Abu Dhabi, UAESaturday 4 April 2020

Egypt’s Banque Misr plans to borrow $250m to fund growth in Africa

The lender is looking to extend operations into Kenya, Somalia and Djibouti

A night-time view of Nairobi, Kenya. The East African nation is one of three that Egypt's Banque Misr is targeting as part of an expansion push on the continent. Reuters
A night-time view of Nairobi, Kenya. The East African nation is one of three that Egypt's Banque Misr is targeting as part of an expansion push on the continent. Reuters

Banque Misr is seeking to borrow $250 million (Dh918.3m) from international lenders this year as it presses on with plans to expand into the first of three countries in sub-Saharan Africa.

Egypt’s second-largest state-owned lender will use the debt to finance small and medium-size enterprises, among other purposes, chairman Mohamed Eletreby said. Banque Misr expects a further boost in liquidity when it sells a stake in Banque du Caire in the first half of the year.

“We are in talks with two international institutions on loans with competitive interest rates,” he said, without identifying the banks. The lender is holding direct negotiations without an adviser.

Egypt’s central bank has given approval for Banque Misr to open a branch in war-torn Somalia – an unusual step for a foreign lender – while it is also seeking to enter Kenya and the tiny Horn of Africa nation of Djibouti, either via branches or representative offices, Mr Eletreby said. The bank has branches in the UAE and France, units in Lebanon and Germany, and representative offices in China, Russia, South Korea and Italy.

Banque Misr is benefiting from sweeping reforms enacted by Egypt over the past three years that has helped revive economic growth which stalled after the 2011 uprising. A steep devaluation of the pound and soaring interest rates have spurred a surge of investment in local debt, helping end crippling dollar shortages.

The bank saw $15.6 billion in foreign currency inflows in 2019, and $2bn in January alone, according to its chairman. Egyptian workers’ remittances and purchases of local Treasury bills were among the main sources.

That is helping the lender grow both in its homeland, the Arab world’s most populous nation, and further south on the African continent. Banque Misr is targeting about 40 new domestic branches this year, raising the total to roughly 750.

Plans to sell part of Banque du Caire, which Mr Eletreby’s bank fully owns, are finally taking shape, too. Hisham Tawfik, Egypt’s public enterprise minister, said on February 18 that initial public offerings of government-owned companies will resume in March, with the lender the second of three companies in line.

Egypt announced plans about three years ago to either list or sell additional stakes in state companies, but moved ahead with only one before the initiative stalled amid a market downturn.

While Mr Eletreby has previously suggested 30 per cent-40 per cent of Banque du Caire will be up for grabs, he said a final decision has yet to be taken.

A recent roadshow to promote the bank in London, the US and the Arabian Gulf revealed “an appetite from foreign investors due to its good performance”, Mr Eletreby said.

Updated: February 23, 2020 03:44 PM

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