Bill Gates is making a big investment in Egypt. Bill Gates, along with other investors, are buying a $1 billion stake in OCI NV. Bill Gates is investing in the deal through his firm, Cascade Investment LLC. Other investors in this transaction include Mason Hawkin’s Southeastern Asset Management, and Davis Selected Advisers. OCI N.V. has obtained total commitments in excess of $2 billion from investors.
OCI N.V. (Netherlands) announced its intention to launch an exchange offer to acquire all of the outstanding GDRs of Orascom Construction Industries Company (PINK:ORSCY) in exchange for ordinary shares in OCI N.V. OCI N.V. plans to list on the Amsterdam NYSE Euronext from January 25 and subsequently launch an ADR program on the New York Stock Exchange.
In addition, a mandatory tender offer to acquire all of OCI’s ordinary shares, listed on the Cairo stock exchange, in exchange for OCI N.V. shares or cash at EGP280/share, has also been launched. OCI N.V. has stated that it has secured the backing of several investors, including Bill Gates, while the existing shareholders, the Sawiri family and Abraaj Capital have committed to exchange their GDRs for OCI N.V.
CEO of Orascom Construction Industries Company (PINK:ORSCY), Nassef Sawiris said, “this transaction is proof of the existing international appetite to invest in Egypt and bodes well for the Egyptian economy with more than $ 1 billion committed by US investors.”
Analysis
If completed, the deal would, in practice, change the current group structure from an Egypt-based holding with international operations in fertilizers and construction (with the Sawiri family its major shareholders), to a Netherlands-based holding with international operations in fertilizer and construction (with the Sawiri family the majority shareholders and some new US shareholders also committed to join the group).
Orascom Construction Industries Company (PINK:ORSCY) currently has 206 million shares outstanding: 75% represented by GDR mostly controlled by the Sawiri family; and 25% is common stock listed on the Cairo exchange. While the ordinary GDR have only the exchange option, the Cairo-listed common shares (52 mn) can opt for either cash (EGP280/share, 4% premium to close on Jan. 17) or OCI N.V. shares.
The creation of a new group structure as likely an attempt to better highlight the international reach the group has achieved and reduce the perceived risk related to its Egyptian operations, which currently represent only c.30% of company assets.
The deal is the biggest foreign investment in Egypt since 2011.
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