Via Bloomberg, an article on Egypt’s decision to sell three more army-held companies in 2021:

Egypt is considering selling ownership in three more army-held companies in 2021, a potentially historic opening of part of the economy to much-sought-after private investment.

The chief executive officer of Egypt’s sovereign wealth fund, Ayman Soliman, said studies are under way into further assets to offer. He spoke in an interview after last week’s announcement that stakes of up to 100% would be offered in a mineral-water company and a petroleum firm in the first quarter.

Soliman didn’t identify the three possible companies, but said that the initial plan is to sell as much as full ownership in as many as 10 firms held by the Defense Ministry-affiliated National Service Projects Organization. The fund is helping the NSPO choose the assets, promote them to investors and potentially co-invest in them by taking minority stakes.

The steps come as the Arab world’s most populous country focuses on attracting private investment, which the International Monetary Fund says previously might have been hindered by competition from some Egyptian state enterprises.

‘Historic Shift’

“This is a historic shift in how Egypt’s economy is structured,” Planning Minister Hala El-Saeed said in a separate interview. She described it as the first opportunity for domestic and foreign investors to fully own army-affiliated companies.

NSPO, established in 1979, owns more than 30 companies in sectors ranging from building materials and food to mining and petrochemicals.

Since his election in 2014, President Abdel-Fattah El-Sisi, who hails from the army, has pressed ahead with an array of mega-projects including a new administrative capital and an extension to the Suez Canal. There’s yet to be large-scale foreign investment except in the oil and gas sector and the country’s debt market.

The selected NSPO firms would first be offered to private investors and could then be listed on Egypt’s stock exchange. Cairo-based investment bank EFG Hermes is advising the fund on the initiative, according to Soliman.

El-Saeed said authorities had to support the economy in the years immediately after the uprising that ousted long-time President Hosni Mubarak in 2011, but that with macro-economic growth restored, the focus has shifted to encouraging private enterprise.

The government about three years ago identified around 20 state-owned firms that could either be listed on Egypt’s stock exchange or see additional stakes offered. One has been offered so far, with the pandemic contributing to delays in the initiative.

‘Serious Signal’

“The state had to step in during the period where we suffered from political instability after 2011, this was a situation were the private sector shied away from investing,” said El-Saeed, who’s also a non-executive chairman of the sovereign fund. “Without these investments, Egypt’s economy would have shrunk, not grown.”

Now “all state institutions are eager for the private sector to have a greater role in development projects,” El-Saeed said. The offering of stakes in army companies is “a very serious signal from the government.”

Former finance minister Samir Radwan described it as a “radical step,” saying it could be strengthened with “further reform of the investment environment, starting with the legal framework and dealing with various bureaucratic obstacles to local and foreign investors.”

Soliman said the opportunities given by the fund “are a manifestation of the government’s direction to encourage private sector participation.” It seeks to promote “more sustainable investment offerings structured around public-private partnerships versus just privatization,” he said.