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Egypt confronts sell-off of more state assets

A vendor at a vegetable market in Cairo. The IMF is encouraging the Egyptian government to continue selling stakes in state assets Reuters/Mohamed Abd El Ghany
A vendor at a food market in Cairo. The IMF is encouraging the Egyptian government to continue selling stakes in state assets
  • Ministers reaffirm plan to sell stakes
  • Energy facilities and banks may be next
  • Some assets ‘really not ready for sale’

More sales of Egyptian state assets from petrol stations to wind farms are likely to be announced in the financial year to June 2025, according to people familiar with the negotiations.

A deal with the UAE worth $35 billion to develop a resort at Ras El Hekma on the Mediterranean has eased the pressure on state finances, but the government in Cairo has reaffirmed its willingness to continue selling stakes.

Since 2022 the International Monetary Fund has been leaning on Egypt to raise capital and stimulate the private sector by selling off publicly owned assets. The IMF is also urging ministers to lift politically sensitive subsidies on bread and fuel.

In a staff report released in April, the IMF projected that Egypt could raise a total of $2.8 billion from sell-offs in the current financial year, which ends in three weeks, and a further $3.6 billion during 2024-25 – expectations that analysts say Egypt is broadly on track to meet. 

A spokesperson for the IMF told AGBI that it had not recommended any particular assets for sale, saying it “does not discuss with country authorities specific transactions”.  

However, consultants who have advised on the government’s negotiations have suggested deals that could take place before the end of 2024-25.

The IMF’s April staff report said Egypt was expected to sell Gabal El Zeit, a 100 sq km wind farm in the Red Sea with a total installed capacity of 580 megawatts, for $339 million before the end of June.

Around the same time, the European Bank for Reconstruction and Development said it was looking at providing $140 million in financing for Actis Long Life Infrastructure Fund to buy 100 percent of Gabal El Zeit from the Sovereign Wealth Fund of Egypt (TSFE).

The April IMF report also mentioned a possible sale of the Zafarana wind farm, which the fund believes is worth $300 million. Maersk International, a shipping company, has reportedly begun due diligence for a potential acquisition of a stake in the farm to provide green fuel.

Hala El Said, the planning minister and chair of TSFE, told reporters in February that she expected deals for Gabal El Zeit and Zafarana to be finalised before the end of March.

Now Farouk Soussa, an economist at Goldman Sachs who advises TSFE, said he believes both deals are “really close”.

Danish shipping company Maersk is said to be interested in Zafarana wind farmAlamy via Reuters
Zafarana wind farm in Ras Gharib, Red Sea Governorate

Aathira Prasad, the director of macroeconomics at Nasser Saidi & Associates who has advised on recent Egyptian disposals, said one of the next announcements could come from the banking sector. The government is looking at selling stakes in three lenders: Banque du Caire, the Arab African International Bank and United Bank.

Despite reported interest in these banks since 2022, no transactions have yet made major progress. “If you look at the fundamentals, the banks have been performing well,” Prasad said. “It is very possible that the banking sector still remains very attractive to investors, especially from the GCC region.”

United Bank, which was created in 2006 in a merger of three publicly owned Egyptian banks by the Central Bank of Egypt, has held talks with Saudi Arabia’s Public Investment Fund. The discussions fell through in 2023, reportedly because of disagreements over valuation

The next big sales to be announced are likely to be companies that have already conducted negotiations with prospective buyers, according to Prasad. “It would just be a matter of starting the conversation again.”

Three military-owned companies are currently open to bids from investors.

Wataniya Petroleum is offering 174 of the 300 petrol stations it operates nationwide as a newly created company. It has previously held talks with Adnoc, TAQA Arabia and Shell. TSFE is also offering stakes in Safi, which produces mineral water, and ChillOut, another chain of petrol stations.

Analysts said they believe other big sales are likely to come from the 40-plus companies managed by TSFE. According to Soussa, many other government assets “are really not ready for sale. Their books are a mess. Some of them are not profitable.”

The Qatari sovereign wealth fund has previously been linked with acquiring Egypt Telecom’s stake in Vodafone Egypt, a mobile operator, and with the fixed line operator itself.

Gulf investors have also displayed an interest in developing Ras Gamila, a tourist site near Sharm El Sheikh in the south of the Sinai peninsular.

There is, however, a reluctance in the government to part with assets it considers strategic. For example, “given the [Saudi] crown prince’s ambitions regarding aviation, it would make perfect sense for Saudi Arabia to buy Egypt Air”, said Sami Hamdi, managing director of risk consultancy The International Interest.

“But selling the airline would have huge political repercussions for [President] Sisi.”

For this reason, analysts expect the trend that emerged over the past few years to continue, with Egypt selling minority stakes mostly to Gulf government-affiliated investors.

“If the Egyptian government had a choice, it wouldn’t sell down these businesses,” said Kevin-Paul Deveau, a partner at Reed Smith, a law firm that has advised the government on disposals. “It wants to own these businesses. A minority sale allows them to keep control.”

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