Heliopolis Company for Housing and Development (HHD) aims to offer 14-15% of its assets on the Egyptian Exchange through public offering and private placement, Sahar El-Damaty, managing director of financial affairs at HHD, told Daily News Egypt on Saturday.
NI Capital will launch a tender during September for investment banks to choose the offering’s bookrunner, according to sources.
Meanwhile, HHD opens the door for real estate developers to compete over managing the company’s portfolio of assets and land.
Moreover, the Minister of Public Enterprises Sector, Hisham Tawfik, told Daily News Egypt that the prospectus to select the managing company will be announced after the company’s general assembly on 26 August. He added that the most important conditions in the prospectus are having good technical expertise in the field of real estate development and management of development companies, providing a management plan for the company during the management contract period, and finally the good solvency of the bidder to ensure the purchase of 10% of HHD.
The current market value of HHD is estimated at EGP 11bn, meaning that the strategic investor will have a share worth EGP 1.1bn.
Tawfik said that in the event of contracting with an alliance of strategic investor and real estate developer, the tender will include the obligation to submit any decision related to the disposal of the company’s assets to a general assembly as a netting contract.
Tawfik pointed out that the trade-off in the financial offers will focus on the percentage that the management company will receive annually from HHD capital for management services.
For her part, El-Damaty said that the upcoming general assembly will see the first steps of choosing the new management company by receiving the approval of the shareholders.
She explained that a committee formed by the Holding Company for Construction and Development (HCCD), the HHD, and real estate experts will begin to develop a prospectus for the management of HHD, noting that the experience will be a major determinant for the selection, whether the bidder is a strategic investor or an alliance between a real estate developer and a strategic investor.
She added that the process of offering 25% of the shares of HHD includes the allocation of 10-11% to the management company, as a private equity or an alliance between a strategic investor and a real estate development company,
The contractual terms announced in accordance with the general assembly’s call set the main objectives of the management contract to raise the company’s competitive capabilities, increase profits and sales, as well as qualify the current management structure and appoint cadres capable of leading the company after the expiration of the management contract, as well as the development of investor relations management.
The contractual conditions set the composition of the Board of Directors of seven members, including two members from the company’s management, two representatives of the HCCD, and three non-executive members representing the other shareholders. The management company is to commit to supervise the executive management and restructuring of the company.
The conditions included three performance indexes, equal in relative weight to reward management, with a minimum of 20% annual growth in sales, and 20% of minimum profit growth, and 20% minimum for the growth of the market price of shares, which will reward the company undetermined percentage UTD of HHD capital shares per index.
