UAE's Global Holding acquires 30% stake in Eastern Tobacco as part of Egypt’s IPO programme

Ahram Online , Sunday 3 Sep 2023

Global Investment Holding Co., a UAE-based company, acquired Sunday a 30 percent ownership stake in Egypt's largest tobacco products maker Eastern Company.

Eastern Company
The signing of an agreement granting Global Investment Holding Co. a 30 ownership stake in the Egyptian largest tobacco products maker, Eastern Company, on Sunday. Egyptian Cabinet


According to a cabinet statement, the deal is worth $625 million, equivalent to EGP 19.3 billion. The Emirati company will provide $150 million to procure the necessary tobacco materials for manufacturing.

After the sale, the state-owned shareholder, Chemical Industries Holding Company (CIHC), will retain a 20.9 percent stake in the Eastern Company.

The company's ownership structure currently stands as follows: UAE’s Global holding (30 percent), the Holding Company for Chemical Industries (20.9 percent), Allan Gray Equity Fund (7.2 percent), the shareholders union of the Eastern Tobacco Company (6 percent), with the remaining 36 percent held in free float.

The deal comes as part of Egypt’s IPO programme to sell stakes in 35 state-owned companies to strategic investors by the end of June 2024.

In February, the government announced a list of 32 companies, to which it later added Eastern Company, Telecom Egypt, and Ezz El-Dekheila.  

The Minister of Public Enterprises, Mahmoud Esmat, who attended the signing, stated that the deal underscores the government's commitment to the success of its program to expand ownership and encourage direct private investment across various sectors.

Esmat elaborated that this agreement aligns with current trends in listing state-owned companies on the Egyptian stock exchange.

This strategic move aims to broaden ownership, stimulate stock market activity, enhance investment opportunities, and utilize proceeds from stock offerings for development, renovation, and restructuring. 

The move also aims to improve the financial position of companies and ensure better governance, he noted.

In the first nine months of FY2022/23 (which concluded in March), Eastern Company, who has over 70 percent of market share in Egypt, reported a net profit of EGP 5.29 billion, an annual 24 percent increase, up from EGP 4.25 billion the year before.

Eastern Company's shares surged 5.91 percent on Sunday, reaching EGP 21.5 from an initial EGP 20.3 at the start of the day's trading with a market cap of EGP 47.945 billion.

The privatization programme is part of Egypt's commitments under its $ 3 billion loan programme with the IMF.

In a report published in August, the Egyptian government announced a plan to attract $5 billion from the offering of power plants and state-owned companies from October 2023 until the end of June 2024.

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