Azimut Holding launches equity fund manager in Egypt worth $61M: Bloomberg

CAIRO – 8 July 2020: The Italian Company Azimut Holding SpA decided to launch the first equity fund manager, specialized in the Egyptian securities, worth $61 million, according to Bloomberg.

According to Bloomberg, Azimut’s Luxembourg-based fund will initially allocate $50 million to about 25 stocks traded on the Egyptian Exchange (EGX).

“Egypt’s 100-million population and the purchasing power of its consumers have the potential to fuel growth for companies as the economy emerges from its coronavirus lockdown,” Managing Director of Azimut Egypt Ahmed Abo El-Saad told Bloomberg.

Azimut Egypt was opened in 2019 by Italy’s largest independent money manager, Azimut, following the acquisition of a local investment firm.

He added that after a hit to equities this year that was more than five times worse than the average for emerging markets, valuations on Cairo stocks are relatively inexpensive, clarifying that this situation may draw investors, including thousands of Egyptians who work abroad and may be keen to increase their exposure to the market.

Bloomberg referred to Egypt’s good position in the bond market, saying that the state resorted to the International Monetary Fund (IMF) in 2019 to secure $12 million loan which pushed it to apply reforms including cutting subsidies and liberalization of its currency. The news agency noted that this step “helped rekindle appetite for the debt, battered in the aftermath of the 2011 uprising.”

Abo El Saad described the Egyptian economy as very resilient after the attack of COVID-19. 

Azimut Egypt expects growth rate to be between 3- 3.35 percent during 2020, according to Abo el-Saad, clarifying that 80 percent of growth domestic product (GDP) comes from local consumption, and you have population growth that boosts consumption, by nature.

“Egypt is an under-served market in various sectors, such as consumer, education and health,” he stated.

“Remittances from Egyptians abroad were close to $30 billion last year, with 70% coming from the Gulf, mostly the United Arab Emirates, Saudi Arabia and Kuwait,” Abo El Saad said. “We want to attract the Egyptian expats that seek to have exposure to the Egyptian equities market.”
 

He noted that Egypt as many markets displays a disconnect between climbing stock prices and faltering economic prospects, but the other way around -- valuations are far below the financial performance of the companies.
 

According to Bloomberg, on currently paused plans to sell shares in state companies, he said he favors initial public offerings over further stake sales by listed entities. “I really hope the government can resume the program with new listings, not by selling shares in already listed companies.”