Saudi Egyptian Investment Company invests $1.3bn in four EGX-listed entities

The purchase of minority stakes is the first investment by the entity set up by the kingdom’s Public Investment Fund last week

Egypt has turned to Gulf countries and the private sector as it struggles with the economic fallout of the Russia-Ukraine war. Reuters

The newly formed Saudi Egyptian Investment Company (SEIC) has acquired minority stakes worth about $1.3 billion in four companies listed on the Egyptian Stock Exchange.

It is the first investment by the new entity, which was set up by Saudi Arabia's Public Investment Fund last week, Egypt’s planning ministry said on Wednesday.

The four companies are Abu Qir Fertilisers and Chemical Industries, Alexandria Container and Cargo Handling, E-Finance for Financial and Digital Investments and Misr Fertilisers Production Company.

The deal comes at a time when Egypt is planning to increase private sector participation, encourage foreign direct investment and attract foreign investors in a variety of economic sectors, said Hala El Said, Minister of Planning and Economic Development.

Ms El Said, who is also chairwoman of The Sovereign Fund of Egypt (TSFE), said it reflected “foreign investor confidence in the Egyptian economy as a promising market with many attractive investment opportunities”.

Egypt and Saudi Arabia signed an agreement in June to strengthen economic relations and support PIF investments in Egypt, in co-operation with the TSFE.

The Arab world’s most populous country has turned increasingly to Gulf countries and the private sector as it struggles with the economic fallout of the Russia-Ukraine war.

Some of the challenges facing the Egyptian economy include a high import bill, a growing budget deficit, surging inflation, a depreciating currency and declining tourism revenue.

Saudi Arabia deposited $5bn in Egypt’s central bank in March and pledged about $10bn worth of investment through its sovereign wealth fund.

Abu Dhabi holding company ADQ bought stakes in several public Egyptian companies in April, including Abu Qir Fertilisers and Chemical Industries, Alexandria Container and Cargo Handling Company and Misr Fertilisers Production Company, as well as the Commercial International Bank and digital payments platform Fawry.

In May, Egyptian Prime Minister Mostafa Madbouly outlined a plan to sell state assets to private investors to attract $40bn in investment over the next four years.

Last month, Egypt approved pre-listing procedures for petrol station operator Wataniya and water company Safi, which are both currently owned by the Egyptian army, as a first step towards listing, the country's Cabinet said.

The first state-owned company to list its shares under Egypt’s IPO programme was Eastern Company for Tobacco in 2019, followed by E-Finance in October.

The PIF is one of the world’s largest sovereign wealth funds, with $620bn in assets under management as of end of March. It has established 54 companies.

The establishment of SEIC is in line with the PIF’s strategy to seek new investment opportunities in the Mena region, the fund said.

“In light of the economic growth in the region, SEIC will capitalise on lucrative investment opportunities within a number of promising Egyptian economic sectors, which will also support the expansion efforts of Saudi businesses and other PIF portfolio companies,” said PIF deputy government and head of Mena investments Yazeed Alhumied.

The company said it would invest in several vital sectors, including infrastructure, property development, health care, financial services, food and agriculture, manufacturing and pharmaceuticals.