Bill Gates is leading a group of US investors committing US$1 billion for a stake in construction and fertilizer company OCI NV in one of Egypt’s largest foreign currency inflows since the 2011 uprising.
OCI will absorb all local stock and global depositary receipts (GDR) of Orascom Construction Industries under a share exchange offer that has attracted more than US$2 billion in commitments, said the company, which is relocating from Cairo to Amsterdam. Its shares will be traded in both locations.
Microsoft Corp co-founder Gates’ Cascade Investment LLC joins Southeastern Asset Management and Davis Selected Advisers in helping fund expansion in Egyptian infrastructure projects as well as other activities.
The Sawiris family and Dubai-based buyout firm Abraaj Group, which together owned 60 percent of Orascom, will take part in the tender.
“The transaction underpins genuine investor appetite to invest in Egypt,” said Nassef Sawiris, who was chief executive of Orascom and will be an executive director of OCI.
“Unlike local shareholders who monitor events on a daily basis, sophisticated investors see the evolution of democracy having a long-term positive impact on the economy,” Sawaris said.
Laura Berger, a spokeswoman for Davis Selected Advisers, declined to comment on why the firm invested in OCI. Michael Larson, who manages Cascade for Gates, and Lee Harper, a spokeswoman for Southeastern, did not immediately return calls seeking comment.
The Egyptian economy has struggled to recover from the chaos that followed the ousting of former president Hosni Mubarak Mubarak, as foreign direct investments tumbled.
The government is in talks with the IMF for a US$4.8 billion loan to help stem the decline in foreign currency reserves.
GDP may expand 3 percent in the fiscal year that ends in June, according to the median estimate of 11 economists surveyed by Bloomberg. The economy expanded about 5 percent in the year preceding the uprising.
Orascom is Egypt’s biggest publicly traded company. After exchanging their GDR for OCI shares, the Sawiris family and Abraaj Group expect to at least maintain their holdings relative to their Orascom stakes, according to a statement.
The deal includes a mandatory offer to exchange all Orascom Construction’s Cairo-listed shares for OCI stock or 280 Egyptian pounds each, according to the filing.