A government source told Daily News Egypt that the registration of shares of Banque du Caire will begin within a few days, followed by applying for registration of the bank’s shares in the London stock exchange within a period of not more than one month from now.
The source added that the initial public offering (IPO) of the bank will take place in two stages. The first stage will include the IPO of global depositary receipts (GDR) on the London stock exchange with a ratio of roughly 5%.
The second stage will include the IPO of the bank’s shares in the Egyptian Exchange (EGX) at 15%. The source emphasised that the majority of those ratios are discretionary and the offering advisers in EFG-Hermes and HSBC bank are working on determining the right time, the increase ratio, and the IPO share in the EGX.
According to the source, the goal of offering Banque du Caire’s GDRs is to provide liquidity and inflows of foreign currency, to examine the international markets, and gain investors’ confidence and views towards Egyptian private companies after the successful IPO of US dollar bonds.
Egypt has successfully sold dollar bonds worth $4bn in the international markets days ago. More than triple of the bond’s IPO—$13bn—was covered.
The EGX on Wednesday said that Banque du Cairo requested to register its shares in the EGX, with a capital worth of EGP 2.25bn distributed on 562.5m shares with a nominal value of EGP 4 per share.
The GDRs are considered a tradable financial tool in the international money markets. They are being traded as a substitute for the original securities in the international money markets, such as the London stock exchange, the Luxembourg stock exchange, or the New York stock exchange.
GDRs are issued to increase the capital. Ahmed Abou El Saad, chairperson of Rasmala, a company for investment funds, said increasing the bank’s capital through offering GDRs is a professional step. The step will enable the bank to provide dollar liquidity, to diversify its shareholders, and to expand the investors’ base, which contributes to increasing the stability of the price of the share.
He added that offering GDRs increases the capital significantly, a difficult step in local markets, as well as strengthens the bank’s position among the global markets and enhances its services.
The governor of the Central Bank of Egypt (CBE), Tarek Amer, said in March 2016 that the CBE will offer state-owned Banque du Caire in the EGX during 2017, in order to increase its capital by 20% and to strengthen the EGX—a step which has not happened yet.
The IPO of Banque du Caire is included in the plan of offering shares of banks and public companies in the EGX, aiming to collect EGP 6-8bn per year. The plan is part of an economic reform programme adopted by the government in agreement with the International Monetary Fund (IMF) which agreed to lend Egypt $2bn, repayable over three years.