The government IPO programme faces challenges as the government loses control of some of its key companies, which have been sold to Gulf sovereign wealth funds and listed on the Egyptian Exchange. These include Abu Qir Fertilizers Company, Alexandria Container and Cargo Handling Company, and Misr Fertilizers Production Company (MOPCO).
The government’s stakes in these companies have been reduced from controlling shares to influential minorities, as it sold more than 42% of Abu Qir Fertilizers Company and more than 50% of Alexandria Container and Cargo Handling Company to the Saudi and Emirati sovereign funds. It also sold over 45% of MOPCO.
The loss of complete control has led the government to rethink the remaining companies scheduled for offering, especially those under government holdings. This is the main reason behind the withdrawal from the idea of offering companies such as Port Said Container Handling, Damietta Container Handling, and other transport holding companies, according to government sources.
In 2022, the Saudi Public Investment Fund bought minority stakes in four companies listed on the Egyptian Exchange for $1.3bn, namely MOPCO, Abu Qir Fertilizers, Alexandria Container and Cargo Handling, and e-Finance.
The same year, Emirates Holding Group acquired stakes in five companies listed on the Egyptian Exchange, including Commercial International Bank, Fawry, Alexandria Container and Cargo Handling, MOPCO, and Abu Qir Fertilizers and Chemical Industries.
Sources, who requested anonymity, said that after losing control of the mentioned companies, the government is reconsidering the stakes to be sold.
Amr Al-Alfi, Head of Equity Strategies at Thndr, said that loss of control is not the main factor in the offering process, as there are deals where the government plans to divest, such as Wataniya. He added that offerings for minority stakes in the stock market may attract diverse investors, while the final decision remains with the major shareholder.
Al-Alfi also said that the recent statements from the IMF about postponing the offering programme will give the government time to assess and sell assets at fair values.
A few days ago, Kristalina Georgieva, the IMF Managing Director, said: “The situation in Gaza has put pressure on Egypt and the government’s offering programme. We want Egypt to sell at the right time and do not want the government to hurry into selling stakes in government companies under the current circumstances.”
Hani Gennina, Chief Equity Strategist at Cairo Capital Securities, believes that the government’s delay in making decisions regarding the government offering programme, as well as the exchange rate of the pound against the dollar, confirms that the delay worsens rather than improves the current situation.
