OCI NV, the Netherlands based global nitrogen fertiliser producer, successfully acquired on Sunday 97.44% of Egypt’s Orascom Construction Industries (OCI SAE), or 201,616,948 shares of the biggest listed company in the stock exchange.
The remaining shares of OCI SAE include 0.47% listed in global depository receipts (GDRs) in the London Stock Exchange, 0.51% in American depository receipts (ADRs) on the New York Stock Exchange, and 1.58% on the Egyptian stock exchange.
“This transaction reflects badly on Egypt,” said Angus Blair, chief executive officer of Signet Institute, referring to it as a continuation of investors’ pulling out of the market.
“This way the market will become less attractive, prompting regulators of the stock exchange to work really hard to keep large companies listed,” he added.
Meanwhile, Islam Abu El-Fotouh, an investor at the stock exchange, believed traders who sold their Orascom shares will start trading in other companies; supporting the market over the long term.
Orascom shares represent around 10-15% of the market. “Pulling out will create liquidity of about EGP 7bn, [with the] value of shares distributed over other Egyptian stocks,” Abu El-Fotouh said.
“Stock prices are lower than during the January 25th Revolution,” he added.
The benchmark EGX30 index, which declined 3.25% since the beginning of the year, closed with a 0.58% loss at 5,286.19 points, down from 5,317.06 on Sunday. The broader EGX 100 index closed with a 0.3% loss while the index tracking small and medium sized companies, the EGX 70, gained 0.11%
At Monday’s close, shares of OCI had dropped 2.1% since Sunday’s session to EGP235.54.
Starting 1 August, OCI SAE will officially pull out of the stock market along with National Real Estate Bank for Development (NRPD) and Egyptian for Tourism Resorts (EGTS).
On July 17, OCI construction group was awarded several contracts in Egypt valued at EGP 1.5bn covering different sectors such as power, transportation and healthcare. The projects, awarded by both private and public sector clients, include Phase II of Dar El-Fouad hospital and a 500 megawatt power plant in Sixth of October city.
On the awarded contracts, Osama Bishai, the chief operating officer of OCI Construction said: “OCI continues to secure high quality work of significant size during this challenging transitional period in Egypt, and yet we remain selective in the projects that we pursue in order to minimize counterparty risk.”
“OCI is excited to build on its integral role in driving business activity and employment in Egypt, and we look forward to contributing to the economic recovery,” Bishai added.
