Egypt sale of stakes in state companies are factoring in Aramco IPO

What’s set to be the world’s biggest IPO is already causing ripples across the Red Sea.

Egypt government says banks advising on its own long-awaited sales of stakes in state companies are urging it to take the looming listing of Saudi Arabia’s Aramco into account. That could mean a shift in the North African nation’s plans to raise about GBP80bn ($4.95bn) from all its offers and bring in much-needed foreign investment.

Aramco hasn’t given a date for its IPO, but Al Arabiya TV reported this week the oil giant will start trading on Saudi’s stock exchange December 11.

“Aramco is the biggest IPO in the world and we should take it into consideration when deciding the timing of our offerings,” Public Enterprise Minister Hisham Tawfik said in an interview. “This is the message we got from the investment banks.”

While Abou Kir Fertilizers & Chemical Industries and Alexandria Container & Cargo Handling are both almost ready to sell stakes, Tawfik said authorities will meet advisers “soon” to discuss the timing. He didn’t specify whether that could mean bringing forward the sales to before the reported date of Aramco’s offering, or pushing them further back.

Broader plans 

NI Capital, the government’s investment bank and adviser on the sales, said EFG-Hermes Holding Co. and Citigroup Inc. are managing Alexandria Container & Cargo’s offering. CI Capital & Renaissance Capital are managing Abou Kir.

Egypt has been planning the offering of ownership in government-run entities as part of a broader effort to turn around bloated public-sector companies. Officials seek to offer stakes ranging from 15-30 per cent in more than 20 firms in sectors including petrochemicals, oil, finance and real estate.

After several delays, the government kicked off the program with an additional 4.5 per cent stake sale in tobacco monopoly, Eastern Co. Abou Kir and Alexandria Container & Cargo are next in line.

Earlier plans to offer the companies were pushed back for various reasons, including the lackluster performance of one private company’s IPO, as well as a general downturn in the investment climate.

Tawfik also said a sale of part of the government’s stake in property developer Heliopolis Housing is expected to be ready in the first quarter of 2020. Current shareholders have approved handing over management to a strategic investor that takes a 10 per cent stake from the 22-25 per cent it will offer, he said.