Egypt's first gold investment fund raises $5 million two weeks after launch

It was 15 times oversubscribed, with the number of investors exceeding 7,000

Attaba Square in Cairo. The surge in gold rates was caused by Egyptians looking to hold value as the local currency depreciated. AFP

Egypt’s first gold investment fund has raised 152.8 million Egyptian pounds ($4.98 million) during its two-week initial subscription period.

The az-Gold fund, which offers investment certificates in 24-carat gold for 10 pounds, closed ahead of schedule, according to Azimut Egypt and Evolve Investment Holding, the fund managers.

The fund, which was launched in May, was oversubscribed 15 times, with the number of investors exceeding 7,000.

Investment certificates in the fund are redeemable at any point in time, either as cash or grams of gold.

The fund, which will work with commodity traders and Egycash, its gold custodian, had initially aimed to start with a minimum investment of 5 million pounds ($161,824).

Egypt’s Financial Regulatory Authority said at the time of the launch that the fund would promote financial inclusion by diversifying the investment options available to Egyptians.

The government eased restrictions in May on travellers bringing gold into Egypt in an effort to increase bullion supplies in the local market and bring down prices, which have been on a sharp rise since March last year, Nagy Farag, an adviser in the Supply Ministry, told The National.

The surge in bullion rates was caused by Egyptians looking for more secure means of saving money as the value of the local currency dropped by more than 50 per cent against the dollar over the past year.

The increase was first triggered by a shortage of US dollars in Egyptian markets, which seriously limited the country’s ability to import components needed for essential industries.

The drop in the value of the pound also made many hoard gold rather than sell it, which further decreased supplies in the market and drove up prices.

Despite hopes that gold prices will drop in light of more supply, they have remained largely the same as before the launch of the fund.

On Tuesday, 24-carat gold cost about 2,674 pounds a gram while 21-carat gold was selling for 2,340 pounds a gram.