2nd phase of gov’t IPOs include sectors that do not exist on EGX

CAIRO – 24 March 2019: The second phase of the governmental initial public offering (IPO) will include new sectors that do not exist on the Egyptian stock exchange, which will attract more investors, Minister of Public Business Sector Hesham Tawfik said.

Tawfik added that the strategic objectives of the government’s IPO program 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 companies with profits 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 that provides minimum governance," he said.

The minister emphasized the importance of the role of the investor relations officer.

He revealed that the training program will be organized in cooperation with the Egyptian Stock Exchange to qualify 10 - 15 investment relations officials to be appointed in companies listed in the program of government offerings.

Tawfik announced earlier that the second stage of the government's IPO program in EGX will begin before the end of this year, explaining that the stage includes the launch of eight governmental companies, most of which are first timers.

He also pointed out that three companies are remaining in the first phase of the program after the offering of the Eastern Tobacco Company, stressing that the program is going normally.

Chairman of EGX Mohamed Farid said that offering shares of a number of public companies on the Egyptian Exchange (EGX) is important to revive the market.

By the end of February, Egypt floated a stake of Eastern Company on EGX, and the public and private offerings on the course were completed Wednesday, March 6, with a total value of LE 1.72 billion.

Meanwhile, Minister of Petroleum Tarek el-Molla told local media earlier that Egypt is expected to float a stake of Oil Company Engineering for Petroleum and Process Industries (ENPPI) on the Egyptian Exchange (EGX) in the first half of 2019, or before the Holy month of Ramadan.

In 2018, Egypt delayed listing shares of state-owned companies on the Egyptian Exchange, such as the 4.5 percent stake of Eastern Company slated for October. The government attributed the delay to volatility in the global market, noting that if the shares had been floated, they would have failed to be covered at proper valuation.

In 2016, Egypt announced the launch of the government’s IPO program offering shares over three to five years in several state-owned companies in fields such as petroleum, services, chemicals and real estate.

As part of the economic reform program, the government targets offering 15-30 percent of stakes in state-owned companies on the stock exchange (EGX) to increase funding to Egyptian companies, maximize the benefit from state assets, and attract local and foreign capital flows to Egypt.