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Interview- Arabian Cement expects starting IPO in Egypt bourse next May

Interview- Arabian Cement expects starting IPO in Egypt bourse next May

Egypt’s Arabian cement expects to start trading in the Egyptian Exchange before the end of the second quarter at May 21, Chief Executive Jose Maria Magrina told Mubasher in an interview Monday.

The first IPO since late president Hosni Mubarak was toppled in 2011, the company will open the door for the Initial Public Offering next May 9, and set to close at May 13, Maria added.

“We are looking to float a stake of 22.5%-30%, from 40% stake owned by Egyptian investors,” said Magrina.

In 2004, Cementos La Union (CLU), a leading Spanish cement producer, acquired the majority of shares of Arabian Cement and formed a Spanish-Egyptian management team, with its stake in the company forming about 60%.

He noted that the company plans to hold international roadshows from next week to attract investors for its IPO.

New Investments

“Our investments’’ value in the Egyptian market amounts $ 560 million, distributed on our factory in Sokhna. We are aiming at increasing our stake in the Egyptian market through opening of new offices for the company around the country,” Magrina explained.

He noted that the company has sold 3.9 million tons in 2013, with exports amounting 103.87 thousand ton, accounting for 3% of the total production.

“I think the market’s productivity could fall this year due to energy crisis, which badly affected most of the market’s company”.

A country in crisis, political unrest over the past three years have driven lots of investors away and increased the pressure on government, which is facing an energy crisis on hefty subsidies bill.

“We have set aside $35 million of our total investment’s value to shift from using diesel and natural gas into global substitute fuel, which consists of coal and other biofuels,” said Magrina.

The company currently relies on gas for 90% of production, but hopes to increase its capacity from renewable energy by the end of this year from 10% to 30%.

Coal Crisis

Following a governmental decree to allow using coal for power generation, a fierce debate was sparked over whether the fuel should be permitted for use by cement companies or not.

“Renewable Energy is only solution for Egypt to solve this problem. We didn’t create this crisis, and at the same time we need quick solutions to continue our production,” Magrina said.

Since Mubarak was ousted in 2011, cement industry, which is vital for construction projects to provide jobs and trigger growth for an economy, was hit hard by turmoil. Companies including Lafarge and Suez Cement were rattled by the gas supply cut.

Debt Payments

“We have about four years to pay all of our loans. We could hit debt market any time to finance any possible expansions,” said Magrina.

The group which has production capacity of 5 million tonnes a year and a market share of around 8%, has hit debt market several times last years.

Egypt’s last IPOs were in 2010 with Amer Group and Juhina starting trade in the local exchange, since then the market has never seen such a step.

EFG-Hermes has been mandated by ACC to advise on the new IPO.

(Reported by: Ramy Sameeh, translated by: Elsayed Solyman)