Egypt to float 4.5% of Eastern Co. on EGX in March

CAIRO – 24 February 2019: Egypt will float new stake of Eastern Company on the Egyptian Exchange (EGX) in March, to be the first to be offered in the government’s initial public offering program.

A source at the public enterprise sector said that the floated stake will be put up to about 4.5 percent of the company's shares in the stock market in conjunction with the continuous rise of the company's shares and the stock market's gradual recovery.

The company’s share witnessed a rise at 11:25 a.m. of Sunday session, reaching LE 16.97 after gaining LE 0.10, with an increase of 0.59 percent.

In 2018, Egypt delayed listing shares of state-owned companies on the Egyptian Exchange, such as the 4.5 percent stake of Eastern Company slated for October. The government attributed the delay to volatility in the global market, noting that if the shares were floated, they would have failed to be covered at proper valuation.

Analysts agree that this delay contributed to the drop EGX witnessed. The delay in offering the program’s scheduled shares was also reportedly one of the reasons behind the decline of EGX.

The associate vice president of Equity Research at Beltone Financial said the effect of the IPOs’ delay was not big because share prices had already downed. He also stated that the percentage of the free float is not enough.

Analyst in Institutional Equity Sales at NAEEM Holding for Investment Mohamed Sameh argued that the perfect timing for the offering was missed, stating that the price of Eastern Company fell to around LE 15 from LE 25, while the government plans to offer it at LE 21; as a listed company, its pricing is easily affected.

“The IPO program is an opportunity for investors,” Sameh said.

In 2016, Egypt announced the launch of the government’s IPO program offering shares over three to five years in several state-owned companies in fields such as petroleum, services, chemicals and real estate. As part of the economic reform program, the government targets offering 15-30 percent of stakes in state-owned companies on the stock exchange (EGX) to increase funding to Egyptian companies, maximize the benefit from state assets, and attract local and foreign capital flows to Egypt.

Eastern Co. is a public company, listed on EGX since September 1995. It operates within the food, beverage and tobacco sector focusing on tobacco. It was established in July 1920.

Additional Reporting Abdel Haleem Salem