A stright-forward call on valuation
Rising fertilizer concentration, lower conglomerate discount. EKH’s fertilizer and chemicals unit (53% of our SoTP valuation) continues to be the company’s main source of free-cash flow, but not FCF growth given our view that urea prices of USD350/t are here to stay. That said, should EKH move forward with its plans to develop a cUSD2bn fertilizer greenfield plant in the US, our view would change. Such an investment would represent a coherent move to capture the structural shift in global nitrogen fertilizer production economics. Premium US netbacks along with relatively competitive feedstock supply mean in the US it could generate absolute cash margins of USD380/t on ammonia sales, at least 15% higher than Egypt, and in a market where feedstock is likely to be consistent in flow, and where the cost of capital is substantially lower. This would add an additional 56% to our SoTP valuation, assuming a 51% holding by EKH.
Egypt Kuwait Holding is a long-term-term private equity holding firm in Africa and the Middle East. Co. has a portfolio of investments in the Fertilizers, Petrochemicals, Energy, Manufacturing, Insurance, Information Technology and Transport sectors. Co. generally acquires majority stakes and takes management control in most of its investments. As of Dec 31 2011, Co.'s investment portfolio inlcuded ALEXFERT; BKH; NFC; EHC; Sprea Misr; Plastichem; NATGAS; Shabakat; Nubaria Gas Company; Kahraba; Fayum Gas Company; Gas Chill; Tri-Ocean Energy; BMIC; African Paints; Al-Shrouk for Melamine and resins; GT; Delta Insurance; Nile General Takaful; Nile Family Takaful; ETC and MERT.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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