First Equity Partners to become integrated investment bank by end of 2015: Maghawry

New bank to be created to invest in rehabilitation of troubled factories with EGP 500m target capital

An agreement has been made between major shareholders of First Equity Partners Egypt (FEP) to turn it into an integrated investment bank, according to FEP Vice Chairman Omar Maghawry. This will allow the company, which will be transformed into the bank by the end of 2015, to compete with large investment banks in the region, and offer all consulting services. He added that the shareholders are ready for adding new licences in case they were needed.
The company is currently working on restructuring the White House Company after FEP acquired it, by raising its capital, in addition to activating the portfolio management system and brining in new trained staff. Additionally to this, research management and developing the company's statutes will also be undertaken, while strengthening the company's infrastructure.
What are the most important sectors monitored by the company?
The company aims to collect EGP 500m as capital for a new company to invest in the rehabilitation of troubled factories. Most of these factories are small- and medium-sized projects that could not confirm their situation after the 25 January Revolution in 2011. The process of supporting these factories will not only be financially, but a marketing plan will also be put in place in order to promote the products of the factories, in addition to making a change to the boards of directors if needed. Consultations are still underway with a number of banks in order to provide the necessary funding for these projects.
The volume of assets currently managed by the company is estimated at EGP 1bn in the Egyptian market. We are monitoring a number of sectors, most importantly, small and medium projects within their activity in the field of direct investment. The company is considered the main gateway and the investment agent for Arab clients in particular, and foreign clients in general, who are interested in investing in the Egyptian market. The company provides them with an integrated package of advisory services, information and feasibility studies for their future projects.
How do you see the SMEs sector?
Small- and medium-sized enterprises [SMEs] are facing the problem of the lack of a standard definition for them. Moreover, they are equal in loan guarantees and tax with large companies. These projects are not stimulated by the state to encourage domestic product contribution in industries. Finding a successful environment for the growth of these industries needs the demand on small companies' products be stimulated, as well as creating markets for them and providing cheap financing alternatives.
What about other sectors?
We are very interested in using part of the funds as a direct investment in the heavy industries sector and the small and medium industries. There is a study of companies working in the medium industries field with a volume ranging between EGP 200m and EGP 250m. We are currently planning for an increase in capital in Injaz Egypt, founded with capital of EGP 10m, in order to invest in small- and medium-sized food companies. It acquired ruling shares with two companies in the sector of food industries through increasing its capital. It is also participating in opening markets for these companies and providing them with needed expertise to achieve growth. We are currently planning to create a portfolio that includes four to five companies in the food sector, then move on to companies that serve this sector, in addition to studying the process of acquiring two other companies.
What is your opinion on Egypt's investment climate and the recent economic reforms? Do you think they are enough?
The recent economic reforms are good but not enough, and were definitely less than the ambitions of the finance and business communities that still suffer from bureaucracy in the completion of their businesses, especially the investment law. So far we have not seen a real activation of the one stop shop system. Without it, Egypt will not be able to take even one step forward in the investment field. Egyptians are consumers not producers; therefore, we need a lot of work. Economy should also be "recycled " during the next phase, especially as the Egyptian economy went through a very critical phase over the last few years that passed peacefully with God's help.
How do you evaluate the system of resolving investment disputes?
Resolving investment disputes is slow and dispersed between different bodies, what leads to disrupting resolving the disputes. I hope that disputes resolving would happen through a faster system with clarity, or else, the confidence in the investment climate will shake. New investments or expansions will never occur unless existing disputes are resolved. Investors need a stable legislative system, in addition to clarity in the government's vision of projects, and a commitment to contracts. The rest of the investment incentives come within the second phase of investors' demands.