Sarwa Capital to launch trading on EGX next week amid heavy demand from institutional investors

Company targets new sectors including factoring, SMEs, financial services

Sarwa Capital is scheduled to start trading on the Egyptian Exchange (EGX) next week, amid a heavy demand from institutional investors, as the company mulls expanding in the Egyptian market through new sectors, including factoring, insurance, and financial services for medium and small enterprises.
"The company plans to expand geographically in the Egyptian market through opening about 17 new branches in different cities across Egypt," said Hazem Moussa, the company CEO during a press conference Tuesday.
The company previously announced that the final price of its public offering was set at EGP 7.36 per share, after the success of the book-building process for the institutional offering of 265.65m ordinary shares.
"The IPO's proceedings will be used to finance the company's further expansion in the coming period," Moussa added.
Sarwa said in a statement that the institutional offering was oversubscribed around 10.83 times, recording a strong demand of EGP 21bn ($1.2bn), with demand coming from over 280 institutional and high net worth investors.
The retail offering subscription period runs between October 3 and October 10, 2018.
On the other hand, Brokerage CEO at Beltone Financial, Mostafa Abdel Aziz, explained that the private offering was 10 folds oversubscribed, and that most of the demand came from fresh money.
He added during the press conference that 30% of the demand came from Egyptian individual investors, 20% from local institutions, 35% from foreign institutions, while the remaining 15% came from individual, and family investors from GCC countries.
"The retail offering is fully covered by a stabilisation account, which will be settled one month from the first day of trading," the statement read.
The company will allocate EGP 700m of the yields of public and private offerings, to increase its capital by EGP 95.11m, in a closed subscription of selling shareholders at the offer price (EGP 7.36).
"Based on the offer price, the company's post money market capitalisation is EGP 5.3m," Sarwa stated.
Earlier this month, Sarwa announced that it will offer around 295.17m shares, representing 47.2% of total issued share capital, on the EGX.
The statement added that the indicative price for its IPO ranges between EGP 7.04 and EGP 8 per share, with an expected offering size in the range of EGP 2.1bn to EGP 2.4bn.
The shares were offered in two tranches consisting of: a retail offering of 29.52m shares to individual investors, representing 10% of the offering (the retail offering), a private offering of 265.65m shares to qualified institutional investors, representing 90% of the offering (the institutional offering).
Sarwa capital focuses on personal financing services, as almost 85% of the company's operations are instalments provided for automobiles, and durable goods, Moussa explained.
"When we started in 2001, we had EGP 50m in capital, following the IPO, our capital is expected to reach the 1.6bn mark, " he added.
Beltone Investment Banking is acting as sole global coordinator and bookrunner, with Matouk Bassiouny acting as counsel to the issuer.
In August, Sarwa Capital announced its intention to issue IPO on the EGX. Sarwa Capital is a provider of consumer and structured finance solutions in Egypt.