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Foreign investors seek 15% of Egypt’s tobacco company

Egypt tobacco Unsplash/Robin Canfield
The government sold 4.5% tobacco company Eastern Co on the stock exchange in 2019

Egypt has received several offers from foreign investors to buy up to 15.3 percent of the shares of state-controlled Eastern Co, the country’s main tobacco products maker, the company said in a disclosure to the stock exchange on Tuesday.

If it goes through, the sale would give impetus to Egypt’s floundering privatisation programme and reduce the state-owned Holding Company for Chemical Industries’ 50.95 percent stake in Eastern’s shares to as little as 35.67 percent, according to Reuters calculations.

The government sold 4.5 percent of Eastern Co on the stock exchange in 2019, leaving the holding company with a majority stake.

“These offers are under study and there’s a negotiation with these investors to choose the best one, as the implementation of the deal is linked to conducting due diligence,” the statement quoted the holding company as saying.

“Disclosure will be made once the best and most appropriate offer is settled,” it said.

Egypt promised the International Monetary Fund it would roll back the state’s involvement in the economy and allow private companies a much greater role as part of a $3 billion, 46-month financial support package signed in December.

The IMF’s first review of the extended fund facility, initially scheduled for around March, has yet to take place, partly the result of Egypt’s slow progress on asset sales.

Since then a number of sales to foreign investors have been announced in principle, but few have been completed.

Egypt desperately needs foreign currency after the Covid pandemic and Ukraine crisis exposed vulnerabilities in the economy.

The government has been facing an increasingly tough task raising cash for foreign debt repayments after a borrowing spree over the past eight years quadrupled its foreign debt.