A UAE investment company has bought a 30 per cent stake in Egypt’s largest tobacco company for $625 million, the Egyptian government has announced.
The sale of the stake in Eastern Company is the latest step in Egypt's plan to offload state assets to raise foreign currency for the nation, which is suffering from a dollar crunch.
The UAE company was identified as Global Investment Holding in a statement issued by the Egyptian government.
Global Investment Holding said it would provide Eastern Company with $150 million for the purchase of raw materials for manufacturing, the statement said, without giving details.
The deal, announced at the weekend, follows an announcement in July that Egypt reached agreements with investors, including Abu Dhabi holding company ADQ, to sell stakes in a number of companies for $1.9 billion.
In January last year, Egypt announced its intention to sell stakes in more than 30 state-held or state-affiliated companies as part of its efforts to attract foreign currency and reduce the role of the state in the economy, a key demand in a $3 billion programme signed last year with the International Monetary Fund.
The North African country has faced several economic problems in the past two years, including record inflation, a foreign currency crunch that has suppressed imports and a growing foreign debt.
The Cairo government, which blames the coronavirus pandemic and the Ukraine war for the economic slump, has come up with unorthodox ways to raise foreign currency, including granting citizenship in return for dollars and requiring tourists to use foreign currency to pay for train tickets.
Under the terms of the purchase of the stake in Eastern Company, the state-run Chemical Industries Holding will retain an almost 21 per cent stake in the company. Prior to the sale, it held a stake of about 51 per cent.
Eastern Company said on Sunday it was increasing the output of its products by 15 per cent to meet demand amid complaints by consumers about shortages of some brands.
Additional reporting by Bloomberg