Egypt has postponed its plans to sell a stake in the state-owned Cairo Bank in an initial public offering that was scheduled for mid-April, due to the spread of coronavirus. That decision came despite the fact that Cairo Bank Chairman Tareq Fayed told Reuters in March that the sale, amounting to about $500 million, would remain in place despite the spread of coronavirus. However, Fayed has now told Al-Masry Al-Youm daily in an interview that “plans to offer a share of the bank on the Egyptian Stock Exchange are deferred at the present time due to the spread of the coronavirus, which impacted the stock exchanges, whether global or local.”
The offering was to be the largest sale of a state asset since 2006. The sale of stakes in this bank is part of a new privatisation programme that includes a long list of government companies. The plans were announced three years ago but have faced repeated delays. Selling stakes from the bank amid the spread of coronavirus would have been a challenge, yet despite this, the Egyptian regime insisted on it to the end, amid increasing fears of the downturn in the global economy.
The Egyptian regime aimed to raise $500 million by offering a percentage of shares, ranging from 20 to 30 per cent, expected to take place in mid-April. This would have been the largest sale of state assets in Egypt as it’s the third-largest government-owned bank and was listed on the stock market at the beginning of 2017 with a capital of EGP 2.25 billion ($142.9 million). The sale was being managed by Hermes and HSBC. With assets of EGP 183.4 billion ($11.70 billion) at the end of 2019, Cairo Bank is ranked sixth or seventh among Egyptian banks. Deep questions and uncertainties surround the timing of the deal amid the global coronavirus pandemic. Economists reiterated repeatedly it was better to postpone the deal because the pandemic would drive down the price and profits. But observers said that the coronavirus itself and the decline in the economy and global trade, which has led to even more losses for Egypt, was one of the reasons the regime insisted on offering the bank’s shares. However, it appears that the low price ultimately nullifies that deal.
Cairo Bank, owned by Banque Misr, plans to offer only about 45 per cent of its shares as part of a government programme aimed at offering a group of companies and public banks to the stock market. Economists say it is not clear how the Egyptian regime will compensate for this loss, since its economy was already in dire straits, which has been made worse by the COVID-19 pandemic.
