Shares of United Bank soared on their debut on the Egyptian stock exchange, reflecting a growing investor appetite and confidence. This comes just days after Egypt completed the sale of a 30% stake in the state-owned lender, marking a significant step in the country’s ongoing economic reforms backed by the International Monetary Fund (IMF). The sale, part of Egypt’s broader strategy to privatize state assets and attract much-needed foreign investment, is positioning the government to achieve key goals under its $8 billion IMF loan program.
Strong Market Reaction: A 10% Jump
United Bank’s shares climbed as much as 10% on their first day of trading, reaching 15.23 Egyptian pounds. While the price slightly retraced, shares were still trading 6.5% higher by mid-morning in Cairo, signaling strong market confidence. The sharp upward movement underscores a positive reception from investors eager to tap into Egypt’s banking sector, which remains central to the country’s economic recovery plan.
Oversubscribed Offering Raises $90.5 Million
The sale of a 30% stake in United Bank raised nearly 4.6 billion Egyptian pounds ($90.5 million), with both the private and public offerings heavily oversubscribed. Priced at 13.85 pounds per share, the demand for the offering exceeded expectations, signaling investor optimism despite the country’s ongoing economic challenges. The oversubscription is a testament to the market’s belief in Egypt’s privatization strategy and the bank’s future prospects.
A Landmark Move in Egypt’s IMF-backed Economic Reforms
The United Bank offering marks a significant milestone in Egypt’s economic reform agenda, part of a broader effort to attract investment and restructure its economy. This privatization is seen as a vital component of the country’s expanded $8 billion loan agreement with the IMF, which was secured in March. For nearly a decade, officials had sought to offload a portion of United Bank. Its successful sale represents a key breakthrough in advancing long-delayed privatization efforts.
Currency Devaluation Reflects Broader Economic Strategy
The debut of United Bank comes at a time of continued volatility in Egypt’s economy. The Egyptian pound has weakened to a new record low against the U.S. dollar, a direct result of the government’s decision to allow market forces to determine the exchange rate. This devaluation is part of broader reforms for addressing a severe foreign currency shortage and stabilizing the economy, signaling a sharp break from Egypt’s long-standing policy of fixed exchange rates.
Military-linked Companies Next on the List
Prime Minister Mostafa Madbouly announced plans this week to list up to four military-linked companies on the Egyptian stock market. This move further underscores the government’s commitment to privatizing state-owned entities and attracting private sector investment, marking a major shift in Egypt’s economic strategy.
The Privatization Road Ahead
United Bank’s successful market debut, along with the broader push to sell off state assets, signals a decisive shift in Egypt’s economic strategy. As the government moves forward with its IMF-backed reforms, this stake sale is expected to pave the way for more privatization efforts. While the country faces economic hurdles, such steps are critical to ensuring long-term growth, fostering investor confidence, and positioning Egypt for a more resilient economic future.
