The Ministry of Investment has formed a new, as yet to be named, committee managing public business sector assets, to develop the sector and maximise asset returns.
The committee includes eight heads of holding companies, heads of the Egyptian Financial Supervisory Authority (EFSA) and General Authority for Investment (GAFI), and representatives from the private sector, according to Investment Minister Ashraf Salman.
Salman said during a Monday evening press conference that the committee will meet monthly and will follow up on the implementation and restructuring plan initiated by the ministry. The move follows calls from financial advisors to asses companies. The committee will bring in experts and will establish specialised committees for the spinning, construction, and chemical industry sectors.
He said that Upper Egypt Red Sea for Investment and Development (UERSID) will be converted into an asset management company for the National Company for Construction and Development (NCFCD). The company, which is responsible for managing the Red Sea Road in Upper Egypt, will handle real estate asset developing, not only for NCFCD, but for all subsidiaries.
Salman said: “UERSID’s purpose will change to asset management by the end of this year and management of the Upper Egypt Red Sea Road will transferred to the Ministry of Transportation.”
The new asset management company will be responsible for lending capital to the sector’s companies with machinery and equipment and maintaining assets. It will also enter into real estate and residential partnerships on untapped land owned by subsidiaries.
Salman went on to say that “energy borrowing for the public business sector now exceeds EGP40 billion”, explaining that he believes the asset management company will contribute to financing solutions for companies. This will occur through mortgages and various selling systems and extending sales instalments for El-Nasr Housing and Construction Company products or those of the Heliopolis and Maadi companies to 10 or 15 years.
NCFCD head Mahmoud Hegazy estimated the company’s portfolio of untapped land to be worth approximately EGP 3bn for 12,000 acres across various areas. The asset management company will be responsible for development although ownership will not be transferred.
Salman said that he strives to transfer companies affiliated with the public business sector to the holding companies according to the nature of their activities, describing what is happening as “chaotic”.
Salman revealed the formation of a committee of experts from City Stars and Al-Futtaim Group to take advantage of their expertise in developing government retail done in the same manner of the private sector.
Salman said: “I objected to the transfer of the Holding Company for Food Industries to the Ministry of Supply but the transfer took place under pressure to protect food security so I agreed. But, I will not allow the transfer of remaining companies to ministries on like what was discussed regarding transferring of irrigation companies to the Ministry of Irrigation, and internal trade companies to the Ministry of Foreign Trade and Industry is unlikely.”
But Salman feels that due to the Omar Effendi dispute yet to find resolution, there is a delay in establishing a holding company for trade. This explains why the company is still registered under the investor’s name but has not been transferred to the government. He added that judicial rulings have not been retracted and consultations with the investor are amicable and ongoing.
Salman said that offering capital increases for public sector business companies on the Egyptian Exchange is possible to finance expansions. This will, however, only happen after the restructuring and evaluation plan is implemented, adding that the ministry’s dues to National Bank of Egypt and Banque Misr after settling public sector business companies’ debts is now EGP 1.6bn.
