👨🏿‍🚀TechCabal Daily – A bigger piece of Cairo

Banque du Caire is a commercial bank in Egypt and ranks sixth nationally by assets. Its planned initial public offering, or IPO, would sell part of the bank to public investors on the Egyptian Exchange. The listing is significant because it could become Egypt’s largest in years.

Banque Misr, the bank’s state-owned shareholder, plans to sell existing Banque du Caire shares. The bank itself will not receive the proceeds. At the reported valuation of EGP 80 billion–EGP 80.5 billion, a 30% sale could raise about EGP 24 billion, while a 45% sale could be worth up to EGP 36.2 billion.

The plan follows nearly a decade of delays. Egypt first announced a possible sale in 2016, provisionally listed the shares in 2017, and shelved another attempt in 2020 after COVID-19 disrupted global markets. Trading is expected to begin in November, if the offering proceeds.

Banque Misr is considering increasing the offering from 30% to 45% of Banque du Caire. Investment banks recommended the larger sale after roadshows attracted strong interest from investors globally. The change would make more of the bank available to public shareholders.

The reported valuation is EGP 80 billion–EGP 80.5 billion, equivalent to about $1.5 billion–$1.51 billion. Applying 45% to that valuation gives an estimated stake value of EGP 36 billion–EGP 36.2 billion, or roughly $670 million–$674 million. The current 30% plan would be worth EGP 24 billion–EGP 24.2 billion, or $447 million–$451 million.

These estimates assume shares sell at the reported valuation. Bloomberg reported that the bank was seeking up to EGP 24.25 billion from the 30% sale and could increase the stake to 45%, depending on demand. A larger offer would exceed that target.

The IPO proceeds will go to Banque Misr, Banque du Caire’s state-owned shareholder. Investors will buy part of Banque Misr’s existing ownership, so Banque Misr receives the money from the sale. Banque du Caire is the company being partly sold, but it is not raising fresh capital.

The distinction is visible in the share count. A 30% offering would put about 4.58 billion existing shares into investors’ hands. If the sale rises to 45%, about 6.86 billion shares would be sold. Those shares already belong to Banque Misr, so the cash changes hands between investors and the shareholder.

This structure means Banque du Caire’s balance sheet does not receive IPO proceeds for lending, expansion, or other uses. Instead, the transaction reduces Banque Misr’s ownership and broadens public ownership of the bank. Trading is expected to start in November, subject to the offering proceeding.

Egypt first announced plans to float 20% of Banque du Caire in March 2016. The shares were provisionally listed on the Egyptian Exchange in 2017, but the offering itself was delayed. A renewed attempt in 2020 was shelved after COVID-19 hit global markets.

An IPO depends on investors being willing to buy shares at a price acceptable to the seller. Severe market disruption can make valuation and demand harder to judge. The article does not give further reasons for the earlier delays, so the documented explanation is the postponed process and the impact of COVID-19 on global markets.

The plan is now moving again. Banque Misr announced a 30% sale, and investment banks recommended considering 45% after strong global investor interest during roadshows. Bloomberg reported that the larger sale depends on demand. If completed, trading is expected to begin in November.

Selling 45% would leave substantially more Banque du Caire shares available for public trading than the planned 30% offer. The article says the larger public float could improve the stock’s liquidity, meaning investors may find it easier to buy and sell shares. It would also make the offering larger than Egypt’s current target.

The mechanism is straightforward. A 30% sale would place about 4.58 billion shares with investors, while a 45% sale would place about 6.86 billion shares in their hands. More shares available to trade can create a broader market for the stock. The larger offer could also take Egypt past its target and become the country’s largest listing in years.

The article does not state a formal effect on Egypt’s wider privatisation programme. However, a successful, larger sale of a state-owned bank would provide a prominent example of public-sector ownership being reduced through the market. The offering still depends on investor demand, and trading is expected in November.

An IPO is a company’s first public sale of shares on a stock exchange. The shares can come from existing owners, newly created shares, or both. In Banque du Caire’s case, the offering consists entirely of existing shares owned by Banque Misr, so the shareholder—not the bank—receives the proceeds.

By contrast, a company raising new money issues additional shares. Investors pay for those new shares, and the company receives the cash. It might use that money for growth, lending, equipment, or other corporate purposes. Existing shareholders then own a smaller percentage unless they buy more shares, a change called dilution.

Here, no new Banque du Caire shares are being created for the IPO. The possible 30% or 45% stake is transferred from Banque Misr to public investors. That reduces Banque Misr’s ownership and increases public ownership, but it does not provide Banque du Caire with fresh IPO capital.

A share represents a small ownership interest in a company. If an investor owns more shares, that investor owns a larger percentage of the business. Valuation is the estimated total worth of the company. A stake’s value is calculated by applying its ownership percentage to that valuation, as with Banque du Caire’s possible 30% or 45% sale.

For example, at a reported valuation of EGP 80 billion–EGP 80.5 billion, 30% is worth about EGP 24 billion–EGP 24.2 billion. A 45% stake is worth about EGP 36 billion–EGP 36.2 billion. These figures assume the shares sell at the reported valuation. Ownership also changes: Banque Misr sells part of its stake, while public investors receive it.

Liquidity means how easily investors can buy or sell without greatly affecting the price. The article says a larger public float could improve liquidity. Investors may therefore value the shares more favorably, but the final price still depends on demand and market conditions.