Egypt’s Orascom Telecom IPO breaks Cairo record
(MEBG) – The global offering of shares in Cairo-based Orascom Telecom, which closed on July 11, was approximately 1.7 times oversubscribed and raised a total of $320 million from a capital increase of 20 million shares, making the deal the largest equity offering in Egyptian history.
The price for the new shares was fixed at $16 a share, slightly below the $19 to $24 level expected, but brokers said this was a reasonable level. Global Depository Shares (GDS) were priced at $8 per share.
Investment Director Amani Al Feky said the company was offering 18 percent of its enlarged share capital. After the IPO, the Sawiris family would own 57 percent of the company, while the public would own 43 percent.
"The company will float 18 percent in this IPO. This is expected to increase after exercising the 15 percent stabilization option," she added.
Cairo analysts gave the deal's arrangers credit for showing flexibility, which resulted in a strong response from Western institutional investors, who accounted for 55 percent of the allocation.
The approximate allocation of shares was 70 percent to foreign institutions (55 percent to Western institutions and 15 percent to Gulf institutions), 18 percent to Egyptian institutions, 8 percent to high-net-worth individuals and 4 percent to retail investors.
"We wanted to make sure the share price has only one way to go, and that is up," said Hassan Haikal of global coordinator EFG-Hermes. "What is really remarkable is the quality of the book." Schroder Salomon Smith Barney and Credit Suisse First Boston were also part of the arranging team.
The 20 million new shares bringing the total number of shares to 110 million gives Orascom Telecom a market capitalization of $1.76 billion, which makes it the second largest traded cap on the Cairo & Alexandria Stock Exchanges after Egyptian Company for Mobile Services (MobiNil). Orascom Telecom holds a 27 percent stake in MobiNil.
The proceeds of the offering will be used to finance Orascom Telecom's regional expansion.
Orascom Telecom's GSM operations, licenses and joint ventures cover 18 countries with a population of approximately 385 million. Orascom Telecom is the largest GSM network operator in the Middle East and Africa.
© 2000 Mena Report (www.menareport.com)