Egypt is in advanced talks to sell its remaining stake in Alex Bank to Italian private banking company Intesa Sanpaolo. Since devaluing its currency in March 2024, this will be the first significant asset sale.
As per the agreement, the Italian lender, which currently holds 80% of the bank based in Egypt, will purchase the remaining 20% to acquire full ownership. This comes after the government in 2023 unveiled an initial list of 32 assets it intended to offer investors in industries ranging from real estate and banking to energy.
The Northern African country now aims to raise USD 2 billion to USD 2.05 billion through asset sales by the end of the current fiscal year in June 2025. The source also informed Arab News that Prime Minister Mostafa Madbouly will announce the privatisation programme of state assets in the upcoming weeks, as confirmed internally.
According to the source, details are being discussed within the bank but will not be made public until the official announcement. The transaction will be closely monitored by investors and the International Monetary Fund as a sign that Egypt’s new government is dedicated to a state-divestment programme.
Bloomberg reported that even so, the deal value is expected to be much less than the USD 625 million Egypt raised from the sale of a stake in 2023. After allowing its currency to fall by 40% versus the dollar six months ago, the North African nation is now recovering from the worst economic crisis in decades.
Meanwhile, Egypt’s central bank will now sell a stake in state-owned United Bank through an initial public offering (IPO) on the local exchange, as the North African nation presses ahead with plans to attract foreign investment through the sale of public assets.
The Central Bank of Egypt (CBE) said in a statement that it was working on obtaining approvals from the Financial Regulatory Authority and the Egyptian Stock Exchange. The IPO will take place before the end of the first quarter of 2025, “subject to market conditions and the timely receipt of the relevant regulatory approvals.”
United Bank increased its total assets to USD 2.2 billion (106 billion EGP) at the end of June from 72 billion EGP in 2021. Its net profit rose to 1.74 billion EGP in 2023 from 1.15 billion EGP two years earlier.
The bank has 68 branches, 1,800 employees, and 225 ATMs. United Bank is one of 32 companies that the government plans to sell stakes in, including Banque du Caire, Arab African International Bank, and the Bank of Alexandria (Alex Bank).
Saudi Arabia’s Public Investment Fund (PIF) previously showed some interest in buying United Bank, only to shelve the deal in February 2023 due to a disagreement with the Egyptian authorities over its valuation.
The North African country is emerging from its worst economic crisis in decades after allowing its currency to plunge 40% against the dollar six months ago. The move brought about a fresh wave of funding pledges from the IMF (International Monetary Fund) and others, part of a global bailout totalling some USD 57 billion.
Portfolio investors swiftly made a comeback after this, contributing billions of dollars to Egypt’s domestic debt. The goal now is to attract foreign direct investment by selling off a portion of state-owned assets, which is a significant reform supported by the IMF.
The UAE, on the other hand, has kickstarted Egypt’s bailout with a USD 35 billion investment deal that includes development rights for a prime spot in the Mediterranean headland named Ras El-Hekma. Now, the government says it’s seeking to replicate that pact and has earmarked five areas on the Red Sea coastline to offer to investors.
In August 2024, an IMF report found Egypt’s economy showing signs of recovery, as the government’s efforts to restore macroeconomic stability had started to yield positive results. The report said that, at the time, the inflation rate in Egypt remained elevated but was coming down.
The country has been implementing several economic reforms to maintain fiscal stability, which includes the unification of the official and parallel exchange rates in March.