Egypt intends to sell its remaining stake in the Bank of Alexandria and return to the international bond market | Economy

Egypt is in advanced talks to sell the government’s remaining stake in Bank of Alexandria to Intesa Sanpaolo, in the first major sale of state assets since its currency was devalued in March.

Bloomberg quoted informed sources as saying that the agreement would allow the Italian bank, which already owns 80% of the bank headquartered in Egypt, to acquire the remaining 20%.

International anticipation

Investors and the IMF will be watching the deal closely as a sign of the new Egyptian government’s commitment to the state’s divestment program, however the deal is likely to be worth much less than the $625 million Egypt raised from last year’s stake sale.

The Middle East’s most populous nation is emerging from its worst economic crisis in decades after allowing its currency to fall 40% against the dollar six months ago. The move prompted a fresh wave of funding pledges from the International Monetary Fund and others, part of a global rescue plan that now totals about $57 billion.

Portfolio investors (hot money) quickly returned to Egypt and pumped billions of dollars into Egypt’s domestic debt, but the focus is now shifting to winning a steady flow of foreign direct investment through the sale of a select group of state-owned assets, a key IMF-backed measure.

The government last year unveiled an initial list of 32 assets it plans to offer to investors in sectors ranging from banking to energy and real estate, and is now targeting to raise between $2 billion and $2.5 billion by the end of the current fiscal year in June 2025 from asset sales.

Rescue deals

The UAE began its rescue deals with a $35 billion investment deal that included development rights in the northeastern Ras Al-Hikma area, and the government now says it is seeking to replicate that deal and has allocated five areas on the Red Sea coast to offer to investors.

One of the sites will be Ras Banas, a peninsula in southern Egypt facing Saudi Arabia, Prime Minister Mostafa Madbouly told reporters on Thursday, without specifying the other sites.

According to Bloomberg, Saudi Arabia may be close to fulfilling investment pledges made more than two years ago, and the Egyptian government said last week that the kingdom’s sovereign wealth fund would inject $5 billion, although it did not specify a timeframe or the type of assets it might acquire.

Madbouly said the pledge would be new money, not a transfer of Saudi deposits currently held by the Central Bank of Egypt.

Saudi Arabia has previously shown some interest in developing Ras Jemilah, a coastal area near tourist hotspots in Egypt’s South Sinai, according to Bloomberg.

Sell ​​international bonds

In a related context, Egypt plans to sell international bonds as soon as possible in the current fiscal year for the first time since late 2021, according to what Bloomberg quoted from informed sources.

Finance Minister Ahmet Kucuk told international investors in several in-person meetings in London this week that the country plans to sell about $3 billion of foreign debt in various tranches during the fiscal year through next June, Bloomberg reported, citing people familiar with the talks who asked not to be named because the discussions were closed to the press.

It is not yet clear how much debt issuance is expected, as the minister did not provide details, but sources said one of the issues could be sukuk and bonds as well, within the government’s plans.

Egypt sold its last international bonds in 2021, joining a wave of emerging market governments taking advantage of lower borrowing costs before the US Federal Reserve begins to scale back its stimulus launched during the Covid-19 pandemic.