Bucking emerging market trend, Egypt is one of the most preferred destination for foreign investors

This year, Egypt has become the most preferred destination for foreign investors among emerging markets. The sale of some state-run assets to gulf investors has helped attract more foreign capitals to the Egyptian market, exceeding $4 billion.

This reflects Egypt’s continuous successful economic reforms and its political stability. Such factors continue to reinforce the market strength and its capability to receive more investments, whether from the Gulf or worldwide. In fact, this considers a testament to the foreign investors and financial institutions’ long-term positive outlook for the market.

 

We see here the Sovereign Fund of Egypt (TSFE) playing a vital role in forming partnerships with counterparts in the Gulf.  In 2022, the TSFE has successively attracted $3.3 billion worth of investments by Arab sovereign funds in sectors of green hydrogen, real estate, renovation of antiquities, manufacturing, financial services, digital transformation, and education.

 

It all started with Abu Dhabi’s sovereign wealth fund ADQ acquiring some stakes in five mega companies listed in the Egyptian stock exchange (EGX), as the transactions had totaled $2 billion – equivalent to more than 28 billion Egyptian pounds (according to the exchange rates at the time of completing the deals).

 

The deals included buying more than 340 million shares equivalent to around 18% stake in the Commercial International Bank (CIB Egypt) for almost $911.5 million. In addition, the fund bought 46 million shares in Misr Fertilizers Production Company (MOPCO) for $266.6 million as well as 271.6 million shares in Abu Qir Fertilizer and Chemical Industries for $392 million.

 

It also purchased 215 million shares in Fawry for Banking and Payment Technology Services for $86.6 million in addition to 476.7 million shares in Alexandria Container and Cargo Handling Company for $186 million.

 

 

 

Furthermore, AD Ports Group has finalized an agreement to acquire a 70 percent equity stake in Egypt’s International Associated Cargo Carrier (IACC) for AED 514 million ($140 million) at the end of the third quarter of 2022.

 

As for the Saudi Arabia, its Public Investment Fund (PIF) has acquired minority stakes in four state-run Egyptian companies for around 25 billion Egyptian pounds ($1.3 billion).

 

The Saudi sovereign wealth fund bought around 19.8% stake in Abu Qir Fertilizer and Chemical Industries, around 25% in MOPCO, 20% in Alexandria Container and Cargo Handling Company, and 19.8% in E-Finance.

 

In addition, PIF is in advanced talks to acquire the United Bank, which is owned by the Central Bank of Egypt (CBE), in a deal worth around $600 million. It is also expected that PIF through its set-up firm the Saudi Egyptian Investment Company would announce some more acquisitions in several sectors in Egypt.

 

The TSFE has formed an investment strategy with the UAE and Saudi Arabia, as the two countries are targeting areas of food security, pharmaceutical, education, healthcare, trade, financial inclusion, and manufacturing.

 

The Egyptian fund is also studying 44 projects with investments worth up to 140 billion Egyptian pounds, covering numerous sectors.

 

These sectors are tourism, manufacturing (particularly the agricultural, pharmaceutical, and technological manufacturing), infrastructure, green hydrogen, desalination plants, logistics zones, financial services, financial inclusion, fintech, food, agriculture, with special focus on water-use high-efficiency projects.