After going through major fluctuations post the 2011 uprising, Egyptian Exchange’s performance surged during the past year. Expectations for this year are high with some major construction, food industries and investment companies showing interest in listing and having Initial Public offerings (IPOs). In this article, the Daily News Egypt evaluates the performance of the capital market for 2015 so far and discusses the expected improvements to come.
During 2014, the Egyptian stock market witnessed the largest number of companies listing since 2010, with 13 new companies being listed in the main index and the Nilex index. The capital for the companies listed during the past year, amounted to approximately EGP 1.9bn, 10 times more than the capital of companies listed in 2013.
Chairman of Egyptian Exchange (EGX) Mohamed Omran announced earlier this year that he expects four blue-ship companies to join the stock market, referring to Emaar Misr, Orascom Construction Ltd (OCL) Integrated Diagnostic and Edita.
Omran told the Daily News Egypt that the capital of the companies joining the stock market this year is expected to be significantly larger than EGP 1.9bn.
The collective capital of the companies listed in the stock market through the first quarter of 2015 has reached some EGP 2bn. This figure equates the capital of the companies listed during 2013 and 2014 and two thirds of the total capital listed between 2011 and 2014, the EGX chairman explained.
Emaar Misr listing in the stock market will be amounting to over EGP 870m while OCL listing will be around EGP 800m.
On 11 February, the EGX approved to list two companies, El Tawfiq leasing company, which operates in the leasing field with a nominal capital of EGP 200m, and Raya contact centre company with a capital of EGP 50m.
“The listing committee decision states the acceptance to list two companies with a pledge to perform public offerings with the percentage specified in the rules within a period not exceeding six months of the listing date as a step before start trading them in accordance with article 7 of the listing rules,” an official statement from the EGX said.
In November, Orascom Contruction Industries NV reported it will pursue a dual listing for the engineering and construction branch in Egypt and the United Arab Emirates.
On 17 February, the company announced that it has officially applied its listing request to the EGX. The company’s capital is placed at approximately EGP 800m that will be divided between around 105 stocks.
“Concurrently with the implementation of the demerger, Orascom Construction intends to offer new ordinary shares representing up to 15% of the shares to public retail investors,” the company said in an official statement. The company plans to have a private stock issuance for “qualified institutional investors”.
Emaar Misr, the Egyptian arm of major construction company Emaar Properties, announced its plans to list earlier this year. The company’s capital is estimated to be around EGP 878m that will be divided on 87m stocks.
One of the other big companies that are expected to join the capital market is Edita food industries.
According to Omran, with the presence of the required documents and approvals Etida food industries would go for an IPO during the first weeks of March. The company is said to offer 30% of its shares in the offering at the value of EGP 2bn.
Omran expected that the capital increases “in terms of capital amount rather than number of companies” will increase compared to the EGP 9bn-10bn of last year.
Palm Hills Developments has also announced the intention to increase its capital in the stock market and, in February, the general assembly of real estate company approved increasing the company’s capital by EGP 1.648bn, from EGP 2.69bn to EGP 4.34bn. The company’s plan is to issue 824m shares in the stock market at EGP 2 per share, in addition to 3.5 piastres as issuance expenses.
The company has 90 days from the day of the general assembly’s approval to submit the approved documents from the necessary authorities.
Qalaa Holding also made an announcement on 21 February, saying that its board of directors has approved to increase its capital by EGP 1.7bn. The company’s capital will jump from EGP 8bn to EGP 9.7bn.
“The proposed capital increase will be primarily funded through the capitalisation of liabilities arising from the purchase of additional shares in core subsidiaries, particularly in energy and cement, from limited partners and co-investors,” the company said in an official statement.
“It comes as Qalaa finalises its transformation into a holding company with majority stakes in its core infrastructure and industrial investments. In this respect, this capital increase is a smaller, second and final version of the capital increase that Qalaa executed in 2014, which saw paid-in capital rise by EGP 3.64bn to EGP 8bn,” Qalaa Holding added.
After winning the bid to acquire dairy producer Arab Dairy Product Company (ADPC) at EGP 71.11 per share, Pioneers Holding investment firm approved a capital increase of EGP 3bn ($393m), planning to issue 170m shares at EGP 17.63 per share.
The stock market witnessed a notable progress last year. The main index EGX-30 registered revenues of 32% average, making it one of the best growing markets over the past year.
The volume of trade reached 57bn stocks, around double the trade volume recorded in 2013 and the largest in the capital market’s history.
Prior to the end of 2013, the EGX listing committee approve the listing of the first Exchange Traded Fund (ETF) certificates with an initial value of EGP 10m.
The ETFs were introduced during the first month of 2015 and on the first day of the ETFs trade, the market gained some EGP 6bn.
Earlier this year, the benchmark index EGX-30 successfully reached 10,000 points, a first in six years.