Panorama of 2022: The year of Gulf acquisitions in Egypt

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The year 2022 witnessed a significant increase in Saudi and Emirati influence in the Egyptian economy, as the severe economic crisis suffocating the country allowed Gulf wealth funds to acquire government-owned stakes in some of the most potent companies listed on the Egyptian Stock Exchange, in return for immediate payment in dollars to alleviate the foreign exchange crisis.

According to the “Harvest of Monitoring and Acquisitions in 2022” report, prepared by the Enterprise Economic Bulletin, Abu Dhabi’s sovereign wealth fund (ADQ Holding Company) and Saudi Arabia’s Public Investment Fund together own nearly half of Egypt’s two largest fertilizer companies, currently owning 41.5% of Abu Qir Fertilizers Company and 45% of Misr Fertilizers Production Company (Mopco).

The financial sector was also one of the biggest targets of the two funds, with ADQ Holding becoming the most significant independent shareholder in Commercial International Bank, the largest private sector bank in the country, and Fawry, a leading financial technology company. The Fund bought a 17.2% stake in the Commercial International Bank for $911.5 million and 11.8% of Fawry for approximately $55 million. Meanwhile, the Saudi Public Investment Fund acquired a 25% stake in state-run e-finance, and according to reports, there are talks with the central bank to acquire The United Bank fully.

The Public Investment Fund increased its presence in the pharmaceutical sector in Egypt by acquiring 4.7% of the Egyptian International Company for Pharmaceutical Industries (EPICO) and increasing its stake in the Tenth of Ramadan Company for Pharmaceutical Industries and Diagnostic Products (Rameda) to become the second largest shareholder in the company. The Saudi Wealth Fund also acquired 34% of the “B-Tech” company, which specializes in retail trade and distribution of household and electronic appliances, for an undisclosed amount. At the same time, ADQ Holding acquired a controlling stake in the Auf Healthy Food Group, which owns the famous Abu Auf food brand.

Gulf funds entered the port sector firmly. Most Gulf wealth funds now own the Alexandria Container and Cargo Handling Company after state institutions agreed to sell their shares to provide hard currency liquidity for the country. ADQ Holding acquired a third of the company listed on the Egyptian Stock Exchange for $186.1 million in April. The Saudi Public Investment Fund followed suit four months later by acquiring a 20% stake for about $156.3 million. Abu Dhabi Ports, majority owned by ADQ Holding, bought a 70% stake in Egyptian International Associated Cargo Carrier (IACC), one of the country’s leading private sector shipping companies, for $140 million.

Gulf wealth funds are just some of the ones hungry for Egyptian assets. Several private sector players from Saudi Arabia and the UAE have made significant acquisitions this year. The Egyptian-Belgian Industrial Investments Company and Brief Systems are now in Saudi hands. Besides UAE investment company, Remco bought 3% of Edita, a leading snack food manufacturer. The Emirati National Dyes Holding Company is trying to acquire the Paints and Chemical Industries Company (Pachin) listed on the Egyptian Stock Exchange, which owns more than half of government institutions and banks. The distribution arm of Abu Dhabi National Oil Company (ADNOC) has offered to take over half of the Total Energies Egypt, one of the country’s largest petrol station operators. Chimera Investments acquired 56% of Beltone Financial Holding for EGP 384.8m ($20.3m) in July, followed by purchasing a 22% stake in Dutch MNT Investments, the majority owned by GB Capital for financial investments. A subsidiary, GB Auto, also agreed to sell a 45% stake in GB for financial leasing to the UAE investment company.

Qatar is set to enter the scene soon, as one of the main factors driving Egypt’s rapprochement with its former regional rival was the search for new foreign direct investment. Doha was happy to enter talks to acquire stakes in Egyptian companies. Discussions on the Qatari side were led by the Qatar Investment Authority – the country’s sovereign wealth fund – reportedly considering spending up to $2.5 billion to buy state-owned stakes in several companies, including Vodafone Egypt. Talks with Qatar’s sovereign wealth fund continued throughout the year with little disclosure from the parties involved. However, the Qatar Investment Authority placed $1 billion with the Central Bank of Egypt as a temporary deposit until the agreements were finalized. The Qatari company “Baladna” for the dairy industry became the third largest shareholder in Juhayna, the largest producer of dairy and dairy products in Egypt, with a series of stock purchases during the year that witnessed its acquisition of more than 10% of the company.

This significant presence in the economic scene doubles the influence of the Gulf countries in Egypt, especially the Saudi and Emirati influence, which has grown a lot since 2013 after the two countries supported the army’s overthrow of elected President Mohamed Morsi and the exclusion of the Muslim Brotherhood from the equation of government, and provided about $70 billion to support the stability of the military regime headed by Abdel Fattah al-Sisi. This influence appeared strongly on many occasions, most notably the Egyptian position on the conflict in Libya and support for the Khalifa Haftar front supported by the Emirates, as well as the introduction of Egypt into regional arrangements with Israel to confront Iran. The latest manifestations of this influence appeared in Egypt’s negotiations with the International Monetary Fund to obtain a $3 billion loan. The UAE and Saudi Arabia had a decisive role in setting the conditions the government must adhere to get the loan.