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Coronavirus postpones IPOs of Banque du Caire, TAQA Arabia - Daily News Egypt

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Coronavirus postpones IPOs of Banque du Caire, TAQA Arabia

Sukuk, securitisation issues take the lead, especially as interest rates drop

Offering Banque du Caire and TAQA Arabia on the stock market after the spread of coronavirus in Egypt and the precautionary measures that the country is currently taking, informed sources told Daily News Egypt. The two offerings were the closest to implementation in the current period as part of the government’s initial public offering (IPO) programme.

Banque du Caire aimed to attract about $500m from local, Arab, and foreign investors, while TAQA Arabia aimed to raise EGP 1.2bn. Both IPOs were intended to be implemented in mid-April.

The investment bank EFG Hermes is managing Banque du Caire offering and co-managing TAQA Arabia IPO along with HSBC.

A number of investment banks have decided to delay any offerings until the coronavirus pandemic ends, especially amid the presence of plenty of attractive financing at less risk, including non-bank financing tools after the Central Bank of Egypt (CBE) cut interest rates 3% last week.

Beltone Financial CEO Maged Shawky said his company is managing several IPOs in the public and private sectors that were intended to be offered soon, but the bank has delayed all offerings to the second half of 2020 depending on the market conditions at the time.

On the other hand, Shawky said that the companies that need financing in the current period will be provided funds through non-bank financing tools such as securitisation, Sukuk, finance lease, consumer finance, and financing for small and medium companies, especially with the low interest rates, noting that this period is ideal for demand on this finance to increase, being risk free.

In conjunction with the postponement of IPOs, whether governmental or private sector, informed sources revealed that a number of non-bank financing instruments will be announced soon, where Talaat Mostafa Group intends to implement the first offering of sukuk in the Egyptian market at the beginning of next month at a value of EGP 2bn. Palm Hills, Contact, Raya, Wadi Degla, and Premium will offer short-term securitisation bonds with a total value exceeding EGP 5bn, including EGP 2bn for Palm Hills alone.

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