EFG Hermes, a financial services corporation in frontier emerging markets(EM), has successfully concluded the EGP 1.7bn offering of 4.5% of Eastern Company SAE, Egypt’s leading tobacco manufacturer, in a highly anticipated equity offering that marks the first offering of a state-owned company on the Egyptian Exchange (EGX) in more than a decade, according to press statement on Thursday.
The statement said that Eastern Company’s offering is the maiden transaction of the initial public offering (IPO) programme announced by the Egyptian government which aims to strengthen domestic capital markets and attract international investment. EFG Hermes acted as sole global coordinator and bookrunner on the offering.
“Eastern Company’s offering has panned out in a highly encouraging way both for Egyptian capital markets and for the firm, with a very strong appetite from both global and GCC institutional investors as well as Egyptian investors,” said Mohamed Ebeid, Co-CEO of the Investment Bank at EFG Hermes.
The statement pointed out that the transaction consisted of a private placement implemented through an accelerated equity offering and a public offering, with a total of 101,250,000 existing ordinary shares offered to investors.
“The private placement was 1.9x oversubscribed and public tranche 4.2x. At the offer price of EGP 17.00 per share, the institutional demand for privately placed shares generated EGP 3.2bn. Approximately 94% of private placement demand came from international and GCC institutions, with local institutional investors accounting for the remaining 6% of total demand,” the statement read.
For his part, Maged El Ayouti, managing director at EFG Hermes Investment Banking said, “We are honoured to have been part of this landmark transaction, which is the largest follow-on secondary offering on the EGX in over a decade. We have been able to utilise our position as the MENA region’s leading ECM adviser to generate a quality book of demand from global and regional institutional investors, and place the shares at a premium over the pre-book building launch price, which is a reflection of investors’ confidence in the country’s long-term outlook.”
“We are proud to partner with the Egyptian government in its IPO programme, leveraging our longstanding role as the bridge between global capital and local investment plays in Egypt and the region,” added Maged.