Beltone Financial Holding aims to complete its plans in the investment banking sector in 2018.
The company will focus on certain activities such as IPOs, mergers, and acquisition transactions in light of the high demand from foreign institutions for them.
This came due to the company’s success in completing two offerings in the Egyptian market during the past year.
Chairperson of the company Mohamed El-Akhdar discussed with Daily News Egypt his expectations regarding investment prospects at Beltone Financial Holding and his outlook for the new year.
The company aims to increase its focus on the activities of the IPOs, as well as mergers and acquisitions (M&A) in light of the high rates of return offered by the Egyptian market to investors.
El-Akhdar said that the returns received by investors in Egypt cannot be compared to other markets. “This year, there will be a decline in exchange rates, which will double the return on investment, and the market is waiting for some positive news to see its impact on the indicators,” said El-Akhdar.
He revealed that Beltone Financial is working on two IPOs in 2018 in both the consumer and industrial sectors, one of which is currently completing its merger procedures in preparation for launching. It is one of the top three companies in the sector through which it operates in the Egyptian market.
According to El-Akhdar, the company is working on two M&As the contracts for which are expected to be signed this month. One of the contracts would make Beltone a financial adviser to Zahran Group in the merger with the French Groupe SEB to create a new entity called Groupe SEB Egypt Zahran.
The merger is expected to take place during the second quarter of this year after obtaining the approval of regulatory bodies.
He explained that the role of Beltone in the deal includes the separation of activities and some real estate assets belonging to the Zahran Group outside the new entity, where the French Groupe SEB aims for Egypt to be its platform for expansion into the markets of the African continent and the Middle East.
According to Beltone’s banking head, the opportunities in sectors of the Egyptian economy during the new year are not suitable for real estate projects, with some shares of the sector at discount rates of up to 50% of their fair values.
However, El-Akhdar said that the real estate sector will continue to attract investments because of the high demand rates in all sectors in which most companies operate.
This means that there are promising possibilities for entering new liquidity for the sector.
He added that the sectors of the Egyptian economy vary in size, performance, and saturation ratios. However, most of them are defensive sectors that offer attractive returns to foreign investors, especially after the decline in value of assets denominated in US dollars, which increased the interest of foreign and Arab investors.
According to El-Akhdar, the industrial sector is waiting for the expected cut in interest rates to shift from borrowing to working capital financing to long-term borrowing to fund capital investments, whether for maintenance or adding new production lines.
Some companies are moving to export to make use of the current exchange rates, which make competition strong for the benefit of Egyptian products, if they are of good quality.
He pointed out that the industrial sector will be a top priority for investment in the current year, to meet local demand for goods with local alternatives, both at the level of manufacturing large or smaller goods, which depends on the reduction of interest rates and hence the cost of financing.
In the opinion of El-Akhdar, shares in the medical sector are experiencing high demand from investors, because of lack of supply, in the presence of strategies of foreign investors to have shares in the sector within their portfolios.
This makes their trading higher than the multiples of the market, and benefited the shares of Cleopatra Hospital and the last offering of the company Ibn Sina Pharma.
The latest offering of Ibn Sina Pharma received became oversubscribed about 17 times on the Egyptian Exchange, raising EGP 30bn.
El-Akhdar confirmed that the strong growth of MM Group for Industry and International Trade (MTI) shares is a strong boost for foreign investors to participate in the IPO of Ibn Sina Pharma.
MTI shares rose 124% in the six months after the IPO from EGP 5.9 (the offering price) to EGP 13.24 by the end of last Thursday.