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Cash-strapped Egypt prompts unprecedented Gulf acquisition of stakes in major state-companies

February 16, 2023 at 9:22 am

Sign outside the headquarters of the International Monetary Fund (IMF) in Washington, DC, 15 April, 2020 [SAUL LOEB/AFP via Getty Images]

Cash-strapped Egypt has created a golden opportunity for Gulf countries to acquire significant assets in major Egyptian companies, as Cairo awaits a new $3 billion bailout loan from the International Monetary Fund (IMF).

“The investments by Gulf states into Egypt last year helped to alleviate some of the immediate financing concerns that Egypt encountered, prior to securing further funds from the IMF,” said James Swanston, an emerging markets economist at Capital Economics in London, according to AFP.

“At the same time, it has allowed the Gulf states to continue to have a sphere of influence in the region,” he added.

In the past year, the steep devaluation of the Egyptian currency triggered by difficult economic conditions, where the price of the US dollar is exchanged for 30 Egyptian pounds compared to 15.6 in March 2022, have contributed to increasing the general annual inflation rate in the import-dependant country to 26.5 per cent.

A recent IMF report indicated that Gulf states had the lion’s share of acquisitions in the Egyptian market over the past year at a time when there was a government plan to “sell state-owned assets” to bridge a $17 billion financing gap over the next four years.

In a report published in December, Egyptian business news publication Enterprise said in 2022, 66 mergers and acquisitions were completed in Egypt, more than double the transactions in 2021.

At the head of the acquirers was the Abu Dhabi Sovereign Wealth Fund (ADQ Holding Company) and the Saudi Public Investment Fund, which concluded 40 deals, pumping about $3.1 billion “to acquire large minority stakes in some of the most powerful companies listed on the Egyptian Stock Exchange from the government”, according to the Enterprise report.

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