Listing in EGX propped up real estate companies, analysts

Capital increases, estimated at EGP7.021bn and  paid in cash by shareholders in the Egyptian Stock Exchange, have propped up  Egypt’s heavyweight real estate companies during the past six years, according to analysts.

Fortunately, share capital was raised by giving existing shareholders the right to subscribe to new shares for cash rather than by exchanging assets such as shares in another company or by raising the par value of existing shares, endowing the real estate players with a valuable advantage.  

In successive capital increases totaling EGP2.217bn  in 2015, 2018, and 2019, Palm Hills Development managed to boost its current capital by raising EGP600mln, EGP1.539bn and EGP78mln respectively. 

Also, Six of October for Development and Investment (SODIC) got cash totaling EGP1.033bn out of three increases, shoring up its capital to EGP1.396mln. 

Other companies, such as Emaar Misr for Development and Orascom Misr, followed suit, beefing up their capital to EGP4.529bn and EGP1.130bn respectively. 

Vice-chairman of the Egyptian Financial Regulatory Authority Sherif Samy said that the listed companies including those in the real estate sector gained a lot as a result of having their shares traded in the stock exchange. 

“ The listed companies often raise money via capital increases in order to secure financing for the new projects as long as transparency is observed and adequate returns on investment are at hand,”said he.  

On the other hand, Chief Executive of Prime Investment Mohmed Maher said that the listed companies are privileged with borrowing more easily from banks. 

“ Raising money from the stock exchange is not the sole option, as listed companies may resort to take loans from banks, issue bonds, or securities in return for transferring rights of particular units of their projects  to buyers of these securities,” said Sherif Samy.