INTERVIEW: Demand not at its best to resume Egypt’s IPO Programme, says Minister Hisham Tawfik

Doaa A.Moneim , Monday 27 Jun 2022

Egypt issued the State Ownership Policy Document earlier this month to chart the map of future partnership between the public and private sectors, laying the groundwork for the latter’s greater participation in Egypt’s economic activities.

Minister Tawfik
Egypt’s Minister of Public Business Sector Hisham Tawfik


Egypt’s Minister of the Public Business Sector Hisham Tawfik explained to Ahram Online the role his ministry will play in light of the partnership mechanisms the document sets for the relationship with the private sector.

Tawfik tackled Egypt’s Initial Public Offering (IPO) Programme, which is currently on hold due to structural and demand issues the local capital market is experiencing, which need to be considered, he said.

The minister also discussed the latest developments in electric cars manufacturing, the textile sector rehabilitation project, and the e-catalogue for Egyptian products.



Ahram Online: What is the role the Ministry of the Public Business Sector will play in implementing the State Ownership Policy Document in terms of the ministry’s affiliated assets?


Hisham Tawfik: The ministry participated in setting the document’s strategy and measures in partnership with other ministries. The policy focuses not only on the assets run under the Public Business Sector in terms of its application, but also on the companies affiliated to other ministries, the Armed Forces, and economic authorities.

The policy does not imply selling state assets, as reported, but it sets several types of partnership with the private sector, especially with foreign investors, to provide the local market with the hard currency needed to address its shortage domestically amid the ongoing global challenges that definitely affect the local market.

We need the partnership of the private and public sectors to maximise the advantages of state-owned assets and their revenues, particularly the untapped ones, by sharing the sector’s investments, experiences, and management.

The process of selling assets, according to the policy, revolves around offering 30 percent, up to 40 percent, stake of the assets in case the asset is valued at EGP 100 million, for example.

For other types of partnerships, the ministry is already partnering with the private sector through investing in the asset, its improvement and development, and applying the profit-sharing method. This type allows the investor to tap the assets for long periods of 30-35 years, while the asset remains owned by the state.

Another type of partnership with the private sector is through management contracts. Under this type, the investors do not invest money, but only moderate the project or the company to benefit from its experience. In this type, the state invests in the asset through public investments.


AO: What are the investment opportunities the public sector offers for the private sector?

HT: There is a bunch of opportunities in the real-estate sector with 20 million cubic metres of land that are ready to be tapped through partnerships with the private sector. Also, there is an opportunity for rehabilitation of a factory affiliated with Misr Aluminium Company, in Upper Egypt, which is currently under improvement in a project worth $300 million.

Moreover, there are available opportunities in fertilisers as well as industrial and agricultural opportunities in Toshka. These need management experience to moderate each type of projects.

All the opportunities we have are already available even before the launch of the State Ownership Policy Document.


AO: What is the ministry’s plan regarding the hotels sector, particularly with regards to partnership with the private sector?

HT: We have already started with the hotels sector in Cairo, Luxor, and other locations. The sector’s opportunities are open for the private sector, particularly foreign investments, for the sake of backing the state with hard currency amid the ongoing challenging time. Seven of 25 hotels will be merged under one company.

A 20 percent stake of the new company will be offered to the private sector for purchase. There is also a plan to offer an additional stake (5-10 percent) in the Egyptian Exchange (EGX) to domestic investors, bringing the total planned stake to offer at 30 percent.

This stake will be offered in a valuation that mirrors the hotels’ market value and profits.

The 25 hotels that are affiliated to the public business sector ministry are not companies. They run under EGOTH company, which owns the new company.


AO: What are the areas foreign investors eye for investment?

HT: Hotels, as well as the components of vehicles manufacturing in light of the national vehicles strategy that the government recently launched under the directives of Egypt’s President Abdel-Fattah El-Sisi. I expect this sector to witness good developments going forward. Also, Mokattam Corniche development has attracted a Saudi investor recently.

Moreover, we received applications from a number of foreign investors to tap Helio Park, a 1,700-acre land affiliated to Heliopolis Company for Housing and Development.


AO: What are the updates to Egypt’s IPO Programme?

HT: The EGX is currently not at its best. In general, the stake that will be offered for a local investor in the EGX ranges between five percent and 20 percent of the total offer, according to the latest IPO programme updates. Resuming the programme depends on market demand. This is the job of investment banks that set the stake that will be offered for the private sector and the shares that will be offered as public offering. We have noticed a weak local demand since the offering of the Eastern Company in 2019.


AO: Do you think the ongoing challenges, such as the Russia-Ukraine war and its repercussions, hinder the resumption of the IPO programme?

HT: Indeed, but the offering of e-finance (2020) and Eastern Company (2019) reflects some structural issues in the local demand that need to be considered before resuming the programme.


AO: What are the recent developments regarding the launch of the e-catalogue for Egyptian products?

HT: We are set to launch the first-of-a-kind e-catalogue for the made-in-Egypt products on 4 July 2022. The catalogue is an instrument to promote local products abroad that are managed by the state-owned El-Nasr for Import and Export.

Moreover, we will inaugurate the first six branches outside Egypt. Fourteen branches will be moderated through El-Nasr company, while the remaining two branches will be run under another company.

These branches will enable the Egyptian products to enter new markets in 40 countries globally, from Brazil to China, passing through North America, Europe, and Africa that will host seven branches, three of which will be inaugurated in July in Sudan, Ghana, and Cameroon. We are also heading to Morocco and South Africa and other markets in which we were not present before, such as Germany, Malaysia, and India.


AO: What are the products that the e-catalogue is expected to offer?

HT: So far, we have listed 19,000 products by 1,200 producers, and the process is ongoing. We hope to reach 100,000 products by 5,000 producers over the coming 18 months.


AO: May you shed light on the ministry’s project to improve the textile industry in affiliated entities?

HT: We merged 23 textile companies into eight. Starting from the end of 2022 through the beginning of 2024, the improved factories under the project are expected to be inaugurated and commence operation. We are currently working on improving their productive capacity through scrapping half of all machines in all 60 textile factories that run under 23 textile companies, while improving other ones.

Four factories were assigned to an Indian company for complete rehabilitation. We have also changed the spare parts of other machines. The outcome is improving the productive capacity by over four folds with high-quality products.

Purchasing and marketing final products will be moderated through a single company (ECH) with foreign experiences.

At present, we have new textile brands; Nit brand (long staple cotton) that have been already exported to Turkey, Denmark, Italy, and the US. Another cheaper brand is Mahala (short staple imported cotton).


AO: Does this project include foreign investors?

HT: The project is being implemented totally with public investments, while we draw on foreign experiences, from Italy and Bulgaria, in the marketing process, which has raised our productive capacity and profits by the double, so far.


AO: What are the latest actions taken in terms of the contracts of electric cars manufacturing in the local market?

HT: The ministry inked a MoU in April with a Chinese company in this respect, and we hope to finalise three contracts in July. We are in daily talks with the Chinese side, planning to announce the final contracts in July.

Furthermore, we are in negotiations with other companies in terms of the machines that will be utilised in the electric cars production line in Egypt. In this respect, we will utilise an untapped production line in the state-owned El-Nasr Automotive Manufacturing to reduce costs.

Hopefully, electric vehicles will be totally manufactured in Egypt by the third or fourth quarter of 2023.

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