Egypt’s sovereign wealth fund to raise authorized capital five-fold up to $62.15 billion

The fund plans to buy a stake of about 30 percent in power plants built by Siemens, which President Abdel-Fattah El-Sisi inaugurated last year, above. (AFP)
Updated 12 November 2019

Egypt’s sovereign wealth fund to raise authorized capital five-fold up to $62.15 billion

  • Egypt’s parliament passed a law allotting 5 billion Egyptian pounds of start-up capital for the fund last year
  • Abdel-Fattah El-Sisi: Egypt could dramatically expand the size of its new sovereign wealth fund to ‘more than several trillion pounds’

CAIRO: Egypt’s sovereign wealth fund is expected to increase its authorized capital to up to a trillion Egyptian pounds ($62.15 billion) from 200 billion pounds within three years, depending on investors’ appetite, the fund’s executive director said.
Last year, Egypt’s parliament passed a law allotting 5 billion Egyptian pounds of start-up capital for the fund, called the Egypt Fund, with 1 billion pounds to be transferred immediately from the treasury.
The law also allows the president, who picks the board of directors, to transfer the ownership of any unused state assists to the fund or to any of the fund’s assists or companies.
“We expect to increase our licensed capital within three years to a trillion pounds or less ... it all depends on the investors’ response and investment appetite,” said Ayman Soliman, the fund’s chief executive.
“The sectors we will work in include industry, traditional and renewable energy, tourism and archaeology,” Soliman said.
President Abdel-Fattah El-Sisi said last month that Egypt could dramatically expand the size of its new sovereign wealth fund to “more than several trillion pounds,” and that it “aims to contribute to sustainable economic development through management of its funds and assets.”
The fund plans to buy a stake of about 30 percent in power plants built by Siemens, Soliman said, adding that six international investors have expressed interest.
“So far, six companies submitted offers to the Electricity Holding company to buy shares in the Siemens power plant,” Soliman said.
The plants, billed at the time as the world’s biggest, were built by Siemens in a €6 billion ($6.61 billion) deal signed in 2015. El-Sisi inaugurated them last year.
In May, Electricity Minister Mohamed Shaker said that the government is considering selling the power plants to private investors, but talks were still at an early stage.


Israel cenbank’s Abir says buying corporate bonds to prevent layoffs

Updated 08 July 2020

Israel cenbank’s Abir says buying corporate bonds to prevent layoffs

JERUSALEM: The Bank of Israel’s decision to start buying corporate bonds should enable companies to issue debt and prevent further layoffs as a result of the coronavirus pandemic, deputy governor Andrew Abir said.
On Monday, the bank held its benchmark interest rate at 0.1 percent but said it would buy 15 billion shekels ($4 billion) of higher-rated corporate bonds in the secondary market.
“It’s not that the corporate bond market was not functioning or because spreads have widened dramatically, but rather the understanding that over the next 6-12 months, there’s going to be a need for issuance in that market,” Abir told Reuters.
The central bank began purchases on March 15 of up to 50 billion shekels of government bonds, which has helped reverse a spike in government and corporate yields.
The index of bonds issued by Israel’s 20 largest firms has gained 1.4 percent following the central bank’s announcement, following three weeks of declines.
Noting that more than 40 percent of corporate credit comes from the bond market, Abir said that fear of being frozen out the market could lead to cash hoarding and cost-cutting, including jobs.
“We want to prevent a situation where a company is having question marks in its ability to fund themselves (and) lays off another 1,000 workers.”
Unemployment is already more than 20 percent and could worsen after some COVID-19 restrictions were reimposed.
Abir said risks to the central bank’s scenario of a record six percent economic contraction in 2020 will be “to the downside” if the infection rate stays high.
Analysts are split over whether the central bank will lower its key rate to zero percent or negative. The Bank of Israel has indicated it is reluctant to do so.
“We still have more measures that we can do. QE can be increased. We haven’t run out of our policy options,” Abir said.