By: Moslem Ali
Cairo – Mubasher: The story of Fawry was featured in a session titled “An IPO Story” on the third and final day of the 7th RiseUp Summit, held on 5-7 December 2019 at the American University in Cairo (AUC), under the theme “Journey to Growth.”
Mohamed Farid Saleh, the Executive Chairman of the Egyptian Exchange (EGX), alongside Fawry Co-founder and Managing Director, Mohamed Okasha told the story of how it was the EGX team that initiated the talks with Fawry to list the company.
Why Fawry Listed on EGX?
The Co-founder of Fawry said that the main motives behind the decision to list on EGX were seeking a fair evaluation, more liquidity, and better transparency.
Okasha stressed the importance of attracting liquidity, noting that some major funds around the world only invest in listed companies, which opens new doors for companies to attract investments after listing on the stock market.
As for transparency, Okasha said that market disclosures allow listed companies to clarify their positions and updates regarding any changes or developments in the company or the market in general.
Speaking about the goals of the electronic payment network in the near future, Okasha said that expanding, diversifying income resources and achieving a revenue mix through different investments as promised in the IPO prospectus tops their agenda.
The company’s managing director expects being listed to foster Fawry’s growth, forecasting that the success of the company’s recent initial public offering (IPO) will inspire more startups in the current digital era to learn from their journey with the support of market authorities.
He further noted that a company like Fawry could struggle to identify itself as a digital firm or a bank, saying that support from EGX helped them find their story and open the door for more companies to follow their path and explore untapped areas in the market.
Startups need a story to tell
Meanwhile, the Chairman of the Egyptian Exchange (EGX), Mohamed Farid Saleh, said that startups should have an idea or a story to tell, as well as a growth plan, not just to be listed but to attract new capital, grow their business, and reach maturity.
The EGX Chairman said that Fawry set an example for local firms, urging more entrepreneurs and companies to educate themselves the listing criteria and guidelines, in EGX and the small and medium enterprises (SMEs) market (Nilex).
Listing helps businesses grow and raise capital and helps investors enter and exit companies at a fair evaluation through the market price, according to Farid, who noted that EGX considers special cases and provides advice and guidance for companies seeking to be listed.
When asked by attendees how startups could be listed on the stock exchange despite their long journey to achieving profits, the EGX Chairman disagreed with the claim that startups need five to seven years to achieve profits, as companies go through various journeys to growth and success.
“It may take one company seven years and another one only two years,” he stated, adding that for a company like Fawry, introducing a new payment platform to the market definitely took some time.
He added that a listed company is obligated to hold a general assembly meeting to decide on its continuity only in the case its losses exceeded 50% of the capital, while Nilex requires that a listed company does not have equity below the value of its capital.
If a company incurred losses in the past but witnessed an improvement in its sales volumes and indicators we may advise them to list through a different structure, the Chairman emphasized, adding that the exchange offers guidance for companies on how to restructure their business before being listed.
“In the same time we need to encourage companies, we must also protect investors,” Farid said when asked about easing market rules for startups.
Okasha commented, “My advice for startups is to talk to EGX. It took Fawry one year from our initial talks until the IPO.”
It is worth noting that companies with capital below EGP 100 million trade on Nilex, as a special market for SMEs.
Farid told Mubasher that EGX witnessed a paradigm shift and has changed how it operates, embracing a more proactive manner as it reaches out to local companies and supports them throughout their journey to list on the exchange.