Egypt's First IPO of the Year Rockets 31% in Market Debut
Egyptian E-Payment Firm Surges in Trading Debut in Cairo
(Bloomberg) -- The first company to make its trading debut on Egypt’s bourse this year, electronic-payments firm Fawry for Banking & Payment Technology Services S.A.E., saw its shares jump after its initial public offering.
The stock closed 31% higher at 8.48 Egyptian pounds, after shares were sold at 6.46 pounds in the IPO. The offering represented 36% of Fawry’s share capital and raised about 1.6 billion pounds ($97 million). EFG Hermes Holding managed the sale.
Fawry is an 11-year-old company that facilitates electronic bill-payments in urban neighborhoods, and counts 20 million Egyptians as customers, according to its website. Its retail network includes grocers and pharmacies. A tranche of the IPO offered to institutional investors was oversubscribed by 15.9 times, according to EFG Hermes.
Fawry is the first IPO on the EGX since Sarwa Capital in October 2018, as high interest rates attract investors to fixed income rather than equities. The government has delayed plans to offer stakes in some state-run companies, sales that were supposed to streamline the bloated public sector and turn around loss-making enterprises.
Following the “good reception” of the IPO, the stock will likely outperform within its first month of trading, said Amr Elalfy, the head of research at SHUAA Securities Egypt. More than 80% of subscribers were Egyptians, according to data from the bourse.
A stock stabilization fund managed by EFG Hermes will help sustain the stock price in the first month of trading. This measure “should support the stock holders from the public offering,” Elalfy said earlier this week. Potential risks to the stock’s performance include low liquidity, revenue and growth rates that fail to meet market expectations and weakening margins, he said.
The company has “exceptional growth potential,” said Allen Sandeep, director of research at Naeem Holding in Cairo. That contrasts with most companies in the same sector in emerging markets that are making losses, he said.
| Breakdown of Fawry’s share capital distribution in IPO | |
|---|---|
| Actis, National Bank of Egypt and Banque Misr | 21.2% |
| Qualified institutional and high-net-worth investors | 9.8% |
| Retail investors | 5% |
--With assistance from Mirette Magdy and Tarek El-Tablawy.
To contact the reporters on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net;Abeer Abu Omar in Dubai at aabuomar@bloomberg.net
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Michael Gunn, Abbas Al Lawati
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