CAIRO: Golden Pyramids Plaza, the company that owns CityStars, is studying an initial public offering (IPO) of up to 40 percent of its capital. The company is currently owned by a group of Saudi investors led by the Sharbatly Group. Although the company has not given any indication of the possible size of the offering, it is likely to be substantial in light of the fact that over $800 million was invested in the construction of CityStars. Mohamed Abul Yazeed, financial and administration advisor at Golden Pyramids Plaza, says in an interview with The Daily Star Egypt that the company is in the process of preparing necessary documentation for the IPO and has hired a consultant to rate the firm. I expect the IPO to take place after eight months, says Abul Yazeed. CityStars is a mixed-used real estate project in Nasr City. The first phase of the project was completed 18 months ago with a shopping mall, residential apartments, offices and the Intercontinental Hotel. The second phase is currently underway and involves the extension of the shopping mall and the residential buildings, which is due to be completed in September, as well as the construction of a second hotel, the Holiday Inn, which is scheduled to open at the end of this year. Some of the IPO proceeds will be used to fund the current expansion and some will be used to fund new investments, says Abul Yazeed. The other new investment will be in Sharm El-Sheikh and we are currently studying the feasibility of this project. The project in Sharm El-Sheikh will be a smaller version of CityStars. Abul Yazeed describes it as a complete touristic complex, consisting of hotels, residential [buildings], a shopping center, entertainment [and] many activities. The shopping center at CityStars has been successful in attracting new international brands to Egypt such as Virgin, Mango and Benetton. Elhamy El Kerdany, operations and tenant relations general manager at Golden Pyramids Plaza, says that the second phase has also attracted a number of additional international brands following the success of the first phase. The expansion is about 60,000 square meters of leasable area, and it is planned to be opened by September this year, says El Kerdany. This expansion will have mostly international brands as we found a lot of demand from them after we opened Phase One. The mall receives an average of 45,000 visitors per day, according to El Kerdany, and its architecture has contributed to its success. It is unique in its design and it meets the international standards of these brands, says El Kerdany. If you take any of the components separately, like the shopping center, you will not find any shopping center in Egypt that meets the requirements of the international brands, regarding the height of the ceiling, the corridors, safety regulations and the spaciousness of the center itself. The complex as a whole benefits from a common high-tech infrastructure, thereby attracting companies such as Cisco to set up offices there, while shoppers are kept entertained in the mall with a movie theater and a gaming area. The magic formula for a successful shopping center is to mix between shopping and entertainment, says El Kerdany. Since most of the products are imported and hence more expensive than local goods, the mall targets a more affluent segment of the population. El Kerdany concedes that the complex is pursuing a niche market, but explains that a good segment of its target market lives in Cairo. One of mall s major initial obstacles was the restriction on importing ready-made garments. These restrictions were relaxed by the government recently and the duties were reduced to approximately 40 percent. Although this may still seem high, El Kerdany explains that it is offset by lower rent, labor and other costs in comparison to other countries. We faced a lot of obstacles, because the previous cabinet was not as flexible as the one we have now, says El Kerdany. The law changed now; it is now less restrictive for textile and ready-made garments ... Egyptian [retailers] were not enough to fill the spaces. The location of the complex is also intended to cater to potential tenants of its residential buildings. The surrounding is Nasr City, which is occupied by Egyptians working in the Gulf region, says El Kerdany. And its population is approximately 2.6 million. This is our target segment. Abul Yazeed is unperturbed by the recent upsets in the Egyptian stock market, explaining that his company has an established track record as a leader in real estate development and its expansion plans are in line with its experience. All our potential stores will be in the same previous line [of business], so the risk will be minimal if we compare it to overall economic risk in this country, says Abul Yazeed.
