Egypt IPOs Set for Revival as Etisalat Is Said to Mull Sale

Aug 04, 2014 11:56 am ET

(Adds market close in final paragraph.)

Aug. 4 (Bloomberg) -- Etisalat Misr, the Egyptian unit of Emirates Telecommunications Corp., is set to revive the nation’s initial public offerings with a planned $500 million sale.

The company asked banks for proposals to manage an IPO that may be the largest on the Egyptian bourse in almost five years, according to three people familiar with the situation. The operator appointed EFG-Hermes Holding SAE to co-manage the sale with a yet to be named foreign adviser, Al Mal newspaper reported today. A successful sale would make Etisalat the only mobile operator listed on the exchange, fueling investor confidence in a market whose benchmark EGX 30 Index rose about 30 percent this year, according to Mona El Shazly, a Cairo-based senior research analyst at Pharos Holding for Financial Investments.

“It would be a trigger for all postponed projects if they see a good market reaction” to Etisalat Misr, El Shazly said by phone yesterday. “This IPO has been delayed since before the revolution in 2011. For them to consider it again is very positive for the market.”

More than three years of political instability in the Arab world’s most populous state has deterred investors and forced several of the benchmark index’s biggest companies to leave the Cairo bourse. Etisalat Misr was considering an offering, Al Alam Al Youm newspaper reported, while private equity firm Citadel Capital scrapped an IPO of its energy unit in 2011 because of instability. Hotel operator Travco Group also ditched sale plans as tourist numbers plummeted.

First Offering

Etisalat Misr’s proposed deal would follow Arabian Cement Co.’s $110 million sale in May, Egypt’s first offering since the uprising in 2011 that toppled Hosni Mubarak’s government after about 30 years.

Companies including Edita Food Industries, a snacks maker part-owned by London-based buyout firm Actis LLP, and a subsidiary of Emaar Properties PJSC, the Dubai-based developer of the world’s tallest tower, are also considering IPOs in Cairo.

Egypt “has been lagging in terms of new IPOs coming into the market for almost four years now,” Amr Elalfy, managing director of MubasherTrade Research, a Cairo-based analysis company, said yesterday. The Etisalat Misr sale “would likely open the door to more IPOs in the future in other sectors,” he said.

Spokesmen for Etisalat Misr and EFG-Hermes declined to comment when contacted by phone today. The benchmark index rose 1.3 percent to close at 8,918 today, its highest finish since August 2008.

--With assistance from Daria S Solovieva in Dubai.