Press Releases

On July 1st, Dr. Hani Sarie-Eldin was bestowed the distinguished honor to present his observations and analysis to the Chatham House in London. He provided a comprehensive presentation entitled,ﾑEquity Financingﾒ, which focused on the stock market and private equity in Egypt and MENA countries. Dr. Sarie-Eldinﾒs presentation fit within the overarching discussion of the day, which was entitled ﾓInvesting in Emerging and Developing Markets: The role of domestic financial markets in low and middle-income countriesﾒ. Shedding light on the Egyptian economy, Dr. Sarie-Eldin first underscored its prowess in spite of a enduring financial downturn that has gripped the globe, noting that during the 2008/9 financial year GDP grew at 4.7%, with ICT, construction and trade soaring ahead at 15%, 16.4% and 6% respectively. He furthermore highlighted the robustness of the EGX, as it finished 2009 with a 38% increase over the previous year, and already at the end of Q1 2010, it grew by 10.4%. Turning to private equity, Dr. Sarie-Eldin stated that there are now 17 private equity firms operating in Egypt, and that Citadel Capital is the largest, with investments worth $8.3 bln and operations ongoing in 15 industries that span 14 countries. These facts and figures indeed indicate that financial times are looking up in emerging markets such as Egypt; thus representing new horizons for capital markets in the global economy. To continue to usher in a new financial era in Egypt, changes to the way business is conducted are indeed on the way. Dr. Sarie-Eldin explained that the EGX has adapted to meet new demands by introducing a new listing rule, which foresees that companies will be required to have a paid-in-capital of LE20mn (ﾀ2.56mn), float 10% of shares as well as maintain a free float of 5%. Yet another sign of the changing national economic landscape has been the growth of small and medium enterprises (SMEs), which has resulted in the recent launch of the NILEX, an exchange, in June of this year. Already five companies are listed on the exchange, with 40 more anticipated within the next three years. While these changes represent serious improvements toward a mature exchange environment, Dr. Sarie-Eldin bemoaned that the market ﾓis still dominated by individual investors, representing 65% of the market.ﾔ Moving beyond Egypt, Dr. Sarie-Eldin compared the state of play of private equity in the broader regional context. He explained that, ﾓsince 2000, almost 55% of private equity investments in MENA countries took place in non-GCC countries, with Egypt accounting for 33%...over that same period.ﾔ As well, he further noted that between 2004-2009, Egypt was able to boast 73% of all exit private equity amongst MENA countries. To sum up, Dr. Sarie-Eldin pointed out to the Chatham House audience that notwithstanding such tremendous accomplishments and stellar financial figures, impasses in both the Egyptian stock market and in private equity persist. Issues to be tackled within the stock market include transparency and market information, for instance, as well as a lack of investment education among retail investors, he affirmed. As concerns private equity, a lack of access to it for SMEs and start-ups remains an obstacle, and the broader regulatory environment must be strengthened, in particular relating to intellectual property rights, Dr. Sarie-Eldin concluded.