Majid Al-Futtaim Holding LLC, the Dubai-based mall operator and retail franchisee, has its name tied to massive shopping malls sprawling across Egypt, and is expected to have more erected in coming years.
In an interview with Daily News Egypt, the company’s CEO Alain Bejjani said his company is reviewing several opportunities in the country, whether government projects, acquisitions or real estate, especially after embarking on a five-year plan to invest EGP 18bn in the domestic market.
Tell us about the company’s position?
The company is in a strong liquidity position with committed available bank lines and cash sufficient to cover the next 18-24 months’ requirements. Having said this though, we continue to monitor and may access the financing market opportunistically as we see fit. The conventional and Islamic bond programmes that we have in place allow us the flexibility to issue new securities at short notice.
How much are you investing in Egypt?
Majid Al-Futtaim’s investment into the Egyptian market amounts to EGP 18bn as part of an ongoing five-year plan. The investment plan includes new developments as well as the expansion of existing projects, and is expected to create an additional 144,000 direct and indirect job opportunities.
Majid Al-Futtaim’s plan includes investing EGP 5bn in its flagship project, Mall of Egypt. Located in 6th of October City, the two-level mall spans 455,500sqm of built up area and will include Ski Egypt, the first indoor ski slope in the continent of Africa, as well as over 420 stores of international and local brands. In addition, we are expanding our Carrefour retail network from 26 stores to 55 by the end of 2019.
Furthermore, Majid Al-Futtaim recently announced the completion of the new expansion at City Centre Alexandria. With total investments of EGP 70m, the new phase spans 12,000sqm. Inaugurated under the name of the Leisure Precinct, it created 500 new jobs, resulting in 4,500 job opportunities at the mall since its opening in 2003.
According to reports, Majid Al-Futtaim is expected to open Mall of Egypt in the first quarter of 2016. Is this project proceeding as planned?
Construction work at Mall of Egypt is going ahead as scheduled and work is due to be completed during the first quarter of 2016.
Majid Al-Futtaim is constantly looking for suitable and attractive investments: can we expect any announcements in 2015? Can you outline for us the sector, value, time frame and other information?
We are in various stages of discussion with the Egyptian government about a large pipeline of projects. Projects currently progressing with the government include the redevelopment of the existing City Centre Maadi mall and a second City Centre in Cairo, which will be Majid Al-Futtaim’s third City Centre in Egypt and its 12th in the City Centre network – the largest mall network across the Middle East and North Africa.
There have been unofficial reports that the real estate sector in Egypt could be something under consideration by Majid Al-Futtaim? If so, could you give us more information on when to expect an investment in this sector, and its value?
Majid Al-Futtaim is constantly exploring further opportunities in Egypt as a key investment market for the group, seeking to deliver value, both to the company and to the nation. We will announce further investment projects, if and when they are confirmed
What were the company’s goals and targets since it began investing in Egypt in terms of profits? Have these goals been met?
Majid Al-Futtaim has been operating in Egypt for more than 15 years and we have grown our business significantly in that period. Our continued investment has supported Egypt’s development, creating a positive economic contribution through both capital and human investment in Cairo, Alexandria, and across other governorates. Egypt is a key market for Majid Al-Futtaim, and our continued investment is a measure of the importance of the Egyptian market to our business. We continue to expand our presence as we see great potential in the economy and believe that we will achieve a healthy return on our investment.
How do you assess the investment atmosphere in Egypt? What challenges has the company faced?
Egypt is open for investment. We are working closely with Egypt’s government to finalise our current investment plan and have witnessed the authorities’ drive to encourage international investment. The government has displayed a serious commitment to improving the investment climate through engaging in critical reforms and eradicating red tape. In March 2014, we received official endorsement from Egypt’s Prime Minister, Ibrahim Mehleb, for Majid Al-Futtaim’s five-year investment plan in Egypt. This support is critical to us as we carry out our expansion plans with multiple developments in the pipeline. The Economic Summit is testament to the government’s commitment to promoting Egypt as an investment destination.
The government hopes to lure in billions of dollars’ worth of investments: What does it need to do in order to achieve this target? What policies need to be put in place, and what laws need to be enacted?
To foster accelerated and more meaningful growth in the Egyptian economy, investors will be encouraged by consistent regulations, without retroactive changes. Also, more timely investment and licensing approval processes and less restrictive capital flow regulations will help to improve the overall process for investors. We are confident that the authorities will continue taking these necessary steps to promote a business friendly environment that will drive broad economic growth. The timing of the Egypt Economic Development Conference is very important to the country’s economic recovery and growth and it’s an honour for Majid Al-Futtaim to showcase our continuous commitment to Egypt through sponsoring the event. The conference has attracted great interest from countries throughout the region and the world and the event will certainly showcase the potential of the Egyptian economy to perspective international investors. As such, I believe that now is the time for all stakeholders of the Egyptian economy to stand together and send across a strong message confirming that Egypt is on the right track.
Is ongoing, sporadic violence in Egypt a concern?
We have not been impacted. We are committed to Egypt and continue to progress with construction of our new developments and the expansion of our existing portfolio. We have full confidence in the Egyptian government’s ability to maintain stability and security for its people and investors.
Is Majid Al-Futtaim considering any acquisitions in Egypt? If yes, could you share any information?
We are exploring a variety of business opportunities in Egypt to continue our growth. Any acquisitions made will be communicated once they are confirmed.
Which regional markets does Majid Al-Futtaim plan to enter next?
We are always looking at new opportunities for expansion across our geographical footprint in the Middle East and North Africa, in both new and existing markets. We will continue to do so in 2015.
Will Majid Al-Futtaim be selling any securities in 2015 or 2016? If yes, what would it be used for and how big would it be?
Majid Al-Futtaim is a growing company with several expansion opportunities which we will fund through a combination of bank financing and capital market issuances. Currently, the company is in a strong liquidity position with committed available bank lines and cash sufficient to cover the next 18-24 months’ requirements. Having said this though, we continue to monitor and may access the financing market opportunistically as we see fit. The conventional and Islamic bond programmes that we have in place allow us the flexibility to issue new securities at short notice.
What’s the value of Majid Al-Futtaim’s outstanding loans owed to Egyptian banks, if any?
As of January 31, 2015 Majid Al-Futtaim’s loan balance in Egypt amounted to approximately EGP 1bn. This is predominantly related to a long term project finance facility for Mall of Egypt, syndicated with local banks.
What are Majid Al-Futtaim’s expectations for profit growth in 2015?
Our preliminary and unaudited operational and financial results for the year ended 31st December 2014 confirm another steady year of growth, with total revenues growing by 11% to AED 25bn. The company does not provide specific forward guidance. We continue to expect strong operating performance across our businesses and plan to double the size of the business by 2019.
