Egypt's New Sovereign Fund CEO Announces First Plan

This morning, Egypt's new sovereign wealth fund revealed plans to acquire a stake of about 30% in power plants co-built by Siemens AG with international investors taking the rest.

Speaking to 'Bloomberg', Chief Executive Officer Ayman Soliman considered the move  part of the fund's drive to spur greater foreign participation in the Middle East’s fastest-growing economy.

According to Bloomberg,  the sovereign fund’s initiative is the latest involving the three state-owned plants, which cost about 6 billion euros ($6.62 billion) and were inaugurated in mid-2018 as one of a string of major infrastructure projects in the North African nation under President Abdel Fattah El Sisi.

The acquisition will be part of the fund’s “project pipeline into the sector, then an investor would be selected to hold the remaining stake,” Chief Executive Officer Ayman Soliman said.

He noted that six unidentified international investors have expressed interest, and that negotiations will be arranged by a financial adviser to be selected next week. He expected the pact to be finalized in next year.

According to Bloomberg, the new deal involving the plants could help the country tackle the twin challenges of easing its debt burden and encouraging foreign investment that’s still mostly lacking beyond the oil and gas industries.

Egypt’s first-ever sovereign fund was established last year and aims to partner with the private sector and generate additional wealth from under-utilized state assets that it plans to manage.

According to Soliman, the fund will start with paid-in capital of 5 billion Egyptian pounds ($309 million), 1 billion of which the government has transferred, and it’s authorized to manage up to 200 billion pounds. "It’s initially targeting managing as much as 60 billion pounds of assets, some of which it will own," Soliman said.

The long-term plan may involve “offering a stake from the power plants in the Egyptian or an international stock exchange,” said Soliman.

It’s just one of the plans for the fund, which seeks to be a “catalyst of foreign direct investment flow” by creating attractive partnership opportunities via specialized “sub-funds” for areas such as tourism and industry, according to the CEO.

Potential assets include land, buildings and stakes in state-owned companies, while shares of some assets could be offered on a stock exchange, Soliman said. He cited a “very encouraging” appetite for the plans among local and foreign investors during recent roadshows.