October 17, 2021

IPO of state-run fintech platform ‘e-finance’ expected to be covered 50 times

Despite optimism among EGX traders about e-finance offering, inflation and energy crises threaten continuation of market rise

The coverage of the initial public offering (IPO) of Egypt’s state-run fintech and electronic payment platform, e-finance, would reach 50 times by the end of Sunday’s trading session in the Egyptian Exchange (EGX), sources told Daily News Egypt.

The IPO’s required coverage is about 112.5 million, while the size of the entire IPO is estimated at about 25 million shares. The offering of e-finance was covered about 22 times in last Thursday’s trading session.

The high demand for the e-finance subscription reflects the company’s attractiveness, as it is a giant in the financial technology sector, which almost completely monopolizes the government financial sector, and therefore the huge volume of its transactions and market share.

The offering of e-finance was agreed to last for six working days from 10 to 17 October, with a maximum price of EGP 13.98 per share.

The coverage of the private placement of e-finance has also been completed, with coverage reaching 3 to 4 times. International investment funds from the United States, the United Kingdom, and other European countries participated in the private placement.

The capital of e-finance reached about EGP 800m, distributed over 1.6 billion shares, with a nominal value of EGP 0.5 per share.

The company was established in 2005, and its ownership structure was distributed before the offering as follows: the National Investment Bank has 63.6% stake, while the National Bank of Egypt (NBE), Banque Misr, the Egyptian Company for Investment Projects, and EBC have 9.09% each.

On the other hand, EGX gained EGP 12.6bn last week, coinciding with the offering of e-finance, recording a collective increase in its indices, and its benchmark index EGX30 closed at 10,995 points, recording an increase of 4.36%.

The EGX30 continued to rise for the eighth consecutive session. The current rebound is still accompanied by low volumes and weak market breadth as the number of declining stocks exceeds the number of increasing ones.

In addition, the rebound is mainly attributed to the bullish performance of (COMI.CA), (FWRY.CA) and (EKHO.CA), while the majority of the blue chips haven’t shared the rally so far.

Despite the optimism in the market thanks to the e-finance offering, expectations are increasing with more pressure on stock markets, as inflation is accelerating in the United States in September to 5.4% following continued supply and employment shortages. Analysts believe that some supply chain and inventory challenges will remain for a little longer, at least until the end of this year, before the rise in oil prices this month joins those crises. The global energy crisis raises alarm bells in the United States, then will cast a shadow over the rest of the world.

Mohamed Asran, Managing Director of Arzan Securities Brokerage, said that accommodating liquidity from the new offerings will limit the market’s benefit from the offerings that will start with “E-Finance”. He explained that it is essential to solve the capital gains tax law crisis during the last month of the year with the accumulation of macroeconomic crises and high inflation and their impact on the performance of stocks.

He expected the negative impact of the approaching implementation of the law to be strongly evident in the performance of the main index, pushing it towards the level of 8,500 points by the end of this year.

Mohamed Othman, Head of technical analysis department at Al Ahly Pharos, said that the first support level lies at 10,660 points. Short term investors are advised to take some profit for the recently opened trades, while those who would like to hold may trail their protective stop to the nearest support level for each stock separately.

The EGX30 capped rose by 3.6%, stable at the level of 13,341 points, and the EGX100 EWI decreased by 0.4%, stable at 3,593 points.

The market recorded a trading value ​​of EGP 25.1bn at the end of last week, through the circulation of 2.1 billion shares, carrying out 176,000 buying and selling operations.

Foreign transactions recorded a net sale of EGP 662.5m, with an acquisition rate of 15.1% of buying and selling shares.

Shares accounted for 28.2% of the trading on EGX during the past week, while the value of bond trading represented about 71.8%.


Categories : finance & economy

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