Egypt seeks private investment for its army-owned oil company

(Bloomberg) - Egypt is preparing to offer as much as full ownership in a mineral-water company and an oil firm both owned by the military, pressing ahead in seeking private investment for businesses that President Abdel-Fattah El-Sisi has said could be more open to the public.

The National Company for Producing and Bottling Water (Safi) and Wataniya Petroleum have been chosen as the first two firms for the initiative, Planning Minister Hala El-Saeed said Thursday.

“We’re targeting offering up to 100% stakes in these companies to both local and foreign investors in the first quarter on 2021,” she said by phone. After an initial offer to private investors, the firms could then be listed on Egypt’s stock exchange.

The move is part of a broader initiative to relinquish control of some firms of the National Service Products Organization, which is affiliated to the Defense Ministry. “There are other companies in the pipeline,” the minister said.

Egypt, which started a sweeping economic reform program about four years ago, has been reworking to revamp and re-energize state-owned companies and attract foreign investors who have so far largely been attracted to the North African nation’s debt market and energy industry.

The decision to offer stakes in some military companies followed a proposal last year by El-Sisi, who has spearheaded an overhaul of the nation’s infrastructure. The military has direct and indirect holdings in a range of industries, from food production to cement.

Egypt’s sovereign wealth fund will help promote the chosen companies and could also invest in some of the stakes.

“We are targeting anchor investors to partner with the fund to acquire these assets and the fund aims to hold a minority stake with a view to a future IPO to a wider investor base,” its chief executive officer, Ayman Soliman, said in an interview.

The fund is keen on investing in the two firms due to “the quality, governance and hence the investment readiness of them,” he said.