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Sovereign fund aids investment banks to maintain momentum

Article - August 19, 2015

As Egypt ramps up efforts to expand its economic output, an investment fund has been created to support more diversified development.  Investment banks meanwhile are also urging the country to build on the momentum created by the recent success of the Egypt Economic Development Conference. 

MOHAMED YOUNES, CHAIRMAN OF CONCORD INVESTMENTS

Delivering further economic growth in Egypt is clearly a key focus for President Abdel Fattah El-Sisi and the role of investment banking in this task was clearly identified with the creation of a sovereign fund earlier this year.

The investment fund has been designed to support economic development by delivering returns on Egyptian assets and it is a sure signal that the country is ramping up its efforts to expand its economic output.

Central to this will be Egypt’s investment banks and the creation of the Amlak fund, which will be managed and owned via the National Investment Bank and will help to generate more diversified economic development.

Such growth has been assisted by an increasingly stable political outlook that has resulted in ratings agency approval and it is enabling Egypt’s investment banks and management businesses to blossom.

“Instability is not a concern for potential investors any longer in Egypt,” says Mahmoud Attalla, Group CEO and Vice-Chairman of CI Capital.

“Moody’s and other rating agencies have been looking very carefully at the country and its developments. I believe that the Egypt Economic Development Conference (EEDC) in Sharm El Sheikh in March was a very important step for the government to earmark their progress.  It was also a great opportunity for businessmen and politicians to come to Egypt and see firsthand how things are very different in Egypt from what most people see and hear on the news.”

Mohamed Younes, Chairman of Concord Investments – a New York based group which is one of the leading fund managers of Egyptian securities – concurs with Mr. Atalla regarding the impact of the EEDC, where $130 billion worth of agreements and Memorandums of Understanding were signed largely in energy and construction megaprojects.

“The biggest obstacle of the conference was not as much about changing the perception abroad, but about changing the perception of Egypt in Egypt,” he says. 

However, Mr. Younes also believes that the sense of optimism surrounding the country must quickly be turned into action in order to build on the momentum created by the conference.

“We are extremely optimistic [about Egypt’s potential], but the key is going to be implementation.

The question is how these investments will be implemented, who will do the implementation, what the time frame is, and what will be the quality of the guidelines. The ease to invest, set up and start producing must be there,” he explains.

“The reason it is so difficult is due to the intangibles of dealing with people’s motivations, energies, and state of mind. There needs to be successes and quick wins more than anything else. It will pick up people’s confidence that the system will work.”

Indeed while the Concord Investments chairman may understandably have concerns about the viability of some of the megaprojects unveiled at the EEDC – they are allayed by his trust in a government that has proven it can make things happen.

“We’re lucky to have a government which is both down-to-earth and practical,” affirms Mr. Younes.

As work on the mega-projects does get underway, sectors such as agriculture, infrastructure and housing are all poised to grow as investment enters the respective markets.

Mr. Attalla says his company is preparing to both support and advise investors on how related industries such as steel, cement and textiles could provide opportunities.

“We will work with any sector that needs advice, be it in the real estate, renewable energy, or agriculture sectors,” he vows.

“On the private equity side we are most interested in anything that is related to consuming and consumers, such as pharmaceuticals, agriculture and the food processing industry. The non-bank financial services like leasing and mortgages are also very interesting.”

Concord Investments – a company that possesses widely recognized expertise in portfolio management, investment strategy, corporate finance and strategic planning – is likewise confident in the opportunities that Egypt offers – to the extent that chairman Mr. Younes is happy to focus entirely on the country.

“We know Egypt better and there is a real market here. It is the only country in the area that has a big population with enormous economic demands,” he explains.

“Concord Investments is focused on business. We are not trying to do everything. We manage investment portfolios, mutual funds, and funds for companies. We’re not trying to be the biggest underwriter or the fastest broker. We are staying focused in investment management in Egypt where we have a relative advantage.”

Using that relative advantage could prove to be a savvy move for the company’s stakeholders, and expectations are high. While the soaring stock market experienced last year is expected to shift to more sustainable levels in 2015, the hope is that the projects and MOUs signed in March will now enable Egypt’s investment banking sector to start powering significant economic growth and wider social development.

“Now we have to deliver on the promises that were made and be sure to follow all of the commitments and agreements that were signed during the conference very closely,” says Mr. Atalla.

“I believe that Egypt will never have a better second chance for a first impression.”

 

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