CAIRO: Egyptian investment bank Pharos Holding has initial public offering (IPO) and acquisition mandates in its pipeline, even though the investment environment has grown less conducive to growth, its chairman said.
Pharos, which acts as a broker mainly to institutional and high-net investors, also plans to launch online retail trading in Egypt by the end of the year and open a brokerage office soon in Iraq, Chairman Mohamed Taymour told the Reuters Middle East Investment Summit in Cairo.
He said that media criticism of its policies had made the government reticent to voice support for the private sector and free markets, and that this was dampening business confidence.
"There has been some change in the government’s attitude. Privatization, which was the source of much of the business of investment banking, has now come almost to a standstill."
"The rhetoric of the government, what they say, is not very comfortable," Taymour said.
Pharos, which was founded in 2007, has become the second biggest brokerage on the Egyptian stock exchange by value of transactions, behind market leader EFG-Hermes (HRHO.CA), Taymour said, citing the most recent stock exchange figures.
Its asset management business, which started a year and a half ago, focuses on large portfolios and has about LE 1 billion ($174 million) under management, he added.
"We are now concentrating on institutional portfolios," he said. "We’re getting more and more of these, particularly from government agencies like the Social Insurance Fund, the Post (Office) and the (state) National Investment Bank."
Taymour said his company had one mandate for an IPO in the industrial sector, was investigating a second and had another mandate for an acquisitions deal for a seller of a company in the real estate sector.
The country’s only IPO since early 2008 was a share offering in June by dairy goods and juice making Juhayna (JUFO.CA).
"You don’t have a flood of IPOs, no. A flood will only come if the government restarts its privatization program. And I hope they will do that," Taymour said. "I think that privatization has done a great deal of good for this country and it is really unfortunate that the government has stopped it."
Pharos’ strength in brokerage was in catering to institutions, but it planned to expand into retail as well, even though this market was more difficult, he said.
"We’re still not very strong in retail," he said. "We’re doing very well with foreign investors, local institutions and high-net-worth investors. But we still want to grow in the retail (sector) and with Gulf investors."
Pharos was preparing to buy a brokerage company in Iraq, its first move outside Egypt, said Taymour, adding that because the purchase was not yet completed it was too early to give details.
He said Pharos was one of the few Egyptian investment banks to turn a profit in the first half of 2010.
"The first six months of 2010 were not easy. The volume was very low. There were no acquisition deals and very few IPOs," he said. "I cannot say that the second half is much better. The stock exchange has improved a little."
Total stock exchange turnover was now close to LE1 billion a day, but still well below the LE 2 billion a day before the 2008 global economic crisis, he said.
