CAIRO: The Saudi-owned Almarai Company has concluded a deal to acquire 100 percent of Beyti, an Egyptian Agro-Industrial Company. The acquisition, valued at LE 645 million, went through in defiance of current world financial conditions, and is set to bring a significant inflow of foreign direct investment (FDI) to Egypt.
The deal was facilitated by Egypt’s HC Securities and Investment, one of Egypt’s top 10 brokerage firms with assets of LE 5.3 million.
Established in 1996, HC has grown rapidly in Egypt, working on major deals in both the private and public sectors. Recently, the company began pursuing regional expansion with the opening of an office in Dubai in May 2007.
Daily News Egypt sat down with Hussein Choucri, HC’s chairman and managing director, to learn more about the significance of the Almarai deal, his perspective on the crisis and HC’s vision for the future.
Daily News Egypt: What is the significance of the Almarai deal for the company?
Hussein Choucri: What makes the deal important at this time is the fact that it took place during the global crisis we live in now; in the middle of this recession you have a nice big transaction that brings a large amount of FDI into Egypt defying the risk and the times, and that’s why it’s relevant.
We are proud because we were able to sell Egypt as an investment destination and we were able to convince our client that coming to Egypt was a value-added decision for them. We should give credit to Almarai’s senior management who took the decision to make this acquisition at this particular time where other CEO’s are reluctant to make new investment decisions.
Hopefully this deal will open the door and promote new deals with other companies in similar fields.
Why is coming to Egypt a good strategic move for Almarai?
The major benefit for them is the market; the size of the population makes Egypt an important market for any company in the consumer goods sector.
There is also a lot of potential for growth for Almarai, because at the end of the day packaged milk is still only 20 percent of the overall market, while the rest of the population still buys from door to door vendors.
There is plenty of room for Almarai to expand in this environment and promote packaged milk amongst other sectors of the population through education and advertising.
How has the performance of HC’s funds been impacted by the crisis?
Our mutual funds have done well over the last year and were ranked number one recently. We manage seven mutual funds for five banks and are diversified in terms of products, offering equity funds, Islamic funds, balanced funds, and money market funds.
Before the end of the year we should launch an additional three funds pending approval. In terms of performance, the market got hit overall and mutual funds represent the market in general; mutual funds should do better than the market, but it is difficult to get good returns given the situation.
What lessons can be gleaned from the crisis?
I think the crisis highlighted that the only way for countries to escape the negative impacts of a recession is to have a diversified economy, not to be overly indebted, to be properly regulated, and not overly reliant on one economic component only.
Germany, for example, takes 50 percent of their GDP from exports, and they were hit very hard when exports slowed. The same situation applies to China and the Gulf countries, particularly Dubai. I think Egypt is doing well in these areas, I think we have a diverse economy so at the end of the day this balance helps protect the economy in times of crisis.
I hope things get back to normal as soon as possible; we are already seeing an improvement in Egypt’s markets, trading volume is up and people are reinvesting.
Will HC continue to be involved in public-private partnerships in Egypt?
Yes, absolutely. We’ve been involved in the past with the public sector – we helped Banque Du Caire in their divestiture of Suez Steel, for example.
Right now we are working with CI Capital on a secondary offering of shares for the Housing and Development Bank and are currently waiting for a final approval. The bank needs capital as part of its expansion, and it is part of our role to help companies and banks get what they need.
As for other projects, we are committed to helping clients with any project that comes along, public or private. What motivates us is serving our clients; our client is the entity that makes us go and seek to be involved in a certain project, because a client has asked for our help and that’s how we get involved.
What’s next for HC?
We’ve made the decision to pursue a regional focus for HC, and we began implementing that vision through a partnership with Al Futtaim in Dubai, Al Futtaim HC Securities. In 2008 we ranked number two in Dubai in terms of traded volume, and number four in Abu Dhabi.
I’m thrilled that we’ve grown so much during only 10 months of operation and in spite of the current market conditions. We’ve also set up an investment banking office in the Dubai International Financial Center to pursue activities throughout the Gulf region. These were our first two initiatives and more will be added in the future.
We want to create an integrated investment firm and if we can export our services to the region around us we can create a great business. The knowledge and expertise are the same and we have a good ability and I think we will be successful.
