Egypt's Arabian Cement plans IPO
Cairo, April 15, 2014
Egypt's Arabian Cement Company plans to hold international presentations from next week aimed at attracting investors to a stock market debut that would be the first in Cairo since the fall of autocrat Hosni Mubarak in 2011.
Chief Executive Jose Maria Magrina told Reuters the firm was looking to float a stake of between 22.5 and 30 percent. It will hold presentations for investors in Britain, Saudi Arabia, South Africa, the United Arab Emirates and the United States.
"Our target is the 14th of May to start trading ... but that may change ... It depends on the result of the roadshow," he said on Monday.
After three years of turmoil, Egypt is in the midst of a political transition that could see a new president elected by early June. The army ousted the country's first elected leader Mohamed Mursi in July after mass protests against his rule.
Former army chief Abdel Fattah al-Sisi, who led Mursi's removal, is widely expected to win the election as he has gained support among the public hoping he can bring stability to the most populous Arab nation.
"We believe that this is the right time ... the country is now going through a second renaissance," Magrina said.
"We want to capture this ... We think that this excitement will help the company and the stock exchange to perform better."
Magrina said Arabian Cement's capital was worth around 757 million Egyptian pounds ($109 million) and the initial public offering (IPO) would see Egyptian shareholders sell down some of their stakes. He did not identify the investors.
The group has production capacity of 5 million tonnes a year and a market share of around 8 percent, Magrina said.
EFG-Hermes has been mandated to advise on the IPO.
Political and social unrest over the past three years have driven investors away and increased the pressure on Egypt's cash-strapped government, which is facing an energy crisis.
The government is struggling to meet soaring energy bills caused by high subsidies on fuel products and has been cutting back on natural gas supplies to cement factories. It is considering permitting cement firms to use coal for production.
Last year, Arabian Cement only received 76 percent of the gas it needed for its 5-million-tonne a year facilities. It was only able to produce and sell about 4 million tonnes as a result.
While many companies halt production during energy cuts, Arabian Cement has chosen to invest in alternatives.
It currently relies on gas for 90 percent of production, but hopes to increase its capacity from renewable energy by the end of this year from 10 percent to 30 percent.
"Companies have to develop their own strategies in order to survive during the next two, three, four, five years because the energy crisis cannot be solved in days ... so what I believe is that this energy crisis is unfortunately here to stay for a while," Magrina said. - Reuters