Looking to streamline the divestment process of state-owned companies, the Egyptian government, in collaboration with the Egyptian Exchange (EGX), is exploring a new approach for listing these companies, potentially offering smaller share portions through initial public offerings (IPOs) instead of selling them directly to strategic investors.

While speaking to Zawya Arabia, Ahmed El Sheikh, Chairman of the Egyptian Exchange, confirmed that the government intends to divest from 10 state-owned companies this year, either by selling to strategic investors or through public listings.

This change follows the government’s revised approach for selling the United Bank, which was initially intended for sale to Gulf sovereign wealth funds. However, after unsuccessful attempts, the government decided to list the bank on the EGX by the end of 2024.

“Coordination with the Ministry of Investment is at an all-time high. We hope this will yield quick results and enable us to list companies on the stock exchange. We’re working on an initial listing for all companies included in the offering program,” said El Sheikh.

To make this transition smoother, the EGX is collaborating with the Financial Regulatory Authority to amend the current listing regulations.

A key change being proposed is the removal of the requirement that government companies freeze 51% of their shares for two years when listing. Under current regulations, any company listing shares on the exchange must ensure that its majority shareholders (or their replacements) retain at least 51% of the company’s shares for a minimum of 24 months post-listing, limiting the amount of stock available for sale.

El Sheikh emphasized, “Some government companies may list 20% initially, followed by another 30%. However, if the freeze requirement remains, it would prevent these companies from listing more than 49% of their shares. We’re considering an exception for these companies to ensure that the listing process is not hindered.”

Previous Successes and Future Plans

The government has previously sold stakes in companies already listed on the stock exchange, such as Abu Qir Fertilizers, Misr Fertilizer Production Company (MOPCO), Alexandria Container and Cargo Handling, and Eastern Tobacco. El Sheikh pointed out that these previous offerings were the fastest means of implementing government divestments.

If implemented, Egypt hopes to bring more transparency and efficiency to its privatization efforts through the new strategy, while also providing broader access for the public to invest in the country's state-owned companies.