Banque du Caire - the largest IPO to take place in Egypt since 2010

Tarek Fayed, Chairman & CEO of Banque du Caire, sat down for an exclusive interview with Ioana Belu of Business Intelligence Unit, and talked about the bank's African ambitions and it's soon-to-hit-the-market IPO.

As chair of the African Union, Egypt has committed to enhancing its position as a key point of connection for investors looking to approach the African continent. In line with this agenda, the government has urged local private companies to enter African markets and play an active role in the continent’s rapid growth.

Banque du Caire (BdC), currently fully owned by the state and one of the biggest banks in Egypt, is among the Egyptian entities heeding the call with the recent purchase of its formerly partially owned franchise in Uganda, accompanied by an increase in its capital, a complete change of board and management, and a full revamp of its scope in order to cater to the wider East Africa and COMESA region.

Back home, Banque du Caire has undertaken a restructuring and rebranding programme of its own, and is preparing for an initial public offering (IPO) to raise capital for further expansion. Tarek Fayed, Chairman & CEO of BdC, talked to the Business Intelligence Unit about the bank’s priorities in the domestic and international markets.

Business Intelligence Unit: The Egyptian government’s interest in strengthening its ties to sub-Saharan countries has been rising in tandem with the continent’s integration efforts, especially given the nation’s chairmanship of the African Union this year. What role do banks have to play in facilitating the expansion of Egyptian companies across the continent?

Tarek Fayed: I believe that the banking industry needs to accompany its corporate clients in the pursuit of deepening their ties with the rest of Africa, in terms of both investment and trade. Indeed, banks must take an active role in order to benefit from the continent’s potential, which is still largely untapped.

We have big ambitions for Africa. Through Cairo International Bank in Uganda, we can offer trade finance facilities to businesses looking to become active in East Africa and introduce new market opportunities to our existing clients. Our new management team in Uganda identified the top business trends locally and proposed a five-year strategy centred on SME-lending, microfinance and digital banking integration. As one of the largest microfinance lenders in Egypt, with a market share of 25%, we are well positioned to lead financial inclusion efforts in Uganda, serving the under-banked, especially women and the young population starting small businesses.

Business Intelligence Unit: As the bank looks to expand its operations, how are the IPO plans progressing?

Tarek Fayed: We are planning to offload up to 49% ownership of the bank, through a primary and a secondary offering. Our focus is the primary offering, which will increase the bank’s capital in order to support our future expansion plans. Our current conversations with the investment banks revolve around 30% to 40% of the bank’s shares, which at this early stage could be valued at USD 300-400 million, making it the largest IPO transaction to take place in Egypt since 2010.

Business Intelligence Unit: Having spent a decade with the Central Bank of Egypt and currently sitting on the board of the Union of Arab Banks, the Federation of Egyptian Banks and the Egyptian Stock Exchange, you are a career banker with an in-depth knowledge of the Egyptian banking sector. In your opinion, which are its main drivers for growth over the coming years and how is BdC preparing for it?

Tarek Fayed: Addressing financial inclusion and introducing advanced digital banking capabilities are our areas of focus. BdC is becoming a fully fledged bank that caters to a multitude of sectors and of business opportunities in the marketplace. We have a clear strategy of putting people first, which is why one of the main steps that we took as part of the bank’s recent restructuring was to significantly increase our training budget so that our employees could gain access to best-practice expertise.

I expect Egypt to take a quantum leap forward in terms of financial inclusion over the next few years. Banks are working closely with the regulator to transition to a cashless society, educate the customer, create an ingrained banking culture and thus ensure financial and macroeconomic stability. The National Payment Council has been established by President El Sisi to play that precise role and major efforts are being undertaken to digitise all payments, both on the private and the government side, together with the adoption of rules and regulations to facilitate experimentation and testing in a sandbox environment.