Egypt’s tobacco monopoly climbs as state sale draws in investors

Cigarettes sit arranged for a photograph. (Bloomberg pic)

CAIRO: Egypt’s state-controlled tobacco monopoly climbed to the highest in three months as demand for the stock at a private placement was higher than the shares on offer.

The government on Feb 28 launched the private placement of 4.5% in Eastern Tobacco – a sale that was covered 1.8 times, local media cited Public Enterprise Minister Hisham Tawfik as saying.

The offering is part of a long-delayed program to sell additional stakes in key state-run companies.

The stock, which has the second-largest weighting on the benchmark EGX30 index, rose as much as 5.9% in Cairo. It was one of the biggest contributors to the benchmark index’s 0.9% advance.

The sale was delayed from last year following Sarwa Capital’s initial public offering that sent shudders through the market, with the shares dropping over 18% on its first day. At the time, officials said they decided to delay offering additional shares in Eastern Tobacco.

Egyptian officials had planned on either listing for the first time or offering additional stakes in about 20 companies and hoped the move would raise 100 billion pounds (US$5.7 billion).

Local media cited Tawfik as saying the first phase of the program would include another three companies and be wrapped up by May, while another four to five were expected by the end of the year.