UAE’s GIH Aquires 30% Stake In Eastern Company In $600M

November 26, 2023


UAE-based Global Investment Holding (GIH) company has acquired 30% of Egypt’s major tobacco producer Eastern Company for $530.86 million (EGP 16.4 billion). The deal was executed on 669 million of the company’s shares for EGP 24.52 per share, according to the Egyptian Stock Exchange.

With this transaction, GIH became the largest shareholder in Egypt’s major tobacco manufacturer. State-owned Chemical Industries Holding Company (CIHC) became the former majority shareholder of Eastern company after selling the 30% stake, lowering its ownership to 20.95%.

The Allan Gray Africa ex-SA equity fund owns a 7.21% stake in the company, the Egyptian Trade Union Federation holds a 5.2% share, while the remainder shares are free-floated.

The deal comes as a part of Egypt’s initial public offering (IPO) program that includes 35 state-owned companies offered as investment opportunities for investors, either as offering stakes or through assigning the asset to a strategic investor.

The IPO program aims to rejuvenate the local stock market and provide the required liquidity for corporates to boost their activities and businesses. It is also a key commitment Egypt has pledged under its $3 billion loan deal with the International Monetary Fund (IMF) to raise the private sector share in the country’s economy.

Since August, the Eastern Company has considered several offers from foreign investors to buy the 30% stake. In September, the government said that GIH had okayed the purchase of the s30% take for $625 million plus a $150 million investment to help it overcome the economic woes and purchase manufacturing inputs.

A few days after announcing the deal, Egypt’s Minister of Public Business Sector unveiled the new details about the deal.

According to the ministry, the payment will be made in US dollars and will be in two tranches: the first worth EGP 16.403 billion upon conclusion of the deal and the second worth EGP 2.932 billion according to an agreed-upon schedule.

Since the initial announcement of state-owned companies earmarked for the IPO program earlier this year, there has been limited progress from the government in this regard. The latest development was disclosed in August, outlining the government’s intention to generate $5 billion through the offering of power plants and state-owned enterprises from October 2023 to the end of June 2024, marking the conclusion of the current FY2023/2024. Additionally, the government reported having successfully garnered $5 billion in revenues from offering stakes in 13 companies between March 2022 and July 2023.