Egypt expects five IPOs before year-end
August 7, 2017 | 6:11 PM
by Reuters
Under local regulations, companies have six months to begin offering shares after registering to list. - Bloomberg file picture

Cairo: Egypt's stock exchange expects to oversee between three and five initial public offerings by year-end, its Vice Chairman said, as high borrowing costs drive more local companies to consider listings in the search for new financing.

Egyptian equities took off in November, when the country floated its pound and agreed a $12 billion loan programme with the International Monetary Fund, tied to economic reforms including easing capital controls and slashing subsidies.

The EGX30 index, comprising the top 30 listed companies, has risen by some 60 per cent to about 13,700 points since then - offsetting much of the impact of a fall in the pound to 17.8 per dollar from 8.8.

In an interview with Reuters, Mohsen Adel said that over the next few years, the exchange would look to attract more companies by adding new financial instruments including for Islamic financing (sukuk), and switching to a fully digitised quote system.

Including the Nilex small-cap exchange, around 270 companies are listed on Egypt's stock market. Some 500,000 investors are registered to trade though only 80,000 to 100,000 of those are active, according to bourse data.

"I expect the listing of three to five new companies in the stock market before the end of this year, between medium and large-sized ones," Adel said on Sunday, without giving further details.

"The procedures for listing one of the state petroleum companies, ENPPI, are being completed within days. There are several companies that were listed before that are on their way to offering shares before the end of the year."

Those also include property firm Rooya Real Estate, officials have said, which is expected to raise around 2 billion Egyptian pounds ($113 million). The ENPPI IPO is estimated at up to $150 mln

Under local regulations, companies have six months to begin offering shares after registering to list.

High interest rates

The central bank has hiked base rates by 7 percentage points since the currency float, in a bid to combat inflation that has soared to around 30 per cent. Many businesses say that has hampered their ability to finance new projects with debt.

"The high interest rates currently could enable us to attract new companies because financing opportunities on the bourse cost a lot less" said Adel, who took over as EGX vice chairman in July for a four-year term.

The government appointed Mohamed Farid Saleh exchange chairman on Sunday, replacing Mohamed Omran whose four-year term ends this week.

Adel said Egypt is also looking to set up a new exchange for futures and commodities trading after parliament approves amendments to the capital markets law, which lawmakers are due to consider in October.

The former head of Egypt's Financial Supervisory Authority (EFSA), Sherif Samy, said this week it had recently set deadlines for firms to comply with a rule stipulating at least 5 percent of its stock must be publicly floated.

Nearly 30 firms risk being de-listed if they do not raise the percentage of their free float within the next 10 months, Samy said.

"The stock market does not want to de-list any company," Adel said. "The purpose of the decisions is to regulate the market."

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