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SIDPEC back in the limelight

The expiry of the subscription period for AMOC's IPO gave the market new vigour. Sherine Abdel-Razek reports
Though the subscription period for Alexandria Mineral Oils Company (AMOC)'s IPO ended on Thursday, the market was already showing increased activity by Tuesday as the selling spree that preceded AMOC's IPO died down allowing investors to divert their attention to other stocks across the board, thus pushing overall indices up.

Also, throughout this week's early transactions, market activity remained vigorous with Sunday's close witnessing a 3.2 per cent gain. Moreover, 14 market heavyweights recorded new highs.

Plus, Sidi Krir Petrochemicals (SIDPEC) returned to the limelight as investors, frustrated by the low allocation rate in the AMOC IPO, diverted their money to the other oil sector company. Taking the second most active spot on Sunday transactions, SIDPEC's turnover came at LE122.07 million. The stock gained 7.22 per cent to close at an all time high of LE118.89 per share.

By the time AMOC closed its subscription, it was 27 times over-subscribed. The higher than expected demand on the shares resulted in a low allocation rate of 3.7 per cent. Bids reached 230.3 million shares valuing LE10.4 billion, the company only offered LE387 million worth of shares.

As for the private placement, the weighted price came at LE59.59 as bids ranged from LE45 to LE91. Bids reached 298.9 million shares while offered shares were only 8.6 million.

Brokerage companies will have to repay LE2.2 billion to subscribers in AMOC's IPO as the value of 25 per cent of the subscribed shares which they were not able to acquire due to the low allocation rate. According to the offering conditions, subscribers had to pay in advance 25 per cent of the value of shares in which they hoped to subscribe.

This sum is expected to be reinvested in the market. Also, the market is expected to maintain its current upward trend for sometime due to the anticipation for margin trading and same day trading systems set to become effective by the beginning of October.

In other market news, EFG-Hermes Holding Company led the pack in terms of both transaction value and volume. The financial services company is the fourth largest gainer of the week as it hiked 14.07 per cent to close at LE54.81 per share. Its total turnover amounted to LE298.20 million.

The banking sector is also witnessing a lot of developments. The sale of 97 per cent of MIBank to Nationale Société Générale Bank was finalised last week. This provided the market with significant liquidity and aided in the boosting of overall market activity.

Also, the Central Bank of Egypt authorised a number of financial institutions to conduct due diligence studies for the United Bank of Egypt, the Islamic Bank for Development and the Nile Bank as a first step towards their merger with other banks or their sale . This step comes due to the three bank's failure to raise their paid in capital to LE500 million as the CBE regulations stipulate. Press reports noted that there is a fierce competition over these banks between consortiums including investors from Libya, United Arab Emirates, Saudi Arabia, and France represented by the Société Générale Banque.

Moving to the Telecom sector, Orascom Telecom completed the sale of its 100 per cent indirect equity stake in the mobile operator "Oasis", in the Democratic Republic of Congo for $35 million in cash. OT acquired its stake in Oasis through its fully owned subsidiary Telecel in April, 2000. The operation currently has over 77,000 subscribers.

OT lost its bid for the new fixed line licence in Morocco to ISP Maroc Connect . ISP Maroc Connect offered 306 million dirham and will inject up to a billion dirhams in capital expenditures during the first year of operations.

OT had submitted the second best offer at 270 million dirham.

OT ended the week at LE548 compared to LE554 on the previous week.

Egypt Aluminum, despite two straight weeks of negative performance with its closing at LE77.15 last week, is beginning to attract the limelight. The company plans to offer up to 12 per cent stake of its equity sometime in October.

Sixth of October Development and Investment (SODIC) was among the most active list, closing up 18.97 per cent at LE36.5. The company is currently in talks with the Emirati construction company Emaar as well as other local and regional tourism and real estate investment companies for future partnership agreements.

As for privatisation news , minister of investment, Mahmoud Mohieddin, told attendees of the World Bank and IMF meetings at Washington that the Bank of Alexandria, Egypt's smallest state-owned bank, will be privatised by the first quarter of 2006 and will be followed by the privatisation of an insurance company.

In a related note, five financial entities, Citadel Capital, EFG Holding, Arab African bank, HSBC and HC securities are separately analysing the production and financial standing of the Egyptian Financial and Industrial Company (EFIC). The five are competing over the 36.2 per cent stake owned by the Holding Company for Metallurgical Industries in EFIC.

The bond market was relatively active with the value of transactions coming at LE293.3 million compared to LE191.4 million the previous week. This came despite the decline in credit rates for banks by one per cent. Meanwhile, trading on Egypt's new tranche of Eurobonds started on Thursday. The $1.25 billion issue, which matures on 2015 and is backed by USAID, was two times oversubscribed. The issue which has the same rating as the 10-year American Treasury bonds of AAA carries an interest rate of 4.45 per cent and is sold at $99.65.

Egypt tapped the international bonds market for the first time in 2001 with two issues, the first of which matures next year and the second in 2011. This was followed this year by the General Petroleum Authority's $1.5 billion offering.

© Al Ahram Weekly 2005