Banque du Caire announces 30% offering; possible EGP 25B yield

Banque du Caire announced Sunday a 30% capital offering structured across two tranches: a private placement for investors and a public offering for individuals. The bank expects to finalize subscriptions by late October and begin trading shares on the Egyptian Exchange in November.

According to a statement from EFG Hermes, the offering manager, a copy of which was reviewed by Al Manassa, the completion of the subscription process is contingent on obtaining the relevant regulatory approvals.

The Banque du Caire offering was delayed due to poor bids from investment institutions, prompting a shift toward a public offering alongside the private placement, replicating the experience of the United Bank partial privatization in 2024.

Hany Genena, head of research at Al Ahly Pharos, told Al Manassa that the offering is expected to generate proceeds approaching 25 billion Egyptian pounds (nearly $477 million), based on current valuations estimating the bank’s total worth at around 80 billion pounds (about $1.53 billion).

According to Genena, the anticipated valuation of Banque du Caire “appears proportionate to its profitability compared to some other banks.” He noted that the return on equity for several competing banks ranges between 35% and 45%, while Banque du Caire’s yield is estimated at under 30%.

Banque du Caire posted a net profit of EGP 8.6 billion (about $164 million) in the first half of this year, up 15% year over year, with a return on equity of 27.2%, according to its latest published results.

The significance of the offering, Genena said, is not limited to the financial proceeds the government could secure, but extends to the entry of private-sector shareholders into the bank’s ownership structure for the first time in its history.

Banque du Caire was established in 1952 and nationalized in 1961, and is considered Egypt’s third-largest state-owned bank and a major investor in government debt instruments.

Genena believes the government could offer additional stakes in the future if the bank’s financial indicators improve, allowing the state to gradually reduce its ownership while retaining a strategic stake of up to 49%, under his projected scenario..

Although the final breakdown between individual and institutional investors remains undecided, Genena expects the private placement to capture 80% to 90% of the offering based on past patterns, with the rest set aside for the public tranche.

An initial attempt to sell Banque du Caire fell through in 2008, following the sale of 80% of Bank of Alexandria to Italy’s Intesa Sanpaolo in 2007.