EBRD eyes minority stakes in two banks under Egypt's IPO programme

Ahram Online , Wednesday 29 Nov 2023

The European Bank for Reconstruction and Development (EBRD) is seeking the acquisition of minority stakes in state-owned financial institutions earmarked for privatization in Egypt, Heike Harmgart, head of EBRD's south- and east-Mediterranean operations, said on Tuesday.

EBRD logo. Official website.
EBRD logo. Official website.

 

 

Harmgart said that EBRD is in talks with the Sovereign Fund of Egypt (SFE) to invest in the United Bank and Banque du Caire (BdC), two of the three banks included in the official privatization list, with Arab African International Bank (AAIB) being the third.

“However, EBRD is currently awaiting clarity from the government regarding the size of the stakes available for sale,” she added during an interview with Al-Arabiya.

Harmgart emphasized EBRD's support for the IPO programme, highlighting its significance in driving Egypt's economic growth rates, attracting foreign investment and boosting the country's revenues.

She further noted that despite ongoing discussions with the SFE regarding upcoming privatization projects, EBRD has not been contacted by the Egyptian government regarding the sale of United Bank.

“EBRD already has more than 13 partner banks in Egypt, representing a considerable portion of the country's banking sector, and aims to expand its portfolio by adding one or two additional banks,” she said.

The European lender expects to provide a total financing amount of $700 to $750 million to Egyptian banks by the end of 2023, including trade facilitation programmes.

Additionally, EBRD has two projects scheduled to be signed with Egyptian banking partners before the year concludes.

However, the road to privatization has faced challenges. BdC's planned IPO on the EGX has been repeatedly delayed due to unfavourable market conditions.

Furthermore, talks with the Saudi sovereign wealth fund for the sale of 100 percent of United Bank collapsed earlier this year due to disagreements over valuation amid exchange rate volatility.

Other plans

EBRD has also expressed interest in the privatization of renewable energy companies. It awaits the SFE's announcement of purchase offers, following which EBRD will determine the appropriate financing and shares, she noted.

Harmgart anticipates the launch of the first seawater desalination projects in the Egyptian market by late next year.

She explained that over 90 percent of EBRD's total investments this year were directed towards the Egyptian private sector.

Looking ahead, the bank plans to increase financing and loans for government projects to 25 percent, depending on the demand.

In October, EBRD mobilized $2 billion to finance development projects in Egypt during 2023.

EBRD has financed 170 projects since it began operations in Egypt, with €11.199 million ($12.29 million) of cumulative investment to date. Of these projects, 57 percent were directed to the private sector.

IPO programme

Egypt initiated its privatization programme earlier this year, aiming to sell stakes in 35 companies to private investors as part of efforts to resolve the ongoing currency crisis and fulfil the terms of its $3 billion assistance programme with the International Monetary Fund (IMF).

A list of 35 companies have been made public to be included in the programme.

The implementation of the IPO programme has faced delays, leading to the postponement the IMF review.

The government and the SFE are working towards accelerating the implementation of the IPO programme and meeting the IMF loan programme engagements.

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