CAIRO: Egyptian construction and real estate firm Talaat Mostafa Group (TMG) announced Friday pricing of its private placement and Initial Public Offering (IPO) that will secure the company a market capitalization of LE 23 billion at the start of trading.
The new shares for the private placement will be sold at LE 11.60 per share, coming within the price range of LE 10.60 and LE 12.60 that was earlier announced this month. Shares for the IPO will be sold at LE 11 per share, representing a 5 percent discount to the private placement price.
“The company has received a positive response from investors throughout its presentations, said Hisham Talaat Mostafa, TMG’s executive chairman, commenting on the pricing. “TMG is committed to delivering value for shareholders and faces the future with confidence.
The share sale comprises up to 395 million shares, which covers an over-allotment option of 50 million shares. The company is expected to increase its paid-in capital by a maximum of 180 million shares, of which 65 million will be offered publicly and 115 million will be offered through the private placement.
Applicants in the IPO can subscribe for between 500 and 100,000 shares each and will have to deposit 50 percent of the requested shares. The IPO opened on Nov. 4 and will continue until the close of business on Nov. 20. Trading on the Cairo and Alexandria Stock Exchange (CASE) is expected to begin around Nov. 28.
TMG develops large-scale city and community complexes, mainly located on the outskirts of Cairo. It also develops hotel complexes which include residential apartments and/or villas and, in most cases, office spaces and shopping areas.
The company’s largest development to date is “Madinaty, which comprises a land area of 33.6 million square meters with a proposed residential capacity of 600,000 people. Sales commenced at “Madinaty in 2006 and the project is expected to complete in 2023. TMG is also the sole-developer of Al-Rehab and Al-Rabwa residential projects.
Moreover, the company is active in the development of hotels and resorts. Its current operational hotels are operated under the “Four Seasons brand name. It currently has three hotels in operation, namely The Four Seasons Sharm El-Sheikh, the Four Seasons Nile Plaza and the San Stefano Grand Plaza. TMG has two other hotels underway: the Nile Hotel expected to open in 2008 and the Marsa Alam Hotel.
The company currently has a paid-in capital of LE 18.2 billion distributed over 1.815 billion issued shares. The board has recently approved raising that by 215 million shares, to make a total of 2.03 billion.
TMG Holding will create an independent bank account under the name of TMG Holding to maintain stock price stability, thus preserving shareholders’ interest. The company will reserve 50 million shares of the private placement for this account. The bank account will have a maturity of 30 days starting from the first day of trading on capital increase shares and will be managed by the offering’s bookrunners (EFG-Hermes and HSBC bank). The account will be liquidated after 30 days, but will be injected later by funds and/or shares.
Proceeds of the offering are expected to rise up to $900 million to fund ongoing and future projects in Egypt and the Middle East.
