Set to open baby bourse for Middle East
Saturday, 20 October 2007
Andrew England
EGYPT plans to launch the Middle East's first bourse for small and medium-sized companies, a senior government official said.
Mahmoud Mohieldin, the minister of investment, told the Financial Times the exchange would open on October 25, with between four and eight companies expected to list initially.
It is hoped the bourse will help smaller companies gain greater access to capital and is seen as part of wider financial sector reforms.
"We conducted a lengthy report with many advisers, including the World Bank, about the issues of access to finance as one of the impediments to expedite the process of investment and growth in this country, and we are trying every possible means to get that happening soon," Mr Mohieldin said.
"This is going to be of great help to many companies that could now be in better positions to borrow from the banks after getting themselves listed because they are going to have better information, good book-keeping records, and all of that."
The bourse will have the same reporting requirements as the Cairo and Alexandria Stock Exchange, but the smaller companies will be able to publish their quarterly and biannual reports on the internet rather than in newspapers, Mr Mohieldin said.
The minimum capital requirement will be E£500,000 ($90,100, £44,320, €63,350) and the maximum will be E£25m, he said. Initially, the bourse will trade for one hour a day, with lower registration and dealing fees than the main exchange.
"It's not going to be a back door for those who are not happy with the kind of tough regulations we might be putting on CASE," Mr Mohieldin said.
"We discussed the matter with the IFC [International Finance Corporation], with some investment funds, some investment banks and leading commercial banks and it seems as though it's going to be very viable."
Egyptian banks -- which have in the past been saddled with large non-performing loan portfolios -- have tended to be risk-averse. A lack of availability of finance for smaller firms has been a critical constraint on companies' growth.
Sahar Nasr, a senior financial economist at the World Bank, said the move was an important step in the reform of the financial sector. "It's very important because the large corporations easily find access to finance but you see a lack of intermediation from the financial sector overall," she said.
It is unclear how much interest the bourse will generate. It may prove positive for investors by adding depth to the capital markets, said Mohamed Ebeid, head of western institutional sales at EFG-Hermes.
The market will be open to foreign investors, who currently account for around 30 per cent of daily trading on CASE in terms of volume, he said.
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FT Syndication Service
EGYPT plans to launch the Middle East's first bourse for small and medium-sized companies, a senior government official said.
Mahmoud Mohieldin, the minister of investment, told the Financial Times the exchange would open on October 25, with between four and eight companies expected to list initially.
It is hoped the bourse will help smaller companies gain greater access to capital and is seen as part of wider financial sector reforms.
"We conducted a lengthy report with many advisers, including the World Bank, about the issues of access to finance as one of the impediments to expedite the process of investment and growth in this country, and we are trying every possible means to get that happening soon," Mr Mohieldin said.
"This is going to be of great help to many companies that could now be in better positions to borrow from the banks after getting themselves listed because they are going to have better information, good book-keeping records, and all of that."
The bourse will have the same reporting requirements as the Cairo and Alexandria Stock Exchange, but the smaller companies will be able to publish their quarterly and biannual reports on the internet rather than in newspapers, Mr Mohieldin said.
The minimum capital requirement will be E£500,000 ($90,100, £44,320, €63,350) and the maximum will be E£25m, he said. Initially, the bourse will trade for one hour a day, with lower registration and dealing fees than the main exchange.
"It's not going to be a back door for those who are not happy with the kind of tough regulations we might be putting on CASE," Mr Mohieldin said.
"We discussed the matter with the IFC [International Finance Corporation], with some investment funds, some investment banks and leading commercial banks and it seems as though it's going to be very viable."
Egyptian banks -- which have in the past been saddled with large non-performing loan portfolios -- have tended to be risk-averse. A lack of availability of finance for smaller firms has been a critical constraint on companies' growth.
Sahar Nasr, a senior financial economist at the World Bank, said the move was an important step in the reform of the financial sector. "It's very important because the large corporations easily find access to finance but you see a lack of intermediation from the financial sector overall," she said.
It is unclear how much interest the bourse will generate. It may prove positive for investors by adding depth to the capital markets, said Mohamed Ebeid, head of western institutional sales at EFG-Hermes.
The market will be open to foreign investors, who currently account for around 30 per cent of daily trading on CASE in terms of volume, he said.
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FT Syndication Service