By Ahmed Kamel CAIRO, May 15, 2018 - The government will start its long-awaited programme to free-float stakes in state-owned companies in June, Prime Minister Sherif Ismail said on Tuesday. The programme's first phase will float stakes in 4-6 companies of the petroleum, petrochemical and manufacturing sectors. The floated stakes are estimated to be worth between LE15 billion (around $845 million) and LE18 billion, Finance Ministry data showed. The prime minister told the Cabinet meeting that the initial public offering (IPO) programmewas aimed at boosting the stock market through the planned floated stakes. Earlier, Finance Minister Amr el-Garhy made it clear that selling off stakes in state-owned assets "is not privatisation", and he said that these selected firms would go public through listing on the stock market. The plan is part of a structural reform programmeapproved by the International Monetary Fund (IMF) in November 2016. The IPO programme will also enhance governance and provide these companies with the funding required for expansions. Banking on a stock market uptrend, the IPO programme is forecast to attract local and foreign investors to buy into the floated stakes. The market conditions are positive given the political stability and growing investor confidence in the Egyptian economy.The local market liquidity has been on the rise over the past month, with an average of LE1.2 billion per day, bourse data showed. Market sentiment has been improving since the currency float thanks to legislative and economic reforms initiated by the Sherif Ismail-led Cabinet. In March, the government announced a plan to free-float stakes in 14 state-owned companies for the first time and increase the floated stakes in nine others. The 23 state-owned companies comprise the nation's first phase of IPOs expected to be carried out in the next 24-30 months. The 23 companies were selected from the oil and petrochemical, logistic, financial services, real estate and manufacturing sectors. The nation's top companies include Misr Insurance, E-finance, the Housing & Development Bank, Banque du Caire and the Bank of Alexandria, Engineering for the Petroleum and Process Industries (ENPPI), the Middle East Oil Refinery Company (Midor) and Sidi Kerir Petrochemicals. The market value of the 23 companies is estimated at LE430 billion, Finance Ministry data showed. The government said in its Memorandum of Economic and Financial Policies sent to the IMF, that the initial focus would be on "viable successful companies in the following sectors: banking and financial services, oil and gas, petrochemicals, building materials, and real estate development". "The programme is aimed at redeploying Egypt's public assets to their most productive use by widening the ownership base, enhancing transparency and corporate governance, improving financial management, diversifying investment sources, and attracting new investments that can enhance market capitalisation," the memorandum said.
