Egypt delays plan to sell 4.5% additional stake of Eastern Company amid tough market conditions

The secondary offering could take place sometimes by the end of next month: sources

Egypt has shelved plans to sell a 4.5% additional stake of Eastern Tobacco Company, attributing the decision to tough market conditions and fluctuations in the global stock market, the Ministry of Finance said in a statement on Friday.
The ministry added that the postponement decision was “in light of the recent developments in the global financial markets … because of the coincidence of many external factors, most notably the increasing protection policies followed and the trade war between the United States and China and the difficulties facing a large number of markets.”
The shares were due to be floated this month, while the statement did not mention a new date for its implementation.
"The secondary sale of Eastern company shares could take place sometimes by the end of the next month," a senior governmental source told Daily News Egypt.
"We will continue to assess all conditions before any further step awaiting better times to debut the IPOs governmental program," the source added.
The Ministry of Finance announced last month that the government would start the program of proposals to sell 4.5% of the shares of the Eastern Tobacco Company on the stock exchange to raise about one billion pounds.
In May, Egypt's state-owned Holding Company for Chemical Industries said it had agreed to sell part of its stake in Eastern Tobacco on the Cairo exchange.
Zulficar & Partners is going to offer to legal advice to the sale in the state-owned tobacco maker, sources closed to the transaction said.
EFG Hermes signed on two weeks ago to quarterback the transaction, which is expected to take the form of an accelerated bookbuild.
Public Enterprises Minister Hisham Tawfik said last week that the stake sale is scheduled to take place sometime between 21-25 October.
Egypt has been promising for two years to IPO stakes in state-run companies, part of an effort to boost the stock exchange and restructure bloated public-sector companies by making them accountable to investors. Egyptian officials have said the focus would be on financial and energy companies.
"We see the program as positive for the market, as it will lead to a larger market cap as a result of new IPOs and a larger float market cap due to secondary sales of stakes in already-listed securities," Cairo-based EFG-Hermes said in a recent research report.
The share offerings build on economic revival efforts that began with the November 2016 decision to float the currency to end a dollar shortage that had crippled business activity.
That move helped secure a $12bn International Monetary Fund loan, boosting investor confidence in an economy that had struggled since President Hosni Mubarak's 2011 ouster.