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Yasmin Mounir and Rada Ibrahim
Today, the local capital market will begin receiving applications from the company's public offering for bank technology and electronic payments priced at £ 6.46 per share for around 5% of the company, versus 31% for the private placement.
EFG-Hermes began receiving 10% of private placements between Friday and July 31st, while 21% direct sales contracts were signed by Actus Direct Investment Company, Ahli Bank and 'Egypt.
The prospectus, published last Friday in the newspapers, contained a number of essential elements and important details, as well as easier control of the reader, highlighting the most important actions that preceded or which will be followed by the initial offer, the first of the current year.
EFG-Hermes acts as lead manager, while Zulfikar & Co. acts as legal advisor for the placement, and the office of Dr. Zaki Hashim & Co. as Fore's legal advisor.
FipCorp Financial Consultancy acted as an independent financial advisor and prepared the company's fair value report at LE 6.9 per share.
Conditions of participation in the private placement
The definition of the Offering for the Immediate Prospectus is that it is directed to predetermined financial institutions as well as other investors as defined in Board Decision No. 48. Administration of 2019.
The bulletin said that financial institutions should include Egyptian banks and branches of foreign banks under the control of the Egyptian Central Bank, investment banks, management and portfolio management companies, investment companies, and other banks. Insurance and reinsurance, venture capital companies, direct investment, mortgage financing, leasing and credit agreements, its investment portfolio of LE 100 million and its funds from Arab financial institutions , regional and foreign.
A definition of the financial institutions participating in the private placement, the requirement of a book value of £ 20 million for shareholder rights or $ 10 million of securities investments, or the field of view. activity to be subscribed in accordance with the authorization to exercise.
The prospectus stipulated that the financial institution wishing to subscribe to Furi had to have one of the following three elements: the book value of the capital of these institutions should not be less than £ 20 million, or should hold investments in securities at the date of the offer, Books in other stock companies other than the company in question or the activity of this institution may develop to subscribe to the securities for the purposes authorized for the securities. exercise.
Changes in ownership structure after placement
The prospectus indicated that the extraordinary general meeting of the company of July 10 had decided that after completion of the offer, the ownership structure of the company would change as part of the restructuring.
Post-IPO restructuring aimed at transferring indirect ownership via offshore companies to the direct ownership of shareholders, subject to the freeze period of stocks.
The restructuring is due to the payment by the shareholders of the company SARL (SARL), shareholder of the main shareholder of Fori, PSI Netherlands holding BV, Post-IPO to become directly in the company.
The transfer of ownership of the entire main shareholder to the indirect shareholders of the Company, provided that the ownership of 51% of the shares of the company remains frozen for two fiscal years from the date of issue in accordance with the rules of registration and delisting of securities.
The company will submit to EFSA a notice of exemption from the mandatory purchase offer.
The prospectus indicated that the Extraordinary General Meeting held on July 10 had also approved the freezing of any additional interest remaining held by PSA Nizarlands BV for a period of six months from the date of trading of the shares of the company on the stock exchange. .
According to the prospectus, PSI Netherlands holding BV owns 99.99% of the shares of the company, a limited liability company based in accordance with the legislation in force in the Netherlands and owned by Piment Solutions LLC, All elements related to the two companies in the Financial Supervisory Authority in accordance with the prospectus.
With regard to the additional disclosure requirements imposed on shareholders owning 1% or more of the total shares of Piment Solutions, the report stated that LINK HOLDCO held 35.2% of the shares, a Luxembourg limited liability company. , while Black Sparrow Long Term Investments held 32.19%. , Limited Liability Company established in the Cayman Islands.
The Egyptian-American Project Fund holds 18.37% of the shares, a fund established under the laws of the State of Delaware, against 10.3% for responsaAbility in Spain, as well as small shares for directors and others shareholders.
The note indicated that after completion of the Offering, the ownership ratios of the Corporation's Indirect Shareholders may vary, without name change, due to the distribution of the Offer Proceeds in the form of Piment Solutions' own shares. Structure.
Amendments to the board of directors of those who own 7%
The prospectus stated that the July 10 special meeting of the company had approved the amendment to article 21 of the company's by-laws.
On July 10, a special meeting decided to allow holders of 7% to appoint a representative to the board of directors.
The amendment provides that each shareholder holding at least 7% of the total shares of the company will have the right to appoint and appoint a member of the board who will represent it on Furi's board of directors.
Forsi's board of directors is currently composed of three members since its inception, namely Saifullah Qatari, non-executive chairman, Ashraf Sabri, managing director, Mohammed Okasha, managing director, 4 representatives of PSI Netherlands Holding Holding BV, with two independent members.
Share of employee profits, reward system and motivation
After the award of the contract, an Extraordinary General Meeting is convened to decide on the approval of a system of bonuses and incentives for employees, directors and members of the Executive Board, under conditions that must be disclosed in due time. and subject to applicable regulations.
• Convocation of an extraordinary general meeting after the proposal to approve the establishment of a system of rewards and incentives for employees, directors and members of the board of directors
He stressed that nothing required the company to badume the obligations of the major shareholder when implementing the bonus and incentive system, and that any future system would be approved by the special meeting. of the society.
Breakdown of 12% of net profit for 2016 on employees .. And 16.36% of profits of 2017
The ordinary general meeting of the company held on May 15, 2017 approved the allocation of 12% of net profit realized in 2016. The ordinary general meeting of the company approved on May 15 16.36% of profit net from the previous year.
The bulletin indicated that the company would continue to distribute to employees over the next few years with at least 11.8% of net profits, and no more than 16% of them, that it would the distribution of dividends to shareholders or not, which may be interpreted as acquired rights of employees of the company no According to the provisions of Law No. 159 of 1981 – according to the text of the prospectus – the dividends distributed must be deducted from the benefits legally due to employees.
According to the July 2019 book of the company, the total number of employees of the company and its subsidiaries, whether they be permanent or temporary, rose at the end of May to 1 508,000 workers, including 1,302,000 insured, 69 workers submitted for insurance claims and 137 temporary workers.
Tax position
According to the company's tax advisor, Mustafa Shawki & Co., dated July 1, 2019, the company's tax situation includes several calls for tax audits of monetary taxes between 2009 and 2014.
The company received a notice of the 2009 appraisal form, which was contested on May 4, 2015 and was conducted on a real basis, as well as the 2010 appraisal form, which did the ### 39, the subject of an appeal in mid-June 2016. The examinations scheduled for 2011 and 2012 were also contested on 27 February. 2017 and February 27 call of test estimates for 2013 and 2014, and the review is done on a real basis by all orders.
There was no immediate notification of the tax for the years 2015 to 2018
The bulletin indicated that between 2015 and 2018, the company had not yet been informed of the review.
Regarding the stamp duty, the company said the company had been examined from the beginning of its activity until 2014 and that the payment of tax differences had been made, while the company had not been informed of the exam for the years 2015 to 2018.
Payment of sales tax differences until in 2014 .. The examination of the years from 2015 to 2017 .. Although not notified the company to check for the year 2018
With respect to the payroll tax, the company was examined from the beginning of the business to 2016 and the tax differences were paid, while the company has not yet been informed of the exams of 2017 and 2018.
In terms of sales tax, the company stated that the company had been reviewed from the beginning of the activity until 2014 and that the tax differences had been settled. The years 2015 and 2017 are currently being revised as the company has not been informed of the 2018 review.
According to the statement issued by Mustafa Shawky & Co.'s tax advisor, the company has not received a notification regarding the tax on the deduction and collection.
Fair value report
The Offer Circular indicated that the scope of the work entrusted to Fincorp did not include the performance of a financial, fiscal or legal review that was ineligible to express an opinion on the adequacy of the provisions made. in the books of FOI or its subsidiaries or financial investments in bad debts. Related parties, or due by and on behalf of clients, taxes, insurance or other contingent liabilities sufficient for each company.
Regarding the approach and method of work, the prospectus indicated that the Fincorp team had followed the evaluation study of the fair valuation of the company in order badyze the level of financial and operational performance of the company during the period from 2016 to 2018 as well as in the first quarter of 2019, On the most important opportunities and challenges facing the company, discuss the Management of the company in the approach taken in preparing future financial projections gathered to understand the basis of the management-based estimates for the 2019 to 2023 period, as well as making several changes as needed in future data.
Previously, Fincorp estimated the fair value of Fauri's equity, with the exception of FURI, using discounted cash flows and market multiples, using a weighted average of 60% and 40% respectively.
The fair value of equity using the discounted cash flow method was £ 4.4 billion, or £ 6.2 billion, while its fair market value was £ 6.7 billion. euros per share based on a fair value of 4.7 billion pounds. Using the weight of both methods at 4.6 billion LE, at 6.4 LE per share.
Fincorp's fair valuation is £ 4.9 billion, or £ 6.9 per share.
Although Fincorp used the residual income method to estimate the fair value of FURI, because of its adequacy to the nature of the company's operations, the cost of equity was set at approximately 15% on average over the course of the year. forecast period, bringing the value of the company to LE 453 million.
As a result of the consolidation of the parties, the immediate value of the handset with the immediate microphone rose to about 4.9 billion pounds and the fair value of the stock to 6.9 pounds.
The multiplier of the book value of the company in 2017 was 15.50 times and 9.82 in 2018. It was calculated by dividing the price of the offer by the average equity each year .
While the profit multiplier in 2017 was 90.4 times and 80.67 times in 2018, according to the profit multiplier calculation by dividing the price of the offer on the net profit of each year.
Notes from the Financial Supervisory Authority
In the prospectus, EFSA 's comments on the report of the independent financial advisor were an integral part of the report, which included two observations on the badumptions of the study and three on the approach of the financial advisor. Evaluation.
The Commission's observations indicate that the Company's sales forecast has been considerably strengthened with the help of market data not supported by reliable sources for this purpose, which has not been has not been clearly disclosed or explained to the extent that the badessment has been badigned, to handle this model.
3 Financial Control Notes on Estimated Expected Result and Valuation Discounting Methodology
Fincorp said that after reviewing the company's revenue forecast, there were no significant leaps, based on the projected average growth rate for 2020-2023 at 36.1%. , against a real growth rate of 39.4% for the 2016 period. Until 2019, indicating a decline in expected growth rates compared to the average actually achieved.
The estimated budget forecasts a growth rate of 39.2% in 2020, falling to 38.2% in 2012, then to 34.4% in 2022. The growth rate is 32.6% in 2023, an average of 36.1%.
Fincorp added that all expected income elements were based on reliable data, variables, evidence and market data from reliable sources, and that a 1% risk premium had been added to the cost of capital. to deal with the financial implications of potential risks related to the business. As well as any type of variables that may be difficult to verify, as well as the use of the beta coefficient for some companies whose market conditions may differ from those of the domestic market because there are no similar companies on the local market or on similar emerging markets.
The second observation of the FSA was that no immediate investment by FOI was added to the March 31, 2019 financial statements.
Fincorp stated that due to the recent creation of the company and the precautionary principle, it did not rely on any future projections of this investment and then added its fair value to the fair value of the equity. from Furi.
On May 20, Fawri invested 51% of Forsi's capital in consumer goods companies. The company's share in the capital was paid in the amount of £ 5.1 million to provide a range of integrated services to maximize revenue and yield.
With respect to the rating of the valuation methods used, the AMF stated that a variable discount factor is used, decreasing due to the discounting of risk-free performance by residents using the discount factor. discount, although it used a 10-year rate of return on Egyptian Treasury Bills, which implicitly contained the downside forecasts. Has multiplied the effect of these expectations on the discount factor.
Fincorp stated that this is common, particularly in light of expectations of falling interest rates and future returns, on the other hand, because the 10-year Treasury yield does not implicitly contain future downside expectations. , which can be deducted from the periodic variation in the rates of return of these bonds. , When these rates differ over short periods depending on the stability of maturities, despite the stability of the economic situation and outlook for the current year.
Calculate the stability of the stock
A bank account has been opened on behalf of EFG-Hermes to promote and hedge IPOs as a leader of Ahli Bank in order to support the stability of equities in the market for the benefit of shareholders through purchase order at the offer price. For one month from the first trading day of the shares on the stock exchange, only for buyers in public offer.
Inventory Stability Calculator Receipts for public offer shares start at the offer price for one month from the date of trading.
The calculation of the stability of the stock price is financed by 13.89% of the total product of the offer, which the main shareholder has sold to the public and private offers.At the end of the account period, full sellers' orders and settlement must be completed within 5 business days of the end of the period. Return the proceeds of the account in the form of shares or amounts, or both, to the principal shareholder.
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