Egypt targets $5bn from state IPOs by mid-2024

Reuters/Mohamed Abd El Ghany

• Stakes in power plants and wind farms
• Listings to run until June 2024
• Crucial funds to help plug financing gap

Egypt is aiming to raise $5 billion by listing power plants and state-owned companies from October 2023 until the end of June 2024, a local daily reported.

The government plans to offer stakes in the Siemens Beni Suef power plant, Gabal El-Zeit wind power plant and Zafarana wind farm, in addition to Safi and Watanya, companies owned by the military, Ahram Online reported, citing a cabinet report on the government’s initial public offering programme.

The state collected $5 billion by offering stakes in 13 companies between March 2022 and July 2023.

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The government plans to offer stakes in 35 state-owned companies to strategic investors by the end of June 2024.

Funds from asset sales are seen as crucial to help plug a financing gap the IMF estimates will amount to $17 billion over the next four years.

In June, the International Finance Corporation said it will strategically advise the Egyptian government’s asset monetisation programme, which will focus on harnessing private capital and managing state-owned assets.

Egypt unveiled a state ownership policy last December to empower the country’s private sector to drive economic growth.

Assistant prime minister Osama El Gohary said the government intends to divest its stake in 250 companies under its privatisation programme.

The state has decided that 250 of the 800 companies can be offered now, he said, adding the committee will decide on the timings for the rest.

The Egyptian government is ramping up its privatisation drive in an effort to secure much-needed foreign currency to shore up its flagging domestic economy.

The Egyptian pound was devalued three times in 2022, and analysts are predicting a fourth devaluation.

On August 10, Moody’s Investors Service noted that the persistence of Egypt’s parallel exchange rate at EGP38 per $1, against the official rate at EGP30.9 per $1 amid continued foreign exchange outflows, increases the likelihood of another official currency devaluation.

The credit rating agency said it continues to review the Egyptian government’s B3 long-term foreign-currency and local-currency issuer ratings for downgrade.

It said the review balances progress on the government’s privatisation, fiscal and structural reform agenda against evidence of a further weakening in external liquidity.

Egypt’s persistent external liquidity drawdown could negate the proceeds of recent asset sales, it added.

Gulf states have traditionally played a key role in propping up the Egyptian economy by providing grants and deposits in its central bank. However they are now looking to make a commercial return via investments into the country and therefore stipulating that structural economic reforms are made.