Egypt unveils amendments to streamline listings, encourage IPOs

Egypt seems to streamline rules for large companies to list on the country’s stock exchange (EGX) as its market regulator announced on Sunday new listing amendments.

Egyptian Financial Regulatory Authority (FRA) said the new amendments will reduce the amount of capital that companies need to offer to the public in a move aimed to encourage more listings on the Egyptian bourse.

The amendments come ahead of what officials have suggested will be a pickup in initial public offering (IPO) activity in the coming months.

Previously, companies seeking to list on the EGX were required to offer a minimum of 25 percent of its total shares, with no less than 10 percent in free float.

But now, companies are only required to offer a total number of shares equal to 1 percent of those in the EGX’s total free float market capitalisation.

Under the new regulations, companies shall have a free float market capitalisation – the number of shares in free float multiplied by the share price – of no less than 0.5 percent of the EGX’s total free float market cap.

By removing the requirement to list a 25 percent stake, the FRA aims to allure large, multi-billion-Egyptian-pound companies who might otherwise be unwilling to offer such a large stake on the EGX.

This move will enable these companies to go public without significantly diluting anchor, founding or strategic shareholders who may not want to be as diluted.

The amendments are expected to also pave the way for mega-listings by state-owned companies in the coming years.

In August, Egyptian President Abdel Fattah al-Sisi announced that state-owned Administrative Capital for Urban Development (ACUD), which runs the country’s new administrative capital, could sell some shares on the EGX in a record IPO within two years. ACUD’s listing is expected to double the value of the Egyptian bourse, FRA chairman Mohamed Omran said at the time.

The FRA’s latest amendments came following the EGX’s new regulations announced earlier in July under which a maximum of five companies operating in each sector can be included on the EGX 30, in a move designed to improve the index’s diversity and representation of the market.

The EGX listing rules witnessed amendments earlier this year to mandate that EGX-listed firms and non-banking financial services companies appoint women to at least 25 percent of their board seats.