The SIDPEC offering is one of a handful of events pushing the market upwards. Sherine Abdel-Razek reports A long awaited Initial Public Offering (IPO), a new investment-friendly tax law, an increase in foreign interest in the leading sectors, what more could market observers hope for to energise the market? After weeks of investors cashing in through heavy selling transactions in anticipation of Sidi Krir Petrochemicals (SIDPEC)'s IPO, the market witnessed an increase in investors' interest, particularly in light of the low levels to which prices have dropped amid the selling spree. The new tax bill, reducing tax rates by half and providing both companies and individuals with more money, also stirred transactions in the Cairo and Alexandria stock exchanges. For three trading days after the 8 June IPO, the market maintained a buoyant trend though Monday's transactions ended in red due to limited profit taking activity. Subscription in SIDPEC's private placement will last until Sunday. Early subscription trends show that the private placement seems to attract more interest with a relatively lower demand on the IPO. This comes in spite of the fact that the prospects limited the subscribers in private placement to investors with strong financial positions with minimum buying orders of 100,000 shares. While the minimum price for the offering is set at LE70, a report issued by Prime Securities put the fair value of the share at LE84 if the company did not undergo any future expansions and LE110 if it did. A SIDPEC official said the company was approached by several local and international banks to finance its future expansions. However, the official said that no decision has been taken pending the outcome of the company's IPO and private placement. SIDPEC has previously announced that the 20 per cent currently floated will be followed by the sale of another stake to an anchor investor. OT fared well, still capitalising on the euphoria resulting from its owners', the Sawiris family, successful bid for the Italian telecommunication unit Wind. Another source of joy for OT's investors was the announcement that its subscribers base increased to 20 million for the first time, compared to 17.5 million subscribers at the end of first quarter 2005. On Monday the company recorded an all time high of LE533.8. The Sawiris' building and construction unit, Orascom Construction Industries (OCI), registered an 83 per cent increase in its first quarter net profits to reach LE340.519 million. OCI is inviting investors to subscribe to its seven-year non- convertible bond with a total value of LE1.45 billion. The company maintained the lion's share of transactions during last week and early transactions of the current week. With LE154 million worth of its shares changing hands last week, it was the market's highest in terms of turnover. EFG-Hermes attracted a lot of attention as well. Stimulated by a recent spate of investment banking deals, the financial services company ranked second in terms of market transactions throughout last week and posted impressive results in its first quarter. EFG-Hermes net income reached LE41.4 million, a turnaround from a loss of LE2.1 million during the first quarter of last year. A news bulletin issued by HC brokerage said that the increase in the Egyptian stock market's equities transactions has helped the company's bottom line. "EFG-Hermes' market share in brokerage has grown to about 25 per cent, up from 17 per cent in 2004. The company's new operations in the United Arab Emirates recorded revenues of LE1.1 million in the first quarter from trading on both the Dubai and Abu Dhabi stock exchanges, with market shares to the tune of 1.5 per cent and two per cent, respectively," the bulletin stated. Misr International Bank (MIB) outperformed other banking sector stocks gaining around 15 per cent to reach LE46.21. The witnessed boost in MIBank may be a result of high expectations for the sale of the public sector stake over the coming few weeks. Good news concerning foreign interest in local companies supported these transactions. TATA, the Indian Chemicals group interested in acquiring 100 per cent of Egyptian Fertilisers, has raised its bid offering to $352 per share versus the previous offering of $305. The new total value will amount to $519 million. The bid stipulates a minimum buyout of 88.25 per cent of Egypt Fertilisers. TATA is facing fierce competition from EgyptKuwait Holding and the Saudi Basic Industries Corporation SABIC. The Saudi group was awarded a contract in 2003 to establish a fertiliser plant in Egypt at a cost of $300 million. SABIC's chances are believed to be greatly enhanced after the minister of investment received a delegation of the company's senior officials on Monday to discuss their investment strategies in the Egyptian fertilisers, petrochemicals and steel industries. In other news, the rising star of the cement sector, ASEC Cement, maintained its recent rally on news of Italcementi bidding to acquire the company. Arab-Suez Company for Engineering (ASEC), said early this week, that it initialed a deal for Italy's largest cement firm, Italcementi, to buy its 68 per cent stake in ASEC Cement. According to the deal, Italcementi would conduct a due diligence study and offer a bid to buy the stake and the remaining 32 per cent of ASEC Cement Co through the stock exchange within two months. The average price of the offer will range between LE29 and LE31. ASEC Cement shares were traded at LE27.32 on the last trading day before the deal was announced. If concluded, the deal will give Italcementi a further 8.6 per cent share in the local cement market. Through its ownership in Cements Français which owns a majority stake in Suez Cement, Italcementi now controls 22.4 per cent of the cement market. ASEC cement has recently increased its capital to LE1.18 billion as a means to partially finance its bank debts of LE1.327 billion. While the overall market transactions during the week ending on 9 June came to LE1 billion, the share of bonds traded was limited to LE47 million. The volume is low considering the decline in interest rates after the Central Bank of Egypt revealed a plan to adopt a new technique in determining the overnight bank rates.
