CAIRO: Amer Group, a local real estate development firm, announced this past weekend that it intends on raising LE 930 million through a private placement and LE 220 million through a public share offer, according to recent media reports. “We expect the private offering to close around Nov. 21, the public offering to close on Nov. 24, and share-dealing to start on the exchange on Nov. 29,” Alaa Sabaa, chairman of Beltone Financial, stated at an investor conference on the IPO, Reuters reported. Furthermore, “the private offer is between LE 2.6 and LE 3.6 per share, but the final value for the public offer will be announced around Nov. 20,” adding that the final dates and details would be announced next week, Mansour Amer, chairman of Amer Group pointed out. Sabaa indicated that the share prices for both the private and public offerings would be equal. Vice President of Research, Monsef Morsy of Pharos Holding, a Cairo-based investment firm, explained that Amer Group's announcement was motivated by the need to finance projects in both Egypt and abroad in countries such as Syria and Saudi Arabia. Morsy stated that the precise details of those projects are still unknown. He added that the firm's ambition to expand beyond the Egyptian market falls within the scope of what several other firms, such as Talaat Moustafa Group (TMG) and Palm Hills Developments, two leading Egyptian real estate firms, have already been doing. TMG and Palm Hills are already present in Saudi Arabia, while SODIC, also a major Egyptian real estate development firm, has established projects in Syria, Morsy said. In his view, Amer Group's decision to expand abroad demonstrates that the firm is playing a bit of “catch up” with its local competitors. However, he added, “They are not that behind” with the competition, and their decision further represents that there is renewed growth within the real estate market. Amer Group, which specializes in secondary or vacation homes, is not entirely in direct competition with firms such as TMG, which specializes in primary housing, he noted. Morsy believes that raising cash through this avenue is “very important” for Amer Group's expansion plans, as real estate development firms often rely on advanced payments and installments form unit sales to finance projects. Commenting on the launch of the IPO, Sabaa stated, “This is a good time to launch an IPO because there is demand for Egyptian investments … There are not many other IPOs in the Arab region ... this is a good time to meet demand in our region.” Yet, Hisham Halaldeen, senior investment analyst at Naeem Brokerage, noted that the Egyptian real estate market has slightly cooled off due to the ongoing Madinaty imbroglio. The Talaat Moustafa Madinaty development has been bogged down in a legal dispute since June 2010, when a local court decided that the contract for the sale of the state land for the project was illegal. The result, Halaldeen noted, has been a dip in investor confidence in the Egyptian real estate market. He added that the issue would nonetheless be likely resolved toward the end of this year after the new parliament has convened and addressed the disagreement, which should eventually lead to renewed investments and growth in the sector.
