2 - 8 December 1999
Issue No. 458
|Published in Cairo by AL-AHRAM established in 1875|
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No autumnal bluesBy Sherine Abdel-Razek
October's improved market performance continued into November, as new joint-ventures, major privatisation deals and increasing foreign investment boosted market activity.
The capital market index jumped to 553 points during the last trading week of the month, pushing gains since the beginning of the year to 44.6 per cent. But as important as November's upswing in figures, are the significant events that have taken place during the month.
The financial markets received a boost with the news that a new joint venture was being formed between the London-based investment bank ING Barings, Concord International Investments and Banque Misr. The new company is capitalised at LE35 million, held equally by the three partners. The new venture -- which has yet to be named -- will specialise in corporate finance, including the offering of consultancies for companies, inside and outside the local market, seeking restructuring or capital raising advice.
Among the company's first projects will be the management of a new investment fund, with $100 million to invest in the Egyptian capital market. The formation of the new company marks ING Barings' return to the Egyptian market.
Flemings CIIC, a one year-old joint venture between the British group Robert Flemings and the Commercial International Investment company (CIIC), meanwhile acquired a 40 per cent stake in Al-Ahly for Fund Management. Egypt's oldest fund management group was formed by the National Bank of Egypt (NBE) in 1994 and manages NBE's two investment funds.
El Ezz-Steel Rebars announcement of its planned Eurobond launch marks a new development in the market. The $130 million offering -- denominated in dollars -- will mature in four years. The offering, the first by an Egyptian company to be dominated in dollars, is intended to finance El-Ezz's acquisition of a 20 per cent stake in Alexandria National Iron and Steel (ANSDK).
The first $65 million of the offering will be floated by private placement while the second half will be offered publicly, starting this week.
The Commercial International Bank(CIB), widely tipped to be the first local company to launch eurobonds, has until now restricted itself to the local market on the grounds of expense.
CIB has itself attracted attention over the last three weeks amid rumours that two international investment houses -- Citibank and ABN Amro -- are planning to buy majority stakes in the privately owned bank. CIB officials attempted to dampen the speculation, insisting that it was fuelled by the bank posting a 29 per cent increase in profits during the nine-months to September.
CIB's surge in profits was echoed by both the NBE and Banque Misr. NBE registered a 30 per cent improvement -- to LE392 million -- in net profits for the fiscal year 1998-1999, while Banque Misr saw a 45 per cent increase, as profits climbed to LE225 million.
November also saw two important deals reach their conclusion. The Mexican company Cemex finalised a deal with the Egyptian government to acquire 90 per cent of state-owned Assiut Cement in a LE1.2 billion deal. The remaining 10 per cent was sold to Assiut's Employee Shareholder Association(ESA). At the same time, the Bahrain-based Arab Banking Corporation (ABC) acquired a 66 per cent stake in the Egyptian Arab African Bank, paying LE50 a share. ABC, it has been agreed, will increase its stake to 95 per cent at a later stage. The conclusion of these two deals pushed the value of foreign transactions on the stock market in November to LE2.4 billion.
Media City shares, first offered in late October, made a particularly eye-catching debut. As permitted by Stock Exchange regulations, the five per cent ceiling on the daily movement of shares was lifted for the first three days of trading, which led to a speculation-fed 300 per cent increase in the offering price. The shares peaked at LE40, and then fell dramatically to end last week at LE22.50.
It was MobiNil, however, that was the market's most popular stock, and also its best performer, reaching LE107 per share in November, compared to an initial offering price of LE10 in February 1998.
Analysts, though, sound a pessimistic note, predicting that the market will suffer setbacks in December as investors begin to develop millennium cold-feet.