Egypt challenges Coronavirus by selling 30% of Banque du Caire shares

Deputy Governor of the Central Bank of Egypt, Gamal Negm, announced that the shares of Banque du Caire (government) will be offered for sale on the Egyptian Stock Exchange next April. This news comes amid increasing expectations that the IPO maybe delayed due to the downturn in the global economy amid the spread of the new Coronavirus infections (Covid 19). The Egyptian regime aims to raise $ 500 million through the offering, by offering a percentage of shares, ranging from 20 to 30%. The bank’s share offerings are expected to take place in mid-April, according to the Egyptian newspaper Al-Ahram. Banque du Caire will be the largest sale of state assets in Egypt since It is the third-largest government-owned bank and was listed on the stock market at the beginning of 2017 with a capital of 2.25 billion pounds and the prospect shares selling is managed by Hermes and HSBC. With assets of 183.4 billion pounds ($ 11.70 billion) at the end of 2019, Banque du Caire is ranked sixth or seventh among Egyptian banks. Deep questions and uncertainties surround the timing of the deal, which comes at a time of global economic crises due to the Coronavirus.

Economists say it is better to postpone the time of the deal, because offering shares in light of widespread concerns means lower prices and lower profits. But economists say that the Coronavirus itself is one of the reasons that pushed the Egyptian regime to insist on offering shares of Banque du Caire, because the decline in the economy and global trade is expected to incr2ease the losses of the Egyptian economy, which is suffering mainly. At the same time, however, it appears that the size of the loss and the low price may ultimately nullify that deal.

Sources familiar with the process of selling Banque du Caire shares on the stock market said that the process, which was expected at the end of March or the beginning of next April, may be delayed due to the repercussions of the spread of the “Corona” virus emerging on the international markets and Egypt. Banque du Caire, owned by Banque Misr, plans to offer only about 45% of its shares, as part of a government program aimed at offering a group of companies and public banks to the stock market. But those sources told Egypt Watch that the timing of Banque du Caire’s launch on the stock exchange is linked to the readiness of global and local markets during the next two weeks. The sources confirmed that the bank and its advisors are currently watching the negative repercussions resulting from the spread of the emerging coronavirus globally. the offering will take place at the target time or vice versa” according to the sources. The offering managers and officials from Banque du Caire carried out an external exploration tour in Abu Dhabi, Dubai, and London last January and another in America last February to see the appetite of global investment funds for the bank’s bid on the stock exchange.

Officials said the results of the two rounds were positive and achieved their aim, and that the committee based on the offering process will determine the percentage of public and private offerings after completing some of the necessary procedures. But they announced that the process of offering to increase the bank’s capital will be through offering a share in the Egyptian stoke exchange, without going to sell a stake to a major investor with the aim of expanding the ownership base in general, whether for Arabs or foreigners and with certain limits so that it does not go to a limited several investors. According to the sources, the bank will be satisfied with the local stoke exchange offer only without resorting to a global offering in any foreign stoke exchange at the current stage. However, observers believe that the Egyptian regime’s resort to putting the Banque du Caire on the local stock exchange only, without any external markets are the result of its feeling of global market turmoil due to the Coronavirus. Economists consider that putting up Banque du Caire at this time is a difficult challenge and a bitter option, but it appears that the Egyptian the regime has no other alternative.