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Egypt’s Banque Misr to Borrow $250 Million, Grow in Africa

Egypt’s Banque Misr to Borrow $250 Million Amid Africa Expansion

(Bloomberg) --

Banque Misr SAE is seeking to borrow $250 million from international lenders this year to boost financing at home, while it presses on with plans to expand into three countries it’s targeting in sub-Saharan Africa.

Egypt’s second-largest state-owned lender will use the debt to finance small- and medium-size enterprises, among other purposes, Chairman Mohamed Eletreby said in an interview. Banque Misr expects a further boost in liquidity when it sells a stake in Banque du Caire in the first half of the year.

“We are in talks with two international institutions on loans with competitive interest rates,” Eletreby said at his Cairo office, declining to identify the banks. The lender is holding direct negotiations without an adviser, seeking to secure $150 million from one bank and $100 million from the other.

Egypt’s central bank has given approval for Banque Misr to open a branch in war-torn Somalia -- an unusual step for a foreign lender -- while it’s also seeking to enter Kenya and the tiny Horn of Africa nation of Djibouti, either via branches or representative offices, Eletreby said. It already has branches in the United Arab Emirates and France, units in Lebanon and Germany, and representative offices in China, Russia, South Korea and Italy.

Banque Misr is benefiting from sweeping reforms enacted by Egypt over the past three years that helped revive economic growth which stalled in the wake of the 2011 uprising. A steep devaluation of the pound and soaring interest rates have spurred a surge of investment in local debt, helping end crippling dollar shortages.

Taking Shape

The bank saw $15.6 billion in foreign-currency inflows in 2019, and $2 billion in January alone, according to its chairman. Egyptian workers’ remittances and purchases of local Treasury bills were among the main sources.

That’s helping the lender grow both in its homeland, the Arab world’s most populous nation, and further south on the African continent. Basque Misr is targeting about 40 new domestic branches this year, raising the total to roughly 750.

Plans to sell part of Banque du Caire, which Eletreby’s bank fully owns, are finally taking shape too. Hisham Tawfik, Egypt’s public enterprise minister, said on Feb. 18 that initial public offerings of government-owned companies will resume in March, with the lender the second of three firms in line.

Read more: Egypt to Resume IPOs of State-Firms by End March, Minister Says

Egypt announced plans about three years ago to either list or sell additional stakes in state companies, but moved ahead with only one before the initiative stalled amid a market downturn.

While Eletreby has previously suggested 30%-40% of Banque du Caire will be up for grabs, he said a final decision has yet to be taken.

A recent roadshow to promote the bank in London, the U.S. and the Persian Gulf revealed “an appetite from foreign investors due to its good performance,” Eletreby said.

To contact the reporter on this story: Mirette Magdy in Cairo at mmagdy1@bloomberg.net

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Michael Gunn, Vernon Wessels

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