Domty Ready to Start GDRs as Egypt Dollar Drought Hammers Sharesby
Egypt’s foreign-currency shortage keeping overseas cash away
Company to open new factory, boost production within two weeks
Egyptian food producer Arabian Food Industries Co. expects its global depository receipts to begin trading by the start of next week, a senior executive said.
The Cairo-based company known as Domty has final approval from the Egyptian bourse for the plan, which it hopes will lure foreign investors and boost liquidity. Domty has declined about 21 percent since its March initial public offering, compared with an 8.3 percent gain for Egypt’s benchmark index.
“A lot of investors are reluctant to enter without GDRs,” vice Chief Executive Officer Mohamed El Damaty said in an interview. The securities will be denominated in dollars and trade in London, he said.
Domty is the latest Egyptian company to get regulatory approval to start a GDR program as it seeks to offer a safe exit for foreigners. Overseas investors are shying away from the Arab world’s most populous country because of an ongoing foreign-currency shortage that is crippling businesses and raising expectations for a devaluation of the pound.
Domty also plans to open a new factory within two weeks that will increase juice production capacity and add products by 2017, El Damaty said. The new offerings will help maintain sales growth of 20 percent over the next three years, he said.
“The food sector in Egypt is the safest but the aggressive devaluation that’s taking place will impact it in the short term,” El Damaty said. “We’re in an inflationary environment that’s unseen before.”
Domty, which uses around 80 percent imported raw materials, increased prices by 10 percent in July and about 5 percent this month. It plans another price increase during the fourth quarter but is yet to decide when and by how much, El Damaty said.