The Ministry of Investment, in cooperation with the National Investment Bank-affiliated NI Capital Consulting, is examining a list of 17 or 18 state-owned companies before they are offered to the public and listed on the Egyptian Exchange (EGX), according to a government source.
The list covers the petroleum, electricity and petrochemical sectors.
NI Capital is the general coordinator of the state programme to list shares in state-owned companies and banks on the stock market.
The official said that the programme of listing state-owned companies on the stock market comes as part of the current economic reform programme. The International Monetary Fund (IMF) mission, which is currently visiting Egypt, will review the programme to discuss the possibility of facilitating a $12bn load to Egypt. Egypt initiated negotiations with the IMF a few weeks ago to obtain the loan, which would span three years.
According to Finance Minister Amr El-Garhi, the government targets to gain EGP 6bn–8bn annually from the IPO of the state-owned companies programme.
The official added that about four new companies will be established through an IPO in the electricity sector. Three of them will be affiliated to Siemens in Borollos, the New Administrative Capital, and Beni Seuf, while the other company will be specialised in urgent electricity projects.
Egypt relies significantly on the success of its negotiations with the IMF, as it will reflect the fund’s confidence in the country’s economic reform plan. It will also revive the international business corporations’ trust, so as to inject new investment into Egypt.
The $12bn loan will boost Egypt’s negotiations, with the International Bank and African Development Bank (AFDB) and other sources to obtain a total loan package worth $21bn.
Daily News Egypt learned that NI Capital was approached to select the local investment banks and both local and international legal consultancy offices, which will help in determining the first group of companies to be listed on the exchange.
Petroleum Minister Tarek El-Molla said the list of companies nominated for offering includes the Egyptian Ethylene and Derivatives Company (ETHYDCO) and Middle East Oil Refinery (MIDOR), where 20% shares of them will be offered in the EGX. This is in addition to Misr Oil Processing and Fertilisers Company (MOPCO), Sidi Kerir Petrochemicals Company (Sidpec), and Alexandria Minerals Oil Company (AMOC) whose capital will be increased through the market.
Egypt is suffering from a severe lack of foreign exchange following the political unrest after the 25 January Revolution and the exiting of several foreign investors and tourists that tailed the events, in addition to poor export earnings.
Investment Minister Dalia Khorshid said that the programme is part of the plan to diversify investment sources and enhance growth rates. This will happen through bringing indirect local and international investments estimated at $10bn over the next three years, according to Khorshid.
The government owns a large number of companies in several sectors, most prominently the Arab Contractors Co. and Hassan Allam in the sector of construction and contracting. In the oil field, there is Petrojet and the Engineering Company for the Petroleum and Process Industries (ENPPI).
Ashraf Ghazali, chairperson of NI Capital, told Daily News Egypt that the offerings programme will not be limited to selling shares of companies, but will also include increasing these companies’ capitals in order to expand their ownership base.
The number of companies listed in the EGX is no more than 270, while the number of authorised investors–ones who are allowed to sell and purchase–is 500,000. The number of active investors in the market is 100,000.