CAIRO, 6 March 2005 — Egypt’s investment minister said on Friday the country’s privatization drive is expected to help more than double foreign direct investment (FDI) into Egypt for the financial year 2004/5 after weak inflows last year.
Mahmoud Mohieldin told Reuters his ministry would launch an initial public offering (IPO) in a petrochemical firm in the next few weeks and was also working on selling a fertilizer company, real estate and paper businesses.
The minister also said in a telephone interview he would advertise for an adviser in the first week of April to help sell an insurance firm and restructure three others.
Egypt’s privatization drive is part of a package of economic reforms launched by the cabinet appointed in July to boost investment and lift economic growth. The program involves selling state firms or state-owned stakes in firms.
In 2003/4, central bank figures showed Egypt attracted FDI of $407 million, a figure economists say is paltry for a country of 70 million people and needs to rise if Egypt is to raise living standards and reduce the unemployment.
“It seems that this year is going to see a significant increase in the privatization proceeds and very positive results on the FDI,” Mohieldin said, saying FDI would “more than double” in 2004/5 from the “humble” level of the previous year.
On the latest privatization moves, Mohieldin said the state planned to launch an IPO for a 20-25 percent stake in Sidi Krir Petrochemicals Company (SIDPEC) in March or early April, followed about 10 days later by a similar IPO in Alexandria Mineral Oils Company (AMOC).
He said anchor investors would be sought for both firms, first in SIDPEC, adding that investors from the United States, Europe, the Gulf and India had shown an interest in both firms
“With the promising companies, ... my preference today is to have a combination of an anchor and IPO,” he said, adding this would take advantage of Egypt’s buoyant stock market and broaden the shareholder base to allow Egyptians and others to invest.
Mohieldin said he was working with the Oil Ministry on listing other refinery, petrochemical and energy-related firms for sale, but said the state’s key upstream firms like Egyptian General Petroleum Corp. (EGPC) would not be included.
In addition, he said Egyptian Fertilizers Co., was being valued and said anchor investors from the Gulf, India and Egypt had shown an interest.
The ministry was also working to finalize a deal to sell the real estate firm Nasr and some 43.06 million square feet (4 million square meters) of land owned by the firm — selling them either separately or together.
“We have been approached until this moment by a few investors, one of them a leading firm in the Gulf,” he said.
A paper mill is also being offered, probably to an anchor investor, he added.
“During the last few weeks, I met something like 10 investment banks for brainstorming about the best way to go about the privatization of an insurance company before the end of this year,” he said.
He added that he would advertise in the first week of April for a financial adviser to help with the sale of the first company and the preparation of three others. He listed the four firms as Al-Chark Insurance, Misr Insurance, National Insurance of Egypt and Egyptian Company for Reinsurance.
The Investment Ministry said last month it had completed 16 deals between July and February to sell public firms or other state assets, raising a total of 915.6 million Egyptian pounds ($157.9 million).