Exit of non-core businesses will permit de-risking, deleveraging and the capture of growth opportunities at core subsidiaries. Additional liquidity from the exit of Tanmeyah will be used to finance share buybacks by Qalaa Holdings.
Qalaa Holdings (CCAP.CA on the Egyptian Exchange), an African leader in infrastructure and industry, has appointed CI Capital to study strategic options for the full exit of Tanmeyah for Microfinance Services, a non-core subsidiary in which Qalaa holds a 70% stake. Tanmeyah is the largest private microfinance provider in Egypt.
“Qalaa Holdings is on track in divesting non-core holdings. Our ongoing divesture of those non-core businesses will allow us to de-risk, deleverage and to invest in growth opportunities for our core subsidiaries. The exit from Tanmeyah, if concluded, would provide us with liquidity that exceeds the needs of both our current deleveraging program and our financing needs, and permits share buybacks by Qalaa Holdings on an opportunistic basis,” said Ahmed Heikal, Qalaa Holdings’ Chairman and Founder.
“Management and the Board of Directors are firmly convinced that Qalaa’s shares trade at a steep discount to their fair market value and that the acquisition of treasury shares thus represents an exceptionally compelling path to the creation of shareholder value,” said Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar.
The potential exit of Tanmeyah is part of Qalaa’s previously announced program to divest a number of its non-core subsidiaries. The current status of these divestitures is as follows:
- Misr Glass Manufacturing: Due diligence concluded by a number of potential acquirers who are due to submit final binding purchase offers in the coming period.
- Dina Farms: Due diligence by a number of potential acquirers is set to begin in May 2015, with the close of the transaction expected in 2H15.
- Rashidi El-Mizan: Due diligence by a number of potential acquirers is set to begin in May 2015, with the close of the transaction expected in 2H15.
- ASEC Cement Algeria (Djelfa): Qalaa is in advanced talks to exit with short-listed bidders.
- Zahana Cement Company (also in Algeria): Qalaa is in talks with its Algerian partners in the company for an SPA that would see them acquire Qalaa’s stake in Zahana
- Tebbin Port Land (owned by National Company for River Port Management S.A.E.): Purchase offers received and under evaluation.
- Nile Food Industries (Enjoy): Information memorandum has been withdrawn by potential acquirers.
- Egypt October for Food Industries (Elmisrieen): A number of potential buyers have expressed interest. Qalaa expects the due diligence process to soon begin.
“Qalaa may explore additional exits to permit further share buybacks for so long as management sees the company’s share trading at a steep discount to its fair market value,” concluded Heikal.
In 2014 and early 2015, Qalaa Holdings completed exits of non-core assets including Sudanese Egyptian Bank, Sphinx Glass and foundries AAC and AMC as well as Pharos Holding.