Abu Dhabi Oil Giant Mulls Stake in Egypt’s First Army Firm Offer

Abu Dhabi National Oil Co. is among suitors interested in a majority stake in one of the first Egyptian army-held companies being offered to investors, according to people familiar with the matter.

Under the proposal, Adnoc would partner with Egypt’s sovereign wealth fund, giving the two full ownership of Wataniya Petroleum, a fuel distribution firm currently affiliated to Egypt’s military, the people said.

Taqa Arabia Co., a private Egyptian energy distribution company, has also expressed interest in the majority stake and partnering with the fund, according to the people. They asked not to be identified because the talks are confidential.

The chief executive officer of the wealth fund, Ayman Soliman, said Wataniya has “attracted a lot of investors,” but declined to identify them. Adnoc which is owned by Abu Dhabi’s government, declined to comment, while officials in Taqa couldn’t be reached for comment.

Adnoc produces most of the oil in the United Arab Emirates, OPEC’s third-largest producer. Its service station unit, Abu Dhabi National Oil Company for Distribution PJSC, has previously said it wants to expand in Egypt.

Appetite for Wataniya, which has a network of more than 200 filling stations and is one of two army-held firms Egypt this month announced are up for sale, could be a bellwether for private-investor interest in a part of the economy that President Abdel-Fattah El-Sisi has said could be more open to the public.

100% Stakes

The North African nation plans to eventually offer stakes of as much as 100% in up to 10 companies held by the National Service Products Organization, which is affiliated to the Defense Ministry. The fund is helping the NSPO choose the assets, promote them to investors and potentially co-invest in them by taking minority stakes.

The National Company for Producing and Bottling Water (Safi) is the only other firm identified so far.

The plans are part of a push by the Arab world’s most populous country, which has enacted sweeping economic reforms over the past four years, to attract much-needed private investments -- something the International Monetary Fund says previously might have been hindered by competition from some Egyptian state enterprises.

If Adnoc reached a deal, it would be part of the $20 billion joint-investment platform that ADQ, formerly known as Abu Dhabi Development Holding Co., agreed to establish last year with Egypt’s sovereign fund, the people said. ADQ didn’t respond to a request for comment.

Egypt’s NSPO, established in 1979, owns more than 30 companies in sectors ranging from building materials and food to mining and petrochemicals.

The selected companies would first be offered to private investors and could then be listed on Egypt’s stock exchange. Cairo-based investment bank EFG Hermes is advising the wealth fund on the initiative.

©2020 Bloomberg L.P.

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