Nasdaq Dubai listing for Orascom Construction Industries spin-off

17/02/2015 05:43 AST

Orascom Construction Industries said yesterday that it would spin off its construction unit in a public offering on the Nasdaq Dubai.

The separation of the engineering and construction business from the fertilizers and chemical operations will take effect on March 7, the company said. Shares will also be listed in Cairo.

Orascom will offer 15 per cent of the new Dubai-headquartered construction company to investors. It plans to start trading on the Nasdaq Dubai on March 9. The shares will trade in Egypt at about the same time.

“The management’s rationale behind the deal is to create two pure play companies– chemicals and construction – that would allow for better visibility to investors and banks,” said the investment bank EFG-Hermes, which is also advising on the offering. “This will refocus management strategy and improve the company’s balance sheet.”

Once traded on Egypt’s stock exchange, Orascom decided to delist after it was hit by taxes and tough regulations under the former regime of Mohammed Morsi.

In March 2013, the Egyptian tax authority accused the company of tax evasion. It subsequently reached an agreement with the government to pay back the taxes over 10 instalments between 2013 and 2017.

The Egyptian billionaire Nassef Sawiris, who is also the chief executive of Orascom, moved his company from Egypt to the Netherlands last year. Shares of Orascom will still trade on Euronext Amsterdam, the company said yesterday.

Allen Sandeep, the head of research of the Egypt-based Naeem Holding, said that the news was a positive for the Egyptian stock market. However, construction was the “weakest segment” for the company during the past two years.

Egypt’s construction sector has struggled since the 2011 revolution, said Mr Sandeep.

“However, it looks promising in the future, as [Orascom] is now involved in a number of energy projects.”

The National