Egypt prepares for potentially its biggest public offering as new capital emerges

The country plans to take first steps early next year to sell shares in the Administrative Capital for Urban Development, a joint venture company set up to oversee the huge project

The Capital Business District being built in Cairo’s New Administrative Capital. The 20 skyscrapers in the district include the 385-metre Iconic Tower, which will be the tallest building in Africa. CoShow more

Egypt plans to take the first steps early next year towards selling a stake in the state company behind its new capital city, in what could be the North African nation’s biggest initial public offering.

The Administrative Capital for Urban Development, a joint venture between the Egyptian military and the Housing Ministry created to oversee the the multi-billion-dollar project, has “very, very big assets and a big portfolio of land and projects”, said the company’s head, Ahmed Zaki Abdeen.

“We are in the planning stage now and can start the procedures of choosing advisers and deciding the size of the offering early next year,” he said in an interview. “We hope this IPO will be the largest in Egypt’s history.”

The offering will take place on the Egyptian exchange and “very possibly in another international market as well”, Mr Abdeen said. “We are studying this option.”

On Saturday, President Abdel Fattah El Sisi said the company had 100 billion Egyptian pounds ($6.37bn) in liquid assets and as much as 4 trillion pounds in total holdings. Telecom Egypt staged Egypt’s biggest IPO in 2015, when it raised 5.1bn pounds.

The new administrative capital is one of several mega-projects launched by Mr El Sisi since he became president in 2014, as part of a broader effort to reboot the economy after the uprising a decade ago that ousted President Hosni Mubarak.

The new capital east of Cairo represents a three-phase project that envisages transforming a 700-square-kilometre stretch of desert – roughly equal to the size of Singapore – into a modern hub for government buildings, foreign embassies and major companies. It will be home to Africa’s tallest tower once completed.

The government is preparing to move as many as 50,000 employees to the new capital in December, while a monorail linking the city to Cairo is expected to be ready in about the middle of next year, Mr Abdeen said.

About three years ago, the government identified 23 state-owned companies that could be listed on Egypt’s stock exchange or may potentially sell additional stakes. Only one has been offered so far, with the pandemic contributing to delays.

Egypt’s benchmark stock index mostly underperformed regional and global peers this year, partially reflecting investors’ appetite for the nation’s fixed income over its equities. The gauge has gained in the past six days, however, the longest rising streak since January.

An offering of shares in the company in charge of the new capital project would “help shore up trading liquidity to unprecedented levels and add yet another heavyweight to the market’s main index”, said Amr Elalfy, head of research at Prime Securities.