Egyptian Banks See More IPOs After Arabian Cement Share Sale

Egyptian investment banks expect at least two companies to sell shares to the public in the next 12 months after Arabian Cement Co. ended an almost four-year drought.

EFG-Hermes Holding SAE, Egypt’s biggest publicly traded investment bank, and CI Capital Holding, a unit of the largest listed lender Commercial International Bank Egypt SAE, each said they expect to help two companies offer stock. It wasn’t immediately clear if their mandates overlapped. The two served as joint global coordinators and book runners in the $110 million initial public offering of Arabian Cement.

The benchmark EGX30 Index for equities has rallied more than 65 percent since the military ousted Islamist President Mohamed Mursi in July, even as the economy struggles to recover from the worst slowdown in two decades. The country holds presidential elections this month, with former Defense Minister Abdel-Fattah Al-Seesi seen as the favorite to win the top job.

“The interest in Egyptian equities and the Egyptian story is back,” Ahmed El Guindy, head of investment banking at EFG-Hermes, said in a phone interview yesterday. “We are beyond the stage when people were talking about macro challenges. People are focused on the real investment stories.”

Arabian Cement’s IPO, the country’s first since the 2011 uprising that ousted President Hosni Mubarak, received $1.5 billion in bids from institutional and individual investors, El Guindy said. Trading is set to start next week, he added.

Institutional Placement

Of the $865 million of bids received for the institutional tranche of Arabian Cement’s share sale, $531 million came from foreign investors, Hesham Gohar, managing director for investment banking at CI Capital, said in a telephone interview from Cairo yesterday. Funds based in Europe, the U.S. and South Africa accounted for $246.5 million of that amount, he said.

The private placement accounted for 70 percent of the IPO and attracted bids worth 11 times the amount offered, according to El Guindy.

The military-backed interim government has received more than $15 billion in aid pledges from the United Arab Emirates, Saudi Arabia and Kuwait since Mursi’s ouster. EFG-Hermes’ co-Chief Executive Officer Karim Awad said in March that the investment bank had a “robust” pipeline for IPOs in Egypt.

“The success of Arabian Cement is going to encourage a number of other companies in Egypt to go through the IPO process,” Gohar said. “It shows investors were comfortable to take on the risk, given the improving economic situation in Egypt.”

CI Capital’s two mandates are in construction and the food industry, he said. The company is also working on 10 merger and acquisition deals that will bring more foreign investment into Egypt, he added.

To contact the reporters on this story: Alaa Shahine in Dubai at asalha@bloomberg.net; Ahmed A. Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net; Samuel Potter at spotter33@bloomberg.net Matthew Brown, Stephen Kirkland

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