Egyptian food firm’s GDR marks turnaround after Arab Spring

Apr 16, 2015
<p>Edita&rsquo;s LSE listing is country's first GDR offering since 2008</p>

Egyptian snack maker Edita Food Industries listed on the London Stock Exchange (LSE) earlier this month under BNY Mellon’s global depositary receipt (GDR) program – Egypt’s first GDR offering since 2008.

Following four years of political and financial upheaval since the Arab Spring, the listing marks the return of Egyptian issuers to global capital markets, says Mahmoud Salem, BNY Mellon’s head of depositary receipts for the Middle East.

As part of its effort to lure back foreign investors, improve growth and cut the deficit, the Egyptian government launched a series of long-delayed reforms last year and the country has since seen a flurry of mergers and rights issues. ‘We are pleased to see the return of foreign institutional investors to Egypt,’ says Salem, adding that Edita’s IPO ‘was well received’ by institutional investors in the UK, the US and the Gulf region.

Mahmoud Salem, BNY Mellon

Mahmoud Salem, BNY Mellon
‘[Egypt] will benefit tremendously from an increase in direct foreign investment’

Edita’s listing highlights the continued turnaround for the Egyptian economy, he adds. ‘The country will benefit tremendously from an increase in direct foreign investment and [the] announcement of a number of major projects, including a new path for the Suez Canal, the construction of a million new housing units and the building of a new city,’ he says. The Egyptian government announced plans at its recent Sharm el Sheikh economic conference to build a $45 bn administrative capital to the east of Cairo, spearheaded by the Emirati businessman behind the Burj Khalifa.

As well as talking about the benefits of DRs for companies looking to attract foreign investment – which he cites as a preference for institutional investors – Salem notes the ‘crucial role’ private equity firms continue to play in the local market, with two private equity investors selling portions of their Edita ownership via the LSE listing. ‘We’ve also seen the re-entry into Egypt of Ripplewood, a New York-based private equity firm, through acquisitions in the real estate sector,’ he adds.

Indeed, Hani Berzi, Edita chairman and CEO, noted the investments from two of these firms as the company began trading. ‘Building Edita from a flicker of an idea into an Egyptian market leader with regional ambitions has been an incredible journey, and in many ways it has just begun,’ he said.

‘We are honored to count today not just anchor investors such as Actis and Chipita, which have partially realized their investments with the start of trading today, but also hundreds of domestic and global shareholders who have confidence in our product, our market, our vision and, most importantly, in the team of 5,200 staff who have built a house of iconic Egyptian brands.’

In addition to its DR offering, Edita went public on the Egyptian Exchange on April 2, opening at EGP18.50 ($2.40) per share. Its institutional offering – which accounted for 85 percent of the total listing – was 13.4 times oversubscribed, while the retail tranche was 4.5 times oversubscribed. Food is a fast-growing sector in Egypt, the most populous Arab country, with 87 mn people.

Each new Edita GDR represents five common shares, with the firm’s ordinary shares traded on the Egyptian Exchange. Edita offers a range of snacks covering brand names familiar to consumers in Egypt and other markets across the Middle East and Africa, including Molto, TODO, Bake Rolz, Bake Stix, MiMix, HoHo’s, Twinkies and Tiger Tail. It also acts as sole regional distributor of several brands of imported sweeteners, olive oils and pasta.

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