CAIRO: As trading in Talaat Mustafa Group (TMG) shares began Wednesday, investors sank their teeth into heavy buying transactions, making the company the market’s top gainer for the day.Shares opened the day’s trading at LE 11.38, and quickly soared to LE 13.58 at market close, recording a 19.33 percent increase.”Trading volume is high, and investors are [enthusiastic] about the company’s shares, said Menna El Hefnawy, real estate analyst at HC Securities brokerage firm. On the first day of trading, total volume reached more than 93 million shares with the total value of LE 1.269 million. The estimate could make it the largest listing on the Cairo and Alexandria Stock Exchange for 2007. Currently, the company’s market capitalization stands at more than LE 27 billion, up from the initial LE 23 billion.Egyptian real estate developer TMG revealed early November plans to raise more than $750 million in a private placement and an initial public offering to be used to finance future projects in Egypt and the Middle East. The company increased its paid-in capital by some 180 million shares, of which 65 million were offered through an initial public offering and 115 million through the private placement.Shares in the IPO were valued at LE 11 per share; however, the IPO was more than 40 times oversubscribed amid strong demand from investors. The group then announced that total offers for its IPO soared to LE 29.6 billion – due to the oversubscription – and that shares worth LE 715 million would be allocated on a pro rata basis of 2.415 percent of the amount sought. “Everyone was [hyped about] that IPO which caused the oversubscription, El Hefnawy explained. “Generally speaking, IPOs generate strong interest from investors. The bourse witnessed heavy selling transactions before and during the IPO in order to secure enough liquidity. The same selling trend continued in readiness for buying the group’s shares as soon as trading starts. The stock exchange registered TMG’s shares worth LE 940 million ($168 million) after IPO.TMG develops large-scale city and community complexes, mainly located on the outskirts of Cairo. It also develops hotel complexes which include residential apartments, villas and, in most cases, office spaces and shopping areas.The company is also active in the development of hotels and resorts. It currently has three hotels in operation: the Four Seasons Sharm El-Sheikh, the Four Seasons Nile Plaza and the San Stefano Grand Plaza. TMG has other two hotels under development: the Nile Hotel expected to open in 2008 and the Marsa Alam Hotel. The company represents the macroeconomic story in Egypt, which is the rise of the middle class. There are not many real estate companies listed, and there is a lot of interest in the real estate market, said Mohamed Ebbed, head of western institutional sales at EFG-Hermes, in a press statement. The Egyptian investment bank EFG-Hermes is acting as TMG’s coordinators and book runners jointly with HSBC.
TMG’s largest development to date is Madinaty, which comprises a land area of 33.6 million square meters with a proposed residential capacity of 600,000 people. Sales commenced at Madinaty in 2006 and the project is expected to complete in 2023. TMG is also the sole-developer of Al-Rehab and Al-Rabwa residential projects.According to HC Securities, the group recorded a net income of LE 1.1 billion as of October 2007. Total sales reached LE 1.4 billion for the period January-October 2007, while gross profit soared to LE 594.7 million for the same period, indicating a gross profit margin of 41.2 percent.