He also congratulated participants for braving the negative picture painted by the international media on Cairo’s largely peaceful mass demonstrations: “What you see in media is not necessarily what is happening in Cairo.” He repeated the previous speaker’s challenge, how to fuel the growth that keeps Africa rising not uprising.

Progress and plans in Egypt
Mr Kandil pointed out that Egypt is the gateway linking Africa with the Middle East, Europe and Asia. It is busy with a process of democratic change since 25 January last year. “We are making all efforts to fulfil the aspirations of the Egyptian people. In the past few days we have reached the historic point, the final draft of a Constitution written by an elected constituent assembly, under the first elected civilian president. This is a major step, with the prospect of a constitution on 15 Dec, followed by an election for a new Parliament, ending the transition period. You are witnessing history and you should be proud for being in Cairo at this time.”
He said that a democratic Egypt offers a great opportunity for investors where they can invest in a climate of transparency and accountability, those used to dealing with the old regime will soon notice the difference. He added that 2 weeks earlier, Egupt had reached a preliminary agreement with IMF on our home-grown national programme, this open the way to receive the necessary financing to fill the budget deficit that we have inherited from a previous regime. It is a certificate of confidence that this economy is in the right hand and going in the right direction.
He said Government had divided planning into 3 timetables, in the short term (2012-2014) we need to restore growth and we also plan in the mid term 2012-17 and long term 2017-2012. Our aim in the short term is to boost economic growth from 2.2% to 4.5% per annum in 2014, moving towards a sustainable growth rate of 7% by 2022. This year we intend to create local and foreign investment to create 800,000 jobs. The Egyptian Government offers an attractive business climate and offers solutions – lately we have been able to solve problems for 46 companies, bringing investment and jobs for 100,000 people.
The Government will support capital markets, small and medium enterprises SMEs and to achieve social justice for the people, this is the short–term plan to handle the structural problems of the state budget, when the deficit last year reached Le168bn. We will eradicate corruption, it will be a long road, only from this year 2012-13 we expect to save Le20bn from corruption only, we have to rationalize our expenses. We also have to rationalize subsidies to reach the poor, the current subsidy programme keeps the poor poor, we need to focus on the sectors that will help the poor by focusing on education and health services.

Egypt committed to African partners
We are also part of Africa, in Egypt we have a sincere commitment towards Africa, to cooperate with all African partners for our mutual growth and benefit. We strongly enhance our trade linkages and seek to be a major player in the African continent. I travelled east and south, north, everywhere, it is one continent that you cannot help to fall in love with, I have seen the potential and the opportunities with my own eyes. It is projected that Africa could achieve a high growth rate of 6%, African GDP is to reach $2.6trn by 2020, we have natural resources, energy, water and most importantly human capital, we have what we need to reach this. We meet to discuss how to integrate properly through supporting capital markets in Africa, work continuously on the improvement of the technological and legislative infrastructure, I also invite investors from all over the world to reconsider Africa land of opportunity. He pointed out that return on investment in Africa is very high and African companies are generally more profitable than Chinese companies.

Live from Cairo, launch of African Stock Exchanges Association conference

CAIRO – Ready for launch today (3 Dec) of the 16th annual conference of the African Stock Exchanges Association, hosted by The Egyptian Exchange (EGX). This is the great annual gathering of Africa’s stock exchange leaders, visionaries, regulators, IT specialists, investors and many others.
Speaking last night (2 Dec) at the welcome gathering, Dr. Mohammed Omran, Chairman of EGX, described the problems downtown as Tahrir Square as “a political crisis rather than a security crisis.”* ASEA held its executive committee and AGM yesterday, and Sunil Benimadhu from the Stock Exchange of Mauritius continues his excellent work as chairman of ASEA, while Oscar Onyema of the Nigerian Stock Exchange becomes vice-chairman.
The agenda for the conference includes many topics key to the development of Africa’s markets. Special guests include Huseyin Erkan, CEO of the World Federation of Exchanges.
Agenda
• How does the new approach of the African Development Bank (AfDB) support African economies and investment climate? with Charles Boamah of AfDB.
• How to draw investment flows to African capital markets with David Grayson, Mona Zulficar, Jean-Louis Ekra and Erik Berglof.
• Capital Market Reforms: Impact of Global Regulations on Emerging Market Economies, I have the great honour to moderate this and speakers are Prof Vedat Akgiray, Vice Chairman of IOSCO, Dr Ahraf El Sarkawy, Chairman of Egyptian Financial Supervisory Authority and top international consultant Bob Singletary.
• Maximizing the benefit of Africa’s oil & gas – what should exchanges do? (Geoff Rothschild, Peter Mwangi, Joseph Kitamirike, Oscar Onyema and Ekow Afedzie.
• Upcoming IPOs, challenges facing private equity and venture capital firms in Africa – Chip Dempsey, Michelle Essome, Akex Large, Hisham El-Khazindar and James Mworia.
• What are the challenges facing Africa’s SME exchanges in supporting Africa’s entrepreneurs? Lanre Akinola, Sunil Benimadhu, Mohamed Omran, Siobhan Cleary and Cyrille Nkontchou
• The technology equation – managing high IT costs to meet rising demand for speed and efficiency and enable connectivity between markets? Dr. Maher Asham, Sandy Frucher, Oscar N. Onyema, Ekow Afedzie, M. Ibrahim Turhan and Tony Weeresinghe or a colleague.
• Exploring Cooperation Opportunities: Geoff Rothschild, Oscar Onyema, Mustafa Baltaci, Aftab Ahmed.
The conference runs from 2-4 December 2012 at The Four Seasons Nile Plaza hotel. The focus of the Annual Conference of this year is on “Unleashing Africa’s investment potential – what could be done by African capital markets?” The conference has launched a website (www.aseaegypt2012.org) which contains details of the agenda and participants. Look here for registration.

*I and a friend walked over the square yesterday morning and saw many tents and people there with a calm and very determined spirit. The tension seemed less because the large pro-Government marches had been moved to other parts of the city. Within a few metres from the Square shops were open, shoes being polished and people chatting and the EGX continues work as usual a few blocks away. At the beautiful conference hotel, less than 1km away, the Nile and the city are as they have been for centuries.

African SE Association announces 2012 conference will be 2-4 Dec in Cairo

The Egyptian Exchange (EGX) has announced the 16th annual general meeting and flagship conference of the African Securities Exchanges Association (ASEA). This is the top conference for Africa’s capital markets. It will be Cairo on 2-4 December 2012 at The Four Seasons Nile Plaza hotel. The focus of the Annual Conference of this year is on “Unleashing Africa’s investment potential – what could be done by African capital markets?” The conference has launched a website (www.aseaegypt2012.org) which contains details of the agenda and participants. Look here for registration.

Conference topics include:
• How to draw investment flows to African capital markets
• Capital market reforms: regulation & investment and the need for more cross-border coordination between regulators
• Maximizing the benefit of Africa’s oil & gas – what should exchanges do?
• Upcoming IPOs, challenges facing private equity and venture capital firms in Africa
• What are the challenges facing Africa’s SME exchanges in supporting Africa’s entrepreneurs?
• The technology equation – managing high IT costs to meet rising demand for speed and efficiency and enable connectivity between markets?
• Role and determinants of financial development.

The Annual General Meeting of ASEA is held every year and participation is by invitation only. It is the occasion for the heads of exchanges in Africa, to identify the initiatives that need to be implemented to achieve the objectives of the Association and help member exchanges attain a greater role in the competitive global market environment. Casablanca Stock Exchange hosted it last year in December 2011 in Marrakesh, Morocco. and there were over 300 delegates from more than 22 countries.

The 2012 conference is held under the auspices of Egyptian Prime Minister HE Dr Hesham Kandel. Dr. Mohamed Omran, Chairman of the EGX, says: “This is the 2nd time EGX welcomes its fellow members of ASEA to Egypt & hosts the annual meeting. We are looking forward to meeting old friends and colleagues in this conference to discuss means of developing the African markets. Hoping the outcome of the conference would be fruitful to all parties.”

Sponsors include Millennium IT, Arab African International Bank, Orascom, JP Morgan, NASDAQ OMX, CNBC, Egypt Daily News and Bloomberg.

Ethiopia plans more bonds for $4.7bn hydropower dam

Ethiopia has raised Birr 7 billion ($408 million) of debt to finance the $4.8 bn Grand Ethiopian Renaissance Dam on the Blue Nile River and plans to issue more bonds. Communications Minister Bereket Simon said the country is not raising funds from foreigners in a bid to demonstrate its economic resurgence, according to an interview on Bloomberg yesterday (29 Sept).
The 5,250-megawatt dam, also called the “Millennium Dam”, is scheduled for completion in 2017 with the first 700 MW to be generated in 2015. It is on the Blue Nile, the main tributary of the Nile River, about 30 kilometres from the border with Sudan. According to the report, the dam wall is to be 145 meters high and 1.8 kilometres long and the lake will be 1,680 square kilometres (Lake Tana is 3,000-3,500 square kilometres according to Wikipedia), reportedly mostly uninhabited forest in the western Benishangul-Gumuz region.
Prime Minister Meles Zenawi launched the project and construction in April. Ethiopia is busy with many giant hydropower, wind and other generation projects to use its potential to generate 45,000 MW of hydropower, 10,000 MW of wind and at least 1,000 MW from geothermal sources. It is becoming a regional electricity exporter to counteract shortages in the nine East African Power Pool (www.eappool.org) countries, including Kenya, Djibouti, Sudan and Uganda, which are to be connected by a regional grid by 2016. The country started exports to Djibouti in May, a transmission line to Sudan may be completed by January and a feasibility study for a link to Kenya has been finished. Ethiopia is seeking to diversify the fast-growing economy, which used to rely on commodities such as coffee for most of its foreign currency.
Bloomberg quotes Bereket: “Building a dam on the Nile has been the dream of every Ethiopian. For millennia, we have been looking at the Nile as if it has been a curse that took our fertile soil and benefited others while Ethiopia was impoverished.” Bereket is heading a “public mobilization council” to raise funds for the project.
Egypt depends on the flow of the Nile for all of its water. Previous President Hosni Mubarak opposed infrastructure projects by upstream nations, citing old treaties established by the British which favoured Egypt. However, Ethiopia announced the dam soon after Mubarak was deposed in February and the new government has reportedly sought details of the technical and environmental studies on the effect of the dam on Egypt’s Nile water flow. Bereket told Bloomberg that Egyptian and Ethiopian officials have met twice and relations are improving.
Zemedeneh Negatu, managing partner for Ernst & Young LLP in Ethiopia, told Bloomberg: “The financial capacity to build the dam I don’t think should be in doubt at all. Over the next six years, Ethiopia can collect from taxes somewhere between Birr 450 and 500 billion.” He said the dam is “very critical” for Ethiopia to achieve its industrialization goals and for neighbouring states.
Donations of a month’s salary by civil servants have been converted into bonds to help boost the nation’s savings rate, currently 5.5% of gross domestic product, Bereket said. The opposition have criticized funding pressure on civil servants.
Public funding is unlikely to be maintained as it would be “too taxing,” so private companies have been encouraged to buy the debt, which offers a coupon of 5%. There are also plans for bonds to be offered to the Ethiopian diaspora with returns above the London Interbank Offered Rate, while sales to farmers are planned “early next year,” he said. A “significant” portion of funding will also come from the government’s development budget, Bereket said. A National Bank of Ethiopia directive was issued in April compelling banks to buy government bonds equivalent to 27% of their loans each month may raise Birr 11 bn for development programs in its first year, according to Access Capital (www.accesscapitalsc.com), the Addis Ababa-based research group. That amount is likely to increase in subsequent years, it said in an April research note.
The Ethiopian Government plans to borrow Birr 398.4 bn by mid- 2015 to invest in industry and infrastructure. The World Bank said in June this may lead to the economy over-heating and debt problems, the. Annual inflation in Ethiopia was 40.6% in August, partly because the central bank boosted money supply.

Silk Invest says Egypt elections will be turning point

Mark Voss of fund manager Silk Invest (www.silkinvest.com) foresees a turning point for the Egyptian market in a recent note. He also notes growth in Tunisia, with companies back to pre-revolution levels, tourism boom in Morocco, giant growth in Ghana and telecom payments innovation in Kenya.
He says the company clearly sees value in the market, but the evolving politics has cast a cloud on investor sentimenty. “We believe this is now lifting as the country’s election commission chief announced a roadmap for parliamentary elections – and a crucial step in transitioning to civilian rule, from 21 November to 4 March 2012. This should also pave the way forward for the Presidential elections by early next year. Going forward, we suspect that this may mark a turning point in the market’s fortunes.” He adds that there is no shortage of lenders to help the country get back on its feet. He adds that core inflation was 6.9% in August from 8.7% in July and Suez Canal revenues climbed 8.5% year-on-year in August.
Also on the post-revolutionary theme, he looks at Tunisia and said it “continued its upward trend with many companies now back at their pre-Jasmine revolution price levels”. Tourism in Morocco was surging and by end of July was up nearly 10% year on year.
For the rest of Africa he pointed out that the IMF forecasts 13% GDP growth for Ghana this year and noted the Chinese gave a US$3 billion loan for further infrastructure developments. In Kenya: “interest rates were notched slightly up to help control inflation and reduce local currency volatility. Following an unexpected increase in harvested maize, food inflation in the country is expected to decline”. Telecoms innovation continues full speed in Kenya, as Airtel Kenya unveiled an online payment system enabling mobile subscribers to use handsets to make purchases online, while Safaricom and I&M Bank launched a service that allows M-pesa customers to transfer money from their accounts to a pre-paid visa card – which can be used globally.

SANAD Fund to target SMEs in North Africa and Middle East

Tiny, small and medium businesses in Egypt and Tunisia, later Algeria and Morocco, are set to benefit from a new €30 million ($43.2 mn) SANAD Fund for MSME (www.sanad.lu). This was set up in August 2011 by German development bank KfW Entwicklungsbank with funding from the German Ministry for Economic Cooperation and Development and the European Commission and will offer debt and equity financing to partner institutions in the Middle East and North Africa (MENA) region that serve micro, small and medium enterprises (MSMEs). Other target countries include Middle Eastern countries such as Lebanon and Jordan.
The fund is expected to attract further investments from public and private bodies. The partners who will help invest the money will be banks, microfinance institutions, financial service providers, leasing and factoring companies, guarantee funds or venture capital funds. The fund will also offer them technical help to build their skills and reach.
Development finance alternative asset manager Finance in Motion GmbH (www.finance-in-motion.com) and Oppenheim Asset Management Services S.à r.l. (www.oppenheim.lu) will manage the new fund which will be structured as a Luxembourg-based Specialized Investment Fund, SICAV-SIF, involving different share classes.
By facilitating access to finance in the region, SANAD – literally “support” in Arabic – aims to strengthen the MSME sector and local financial markets in the MENA region in line with the principles of responsible finance.

International lenders back Egypt debt, domestic yields climb

Egypt is chasing its short-term domestic market to fund ballooning Government deficits, but seems to be preparing for a new Eurobond issue to replace $1 bn in 8.75% Eurobonds maturing in July, according to Bloomberg.
A week ago, Bloomberg reported that US President Barack Obama’s May guarantee on $1 billion of Egyptian debt could cut the country’s borrowing costs, helping the transition to democracy. Bloomberg surveyed 5 fund managers and says the median estimate is that the guarantee could cut yields on the five-year debt by 200 basis points (2 percentage points) or the equivalent of $100 mn.
Yield watchers follow the 10-year Eurobond, issued at 5.75% in April 2010 and listed on the Bourse de Luxembourg. The 2020 bond price climbed at the start of June after the Government unveiled a new capital gains tax and higher corporate tax, although the news hit share prices and its yield fell 15 basis points (0.15 percentage point) to 5.66% on 2 June, the lowest since 14 January. It had peaked at 7.07% on 31 January.
The IMF has also announced a $3 bn loan and other reported backing includes a plan for a $2.2 bn World Bank loan and $4 billion in economic and budgetary aid from Saudi Arabia.
Sergey Dergachev, who helps manage the equivalent of $8.5 bn in emerging-market debt at Union Investment Privatfonds in Frankfurt told Bloomberg: “The U.S. guarantee helps to get more interest from investors and calm investors’ nerves a little bit. But underlying credit risks for Egypt are nevertheless very high.”
Bloomberg reports that Egypt is rated Ba3 by Moody’s, 3 levels below investment grade after its second downgrade this year in March. A statement on 24 May says: “Egypt suffers from deep-seated political, socio-economic challenges. These include chronic high rate of unemployment, elevated inflation and widespread poverty.” Unemployment rose to 11.9% in the first quarter this year, from 8.9% the previous quarter. Food prices have risen about 20% this year, according to the Government’s statistics agency. Standard & Poor’s rates Egypt BB.
According to a recent report on Bloomberg, the T-Bill auction on 19 June the Ministry of Finance fell 11% short of raising the EGP 6.5 billion ($1.1 bn) targeted at an auction of treasury bills. It sold EGP 3bn in 3-month bills, the highest since 13 February, and EGP 2.8 bn from 9-month bills, less than the EGP3.5 bn target. Bloomberg reports the average yield on the three-month securities jumped 16 basis points, the most since an auction on 20 April to 11.761%. The yield on nine-month bills gained 4 basis points to 12.944%.

Egypt travel ban lifted on PE firm Citadel Capital chairman

Leading African and Middle Eastern private equity investor Citadel Capital (www.citadelcapital.com) said yesterday (19 June) that Egypt’s public prosecutor has lifted a travel ban imposed in April on its chairman Ahmed Heikal, according to a report on Reuters.
The company announced on 16 June that Citadel Capital Partners Ltd. (CCP), the vehicle through which members of the Executive Committee hold their equity in Citadel Capital, sold approximately 13.4 million shares in Citadel Capital with a total amount of approximately EGP 74 mn (US$12.4 mn) last week and lent the money to Citadel “to strengthen the firm’s cash position”.
According to the Reuters report, the Government had ordered Heikal not to travel while investigators probed corruption allegations against several business leaders and government officials linked to former President Hosni Mubarak. Heikal and former prime minister Atef Obeid were accused of links to profiteering and embezzling public money. Reuters reports that Citadel shares fell 10% after the ban on 14 April and have lost a third of their value since the start of the year. Citadel is listed on the Egyptian Exchange (CCAP.CA).
According to the report, Citadel said: “The public prosecutor has agreed today to remove the name of Ahmed Heikal, the company’s chairman, from the list of people banned from travelling.”
Reuters also says that Dubai-based Abraaj Capital (www.abraaj.com) has talked with Citadel about possibly buying a stake. FT Tilt also has an interesting story on the deal, discussing whether Abraaj is seizing an opportune moment and noting that Citadel shares climbed sharply in trading on 19 June.
CCP owns approximately 33% of Citadel Capital SAE shares as of 16 June 2011 and the company statement does not say who bought the shares. CCP has lent the funds to Citadel Capital “until regulatory approvals are obtained for the planned capital increase”.
According to the company, Citadel Capital has $8.7 bn in investments under its control. It “focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity-Specific Funds. The firm’s 19 OSFs now control Platform Companies with investments worth more than $8.7 bn in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy.
“Since 2004, Citadel Capital has generated more than $2.5 bn in cash returns to its co-investors and shareholders (on investments of $650 mn), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2006-2011, as ranked by Private Equity International).”