Al Ahly Pharos Investment Banking aims to complete about six merger and acquisition deals this year, with a value amounting to EGP 30bn in the sectors of industry, health, education, and non-banking financial, especially consumer finance.
In May, Al-Ahly Pharos completed a deal to sell Pachin to the UAE’s National Paints at a value of $25m.
Ahmed Haidar, CEO of Al-Ahly Pharos, said that the company is interested in managing the deals of the government’s IPOs programme which includes about 32 companies in various sectors, expecting a recovery in mergers and acquisitions this year, benefiting from the momentum of those offerings.
In an interview with Daily News Egypt, Haidar added that the company is currently managing more than one issuance of securitized bonds and seeks to obtain a larger market share in the sector during the coming period. He expects the volume of securitized bonds issuances to reach about EGP 12bn this year.
He explained that there are three issuances of securitization bonds for companies in different sectors that the company is currently working on, and it is expected to be completed during the third quarter of this year.
He also revealed that the company is running two securitization operations for future rights at the present time, for companies from the private sector. It is expected to close them this year.
Haidar explained that his company plans to expand debt issuances, and continue to strengthen its leadership through the advisory services it provides, whether in capital markets, propositions, or mergers and acquisitions.
The company completed the first issuance in favour of Enmaa Finance, at a value of EGP 759m.
Haidar went on to explain that the company completed securitization bond deals worth more than EGP 10bn in 2022, adding that it aims to increase its market share in the sector during 2023.
He stressed that the company is expanding securitization operations this year, pointing out that the market is trying to accommodate new interest rates. This is especially important because the financing needed through this tool is very active, and there are many sectors that depend on securitization as a main tool of financing.
He continued that the company witnessed the implementation of about 12 deals last year, two of which were in the money market, in addition to an acquisition deal, and about nine operations in the sectors of debt instruments. The market share is estimated to be about 40% of the securitization operations. The exception is a securitization process that was carried out by the National Urban Communities Authority (NUCA).
Haider believes that the increase in private sector investment depends on the government providing more incentives to encourage it to pump more investments. These include the unification of the tax rate, the non-continuous change in taxes, and the facilitation of the required procedures through a unified investment window.
He pointed out that offering the state ownership document for partnership with the private sector would increase the rate of activity of the sector and its contributions to the economy.
He also added that Egypt has great opportunities in the export-related manufacturing sector, especially those under the industrial initiative with an interest rate of 11%. Haidar pointed out that the current interest rates in Egypt are high, with a likely increase in the coming period.
He pointed out that changing exchange rates is a challenge to merger and acquisition deals, especially as it makes it difficult to evaluate assets. He pointed out that the stability of exchange rates will restore activity to merger and acquisition deals.
He pointed out that the stability of exchange rates and the provision of dollar liquidity, with the recovery of Egyptians’ remittances, will create a kind of stability, which will attract foreign direct investments again to Egypt, especially with the existence of a new mechanism to hedge against exchange rate fluctuations, which was recently launched by the Central Bank of Egypt (CBE).
He emphasized that the issuance of financial derivatives contracts from banks gives them more confidence. Especially that the bank is the guarantor of payment for the contracts, and can play the role of market maker for the contracts.
Haidar explained that the tightening policy pursued by the Federal Reserve Board will be followed by some recession globally. The rise in interest rates in America will attract investors to pump their money into debt instruments in the American market.
He expected a revival in the Egyptian capital market immediately after the resumption of the government offering program, pointing out that the market is ready at the present time to receive public offerings.
Haidar concluded by saying that the harmony between FRA and EGX will leave a positive impact on the Egyptian financial market trading during the coming period.
