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We have news of inflation easing for the third consecutive month in May, updates on Act Financial’s IPO, and a lot more.
Inflation cools for third consecutive month in Egypt
The clap:
Inflation in Egypt fell for the third consecutive month in May, cooling to 28.1% YoY from 32.5% in April, according to data from the Central Agency for Public Mobilization and Statistics issued on Monday.
A fall in our CPI:
On a monthly basis, consumer prices shrank 0.7% last month, the first decline in prices since June 2022, and the quickest pace of contraction since mid-2019. This compares to a rise in prices of 1.1% last April.
Refresher, inflation is expected to cool further this year:
From a forecast of 35.7% in FY 2023-24, headline inflation is expected to average 17.9% over 2024-2025, according to the cabinet. For FY 2024-25, Egypt is forecasting economic growth at an additional 1.3% clip from the 2.9% estimate the year prior.
Act Financial will IPO next month
The Clap:
Investment management firm Act Financial — which in April secured regulatory approval to IPO — has set July 23rd as the targeted date for its debut on the EGX.
Remember:
The firm will price its shares at EGP 3.65, planning to raise EGP 1.3 billion by listing 30% of its shares.
Business model:
The firm’s strategy is to generate value by investing in Egyptian businesses, channeling their investments toward boosting their portfolio firms’ business operations, gaining market dominance, and sharpening corporate management. After reaching their targets, the company plans to offload their stake in its portfolio companies after an average two-year holding period.
Noteworthy investments for Act Financial:
A minority stake in Beltone Financial from 2015 to 2019.
A minority stake in CI Capital from 2019 to 2020.
A minority stake in “Heliopolis Housing” from 2020-2021.
Powered by their consortium, they acquired the largest single stake in SODIC from 2020 to 2021.
Financial performance:
The company recorded EGP 494 million in net profits in 2023, and is expected to add EGP 632 million and EGP 722 million to its bottom line in 2024 and 2025, respectively.
The clap:
Swiss investment bank UBS hypothesized three scenarios according to which Egypt might see a USD 20 billion surge in foreign currency inflows over the next four quarters ending in June 2025. On the flip side, strategists from the bank forecast outflows of up to USD 3 billion under a worst-case scenario.
The first case:
In the first scenario, the bank projects that foreign exchange inflows into the Egyptian economy will total between USD 7 and USD 8 billion by Q2 2025, suggesting the existence of a USD surplus during this time.
Number two:
In the second scenario, if Egypt can secure a 30% increase in FDIs and investment portfolio flows along with a return of remittances to the levels of the fiscal years 2021–2022, then the country could secure USD 19– 20 billion in net cumulative cash flow over the four-quarter period.
The worst case scenario:
Under the most pessimistic scenario of the three, Egypt is predicted to have a net foreign exchange outflow of USD 2-3 billion. This is if Suez Canal revenues do not bounce back to a growth trajectory after its fall in the first half of 2024 and if the country does not regain complete access to international capital markets.
UBS’s two cents for investors:
The bank notes a range-bound outlook for the EGP between EGP 46-51 against the USD for the remainder of the year and advises holding Egyptian treasury bills without hedging against FOREX fluctuations.
The clap:
CIRA Education will collaborate with management firm Blue Ribbon and real estate developer Madinet Masr to launch a sports-focused Swiss school dubbed Project Kayan in the latter’s Taj City development. Project Kayan will combine the professional sports coaching of Klub Kayan with the education of Swiss private school Lemania Swiss International School (LSIS).
The specifics:
The EGP 350 million LSIS, was established by Madinet Masr in collaboration with CIRA subsidiaries Al Ahly CIRA and education management firm Eduhive, while the EGP 2 billion Klub Kayan was established in partnership with Blue Ribbon.
What else is clapping?
Rejecting a proposal by the Supply Ministry to hike the price of subsidized sugar from EGP 12.6 to EGP 18 per kilo, the cabinet has decided to hold the commodity’s price tag steady.
Aspire Capital reported a 2902% YoY surge in net profits to EGP 8.39 million in the first three months of the year, and its top line also grew 104.6% YoY to EGP 105.39 million during the period.
Rowad Tourism recorded EGP 1.46 million in net losses in Q1 2024, seeing a 118% YoY rise.
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