Egypt selects advisors for state firm's IPO

06 July 2017

Government plans to sell a minority stake in oil and gas contracting company as part of a broader IPO programme

Egypt has selected financial advisors to part privatise the government-owned oil and gas contracting firm Engineering for the Petroleum and Process Industries (Enppi) through a share float on Egyptian bourse as part of a broader programme to sell stakes in the state entities.

Cairo-headquartered CI Capital-led consortium, which includes Jefferies International and Dubai’s-based Emirates NBD Capital, will act as lead managers and bookrunners for the initial public offering (IPO), according to a joint statement by the Ministry of Investment and International Cooperation, the Ministry of Petroleum and Mineral Resources and NI Capital, a financial institution set up to lead the transformation and the growth of the Egyptian economy.

Enppi’s potential float is the first public share sale of a government asset in more than a decade, and the government is “eager to see this transaction succeed, affording it all the support it merits,” the ministries said, without specifying the timing or the amount the government intends to raise from the deal.

“We are keen to see the success of this IPO Programme in broadening the ownership base in state-run companies through private sector participation, offered to both retail and institutional investors in Egypt and beyond,” investment minister, Sahar Nasr said in the statement, adding that the Enppi IPO was only the beginning of a pipeline of state-run companies to offer minority shares publicly over the next year, which will help increase the overall width and liquidity of Egyptian stock market.

Reports have indicated that the government could raise $150m from the potential IPO of Enppi, which is 97 per cent-owned by Egyptian General Petroleum Corporation (EGPC), a state holding firm with interests in both up and down stream oil and gas assets.

Egypt could privatise two or three government-controlled oil and gas companies through IPOs in the first year of its privatisation programme, which aims to monetising state assets over a period of three-to-five years. The government has started with oil and gas companies and it will include the state-controlled banks, Ashraf el-Ghazaly, the chief executive of NI Capital, which is part of the state-owned National Investment Bank said in September.

The Egyptian presidency in January announced that it planned to sell shares of “successful” government-owned companies and banks to the public, the first such move since 2005, when it offered shares in Telecom Egypt, Sidi Kerir Petrochemicals and Alexandria Mineral Oils Company (AMOC).

Enppi’s potential IPO is the first concrete move by the government since that announcement. There have been several media reports suggesting the government could privatise up to 18 state-controlled companies going forward.

“This announcement marks the first real step in fulfilling the government’s sponsored IPO programme [commitment],” according to the statement, which added that stabilisation in economic conditions, will help in drawing substantial local and foreign interest for the government’s privatisation programme.

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