Telecom Egypt s data center, Smart Village, West Cairo. Telecom Egypt Official Website
The offer included an EGP 3.7 billion ($122.2 million) stake for 9.5 percent of the company's principal or 162.1 million shares valued at EGP 23.1 each.
The sale was the first tranche of an offering in the secondary market on the Egyptian Exchange (EGX) for financial institutions, individuals with financial solvency and experienced traders. The secondary market is where investors buy and sell securities they already own.
Dedicated only to Telecom Egypt's employees, the second tranche includes up to around 8.5 million shares.
The two tranches total 170.7 million shares and account for 10 percent of the company's capital, and 12.5 percent of the stake of the Ministry of Finance.
CI Capital acted as Joint Financial Advisor and Bookrunner for the deal. "The offering generated strong investor demand from international, regional, and domestic institutional and high-net-worth investors,” said Amr Helal, CEO (sell-side) of the Investment Bank at CI Capital.
Before the deal, the Egyptian state owned 80 percent of the company, while the remaining 20 percent was already traded on the EGX.
Telecom Egypt said in a bourse filing in March that the government is exploring floating an additional stake in the company. No further statements have been released since then regarding the matter.
The offering of EGX-listed companies is typically preceded by a series of filing in relation to the details of offers, the initiation of due diligence and relevant approvals from the Financial Regulatory Authority.
Broader privatization efforts
In February, Prime Minister Mostafa Madbouly disclosed government plans to offer 32 state-owned companies operating in 18 sectors to strategic investors within a year. However, Telecom Egypt was not among the companies included in the disclosed list.
Egypt’s Paint and Chemicals Industries (PACHIN) was the first such company on the list to be sold off after the UAE’s National Paints acquired 81 percent of the company's shares for EGP 770.4 million (about $25 million) in early May.
Two other companies on the list, National Company for Producing and Bottling Water (Safi) and Wataniya Petroleum Company, have not seen much progress despite being mentioned in a plethora of statements. The government announced earlier in May that it will start receiving bids for the companies over the month.
Egypt's privatization program is moving at a slow pace which has been a point of disagreement with the International Monetary Fund (IMF).
Egypt is currently engaged in an Extended Fund Facility (EFF) programme with the IMF that sets the stage for Egypt to receive $3 billion over four years.
The programme's first review is pushed to June as the country ramps up its efforts to fulfil its commitments under the deal.