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IPOs to the fore
Published in Ahram Online on 17 - 08 - 2021

The state-owned Administrative Capital for Urban Development (ACUD) Company may be listed on the stock exchange within two years, according to statements by President Abdel-Fattah Al-Sisi on Saturday.
"We are talking about raising some LE100 billion. The Company's assets are estimated at between LE3 and LE4 trillion," Al-Sisi said during the opening of a number of residential projects in Badr city.
Following Al-Sisi's announcement, Ahmed Zaki Abdine, CEO of ACUD, said the company's assets included the land portfolio under development. He said that much of the land had been sold, with ownership moved to real-estate development companies. There were also government facilities not considered under the ownership of ACUD, he said.
ACUD was established by presidential decree in 2016. It is the owner and developer of the land at the New Administrative Capital, the first phase of which is under construction. The company is owned by the New Urban Communities Authority and the National Service Projects Organisation.
Abdine said ACUD had a land portfolio of 174,000 feddans, and the first phase was finalised on an area of 47,000 feddans. The second and third phases will follow. Land left undeveloped will be assessed in order to estimate the real size of the company's assets, he added.
The value of the company's land portfolio is increasing year by year as a result of the development taking place and the high standards of the infrastructure projects, Abdine stated.
Financial inflows from instalments paid to the company for land sold in the first phase and planned to be sold in the second phase guarantee the availability of the liquid funds mentioned, he added.
The New Administrative Capital is a three-phase project covering an area of 700 square km east of Cairo. It will transform the desert into a modern urban hub of government buildings, embassies, and leading companies and will host the tallest tower in Africa.
The government is scheduled to move up to 50,000 employees to the New Administrative Capital by December, and the monorail linking it with Cairo is expected to become operational by mid-2022.
The LE100 billion initial public offering (IPO), Egypt's largest ever, is awaiting the appointment of a financial advisor, lead regulator, and bookrunner.
Hani Tawfik, chairman of the Direct Investment Association, said the announcement of the IPO had had a positive impact on stock market indices, which rose during Sunday's session by about 1.5 per cent.
He added that more important than the announcement of the offering was its overall significance, meaning that the state was paving the way for the entry of private and foreign investment.
Tawfik said the IPO would attract foreign and Arab investors who often prefer to invest in real-estate stocks that are known for their good performance on the Egyptian Stock Exchange.
The introduction of ACUD as an IPO is expected to increase liquidity in the market and attract more local and international investors. Telecom Egypt was previously the largest IPO since 2015, collecting LE5.1 billion.
Toka Al-Waziri, a real estate analyst with Beltone, an investment bank, believes the announcement of the ACUD offering means that the market is witnessing an increase in listed real-estate stocks. It would revitalise the market due to the large amount of liquidity involved, she said.
The preparatory steps preceding the offering will reveal information about Egypt's real estate market, the size of the demand for ACUD stocks, and the units for which there is high demand, Al-Waziri said.
It is crucial that the offering be well-publicised at home and abroad, she added.
"We are in the planning stage now and can start the procedures for choosing advisers and deciding the size of the offering early next year," Abdine told the US Bloomberg channel. "We hope this IPO will be the largest in Egypt's history."
The offering will take place on the Egyptian Stock Exchange and "very possibly in another international market as well," he added. "We are studying this option."
Al-Waziri believes that the IPOs the government had earlier announced, but then postponed, will attract more investors to the ACUD IPO if implemented or partially executed.
Egypt's IPO programme surfaced in 2018 with the target of offering 23 public companies on the Egyptian Stock Exchange. But by March 2019, only 4.5 per cent of Eastern Tobacco shares had been offered. Other IPOs were postponed due to unsuitable circumstances.
It was expected that Banque du Caire and e-finance, a national developer of digital payments infrastructure, would be among the first companies to be offered. It was also anticipated that additional shares would be offered in Alexandria Containers and Cargo Handling, Abu Qir Fertilisers, and Sidi Kerir Petrochemicals, but the plans were postponed.
Al-Waziri said that Egypt's real estate sector has been revitalised over the past year. The year before, the sector had witnessed a slowdown as a result of the coronavirus pandemic, she said. According to the performance of companies listed on the bourse, all real-estate sectors have recovered.
Besides promoting the ACUD IPO, it should also be accompanied by exemptions on taxes on investing in the stock exchange and stamp duties on buying or selling whether profits are garnered or not, she added.

*A version of this article appears in print in the 19 August, 2021 edition of Al-Ahram Weekly

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