Four firms absorb 63% of Banque du Caire’s private offering
In a regulatory filing to the Egyptian Exchange, Banque du Caire said four companies accounted for 63% of demand for the private tranche of its share offering on Monday, the first day of subscriptions. Meanwhile, orders for the public tranche reached about 97 million shares out of 228.5 million offered, according to a source familiar with public-offering data at a brokerage firm who spoke to Al Manassa.
The offering involves the sale of up to 4.575 billion existing shares, representing 30% of the bank’s capital, through a secondary offering. The private tranche allocates 95% of the shares to qualified investors, while the public tranche reserves 5%. The indicative price range is 4.82 to 5.30 Egyptian pounds ($0.09 to $0.10) per share.
The total value of the offered shares is about 24.25 billion pounds ($449 million), based on the upper end of the indicative price range. Subscription orders will be accepted from Oct. 19 to 23, with the final offering price scheduled to be announced by Oct. 26, based on the book-building process and investor demand, according to a Cabinet statement.
Capital markets expert Ibrahim El-Nemr told Al Manassa that initial demand for Banque du Caire shares points to solid coverage, projecting the public tranche will be covered six to seven times over. He explained that circulating purchase-order figures remain preliminary, as the subscription period opened Monday and has yet to conclude, leaving room for orders to increase over the coming days as the offering develops.
He said one factor that could affect the final subscription coverage is the possibility of increasing the offered stake from 30% to 45%, if approved in light of the applicable regulations and subscription results.
Dollar reaches 54 pounds
Meanwhile, the dollar exchange rate reached 54 Egyptian pounds, according to data from the Central Bank of Egypt. The rate coincided with foreign investors recording net sales of about $509.5 million in Treasury bills traded on the Egyptian Exchange’s secondary debt market by the close of trading on Monday.
Mina Rafik, senior analyst at Prime Investment, attributed exchange-rate movements to external factors, including changing expectations for global interest rates and rising prospects of monetary tightening in the United States and Japan. He also cited geopolitical tensions that are pushing oil prices higher and adding to inflationary pressures.
Rafik told Al Manassa that Egypt’s flexible exchange-rate regime allows the dollar to rise or fall in response to changes in capital flows and domestic and global economic conditions.
Potential dollar inflows associated with Banque du Caire’s offering do not necessarily mean the exchange rate will fall immediately, he noted, as the market is affected by multiple factors, including foreign capital movements and changes in international interest rates.
Rafik added that higher interest rates in major economies could prompt some foreign investors to reallocate their investments, including reducing their holdings of Egyptian debt instruments to free up liquidity and take advantage of returns in other markets.
He expects the dollar to trade between 52 and 55 pounds through the end of the year, ruling out a sharp exchange-rate jump in the coming period.
Rafik also highlighted the gap between domestic and international interest rates as a continuing factor influencing foreign investment flows, noting that any further change in US interest rates could affect foreign investors’ decisions in the Egyptian market.