Successful companies, suitable timing are conditions for success
United Bank, 1st government bank to be listed in money market
MEO – The government has begun studying the privatization of shares of one or all banks in which it has stakes except for large banks such as the National Bank of Egypt and Banque Misr, sources revealed.
The United Bank may be the first candidate to offer a percentage of it in the Egyptian Exchange especially that the bank is owned by the Central Bank of Egypt and is a burden on it. The CBE is not among its duties to own banks but to run the monetary policy and this also is not consistent with the standards of governance.
The sources in statements to the Middle East Observer, ruled out that the offering would take place in the near future, especially that the market suffers from poor liquidity. However, the Central Bank of Egypt will announce the time of what it will offer in consultation with officials in the money market.
For their part, money market experts defined the conditions of success of the offering of government banks or companies in the Egyptian Exchange, saying they are mainly the good timing and the offering of successful and profiting ones.
The government offerings are a key driver for the performance of the Egyptian Exchange. They have supported significantly its performance ever since its return to work in the mid-nineties until 2005. Since the government stopped the offerings and the stock market has been suffering gravely, the added.
Wael Enaba, a money market expert, said the declaration of the presidency of offering shares and government companies on the money market could revive the role of the Egyptian Exchange as a platform for financing. However, the success of these proposals depends on making the offering to increase the capital of some winning companies or banks, such as the United Bank and the Egyptian Chemical Industries Company.
He explained to the MEO that some faltering companies can be offered with the purpose of financial restructuring to increase its capital, such as the Egyptian Iron and Steel and the Union Arab Company for Shipping and Unloading or offering shares of some companies that some of their shares were offered such as the Egyptian Media Production City and the Telecom Egypt but maintaining the state control on and owning the ruling quota of 51%.
He said that there is a difference between offering on the bourse and the privatization. Offering on the Egyptian Exchange aims at restructuring companies and maintaining the ruling quotas, while privatization is that the state sells its holdings without any control of them.
Ehab Saeed, the CEO of Osoul Company, said the statement issued by the presidency on the bourse and the announcement of the government›s intention to offer some companies during the coming phase, will enhance the money market to restore its luster which has been missing for eight years.
The dealers received the statement with a strong state of relief and satisfaction, not only because of the announcement of offering state-owned companies during the coming phase, but because they felt for the first time the interest of the President himself in the sharp decline in the bourse and his queries on the reasons that led to it and giving directives on the need to support it, he said.
Abu Bakr Imam, a money market expert, asserted to the MEO that the market is currently not accommodate any offerings, as investors fear that the fair value of the bank or company to be offered will be overstated as being state-run.
Dr. Mohammed Omran, the head of the Egyptian Exchange, said the government›s announcement of intention to offer a number of government companies and banks and government on the Egyptian Exchange is a strong message from the government that it understands the importance of the money market and its role in obtaining funding through it. He stressed that it is an important step at this time.
During an Egyptian Exchange board meeting to tackle the latest developments that have affected the international and regional money markets recently and their impact on the local market, said that this approach helps significantly to deepen the market and restore the investors’ confidence. He asserted that it is one of the best economic trends over the past years.
