Cairo November 16 2023: Egypt’s government completed its biggest single asset sale this year by offloading a stake of about 30% in the country’s largest tobacco company, part of a privatization push aimed at raising sorely needed hard currency.
The Egyptian stock exchange on Thursday reported a block trade for Eastern Company involving an unspecified buyer and worth 16.4 billion pounds, equivalent to about $530 million at the current exchange rate.
The government earlier announced it had agreed to sell the stake to United Arab Emirates-based Global Investment Holding. Officials at the time said the transaction was valued at $625 million and that the UAE company would provide $150 million for the purchase of raw materials for manufacturing.
It wasn’t clear if a different conversion rate had been used in the completed deal or what might explain the discrepancy in valuations.
Eastern separately said its shares were purchased by the UAE firm at 24.52 pounds apiece — a discount of more than 12% to their closing price on Wednesday — valuing the business at almost $1.8 billion. Cairo-based investment bank EFG Hermes said it advised Global Investment Holding on the deal.
The fundraising by Egypt has shifted into higher gear as it faces its worst foreign currency crunch in decades. The government separately tapped Asian capital markets in recent weeks with bond sales in China and Japan.
The state asset sale program is a key part of a broader plan to revamp the economy, as the International Monetary Fund pushes authorities to make good on an earlier promise to implement a more flexible exchange rate regime.
Although the IMF provided Egypt with a $3 billion loan, the Washington-based lender has yet to conduct several program reviews that would unlock other tranches and pave the way for an expected fourth devaluation of the pound.
Egyptian authorities have devalued the currency three times since March 2022, roughly halving the pound’s value and sending local prices soaring.
