State-owned Holding Company for Chemical Industries will offer 4% of its stake in Eastern Company on the Egyptian Exchange (EGX), Minister of Public Sector Affairs Khaled Badawi said in a statement on Monday.
Badawi added that the offering is part of the government’s (initial public offering) IPO programme, aiming to increase state-owned companies’ base of ownership and provide the necessary funding for them to expand their activity and achieve greater corporate governance.
In March, the government announced a list of 10 companies that will have additional shares listed, with 15-20% of each of the companies to be listed over the next 24-30 months. The cumulative value of the listings is expected to rise to EGP 80bn, raising the collective market capitalisation to EGP 450bn.
Moreover, the minister explained that proceeds from the Eastern Company sale will be used to restructure and develop subsidiaries of the Holding Company for Chemical Industries.
Last week, Badawi explained that the government IPO programme will start next month.
Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes, had previously told Daily News Egypt that these offerings would carry a positive effect for Egypt’s capital market through boosting liquidity, in turn allowing the authorities to allocate such resources to other companies in need.
Earlier in April, IMF Mission Chief for Egypt Subir Lall expressed support for the IPO programme and told Daily News Egypt that the decision will help attract equity financing for the companies and will also help expand the Egyptian stock market’s capitalisation.