17-07-2025
Parting ways with traditional investment - Economy - Al-Ahram Weekly
The growing interest in the two recent listings on the Egyptian Stock Exchange highlights a shift in investor perceptions of what constitutes a sound investment
For decades, Egyptians have viewed investment opportunities through the narrow lens of real estate, gold, and more recently certificates of deposit.
However, the recent listings of ValU and Bonyan on the Egyptian Stock Exchange (EGX) have stirred a buzz among market observers and investors due to the companies' unconventional and highly profitable business models and different fields of work — consumer financing and income-generating real estate.
ValU, established in 2017, is a leader in financial technology (fintech), a field that is rapidly growing in Egypt and offering a wide array of services. The buy-now-and-pay-later service, one of the most widely used service offered by fintechs, has become the go-to solution for Egyptians who can't afford to buy expensive commodities, let alone even essential products, in cash.
ValU has a share of 27 per cent in the consumer financing market, with a competitive advantage in the car loans segment in particular. The company extends more than LE350 million in auto loans monthly.
As for Bonyan, 'We buy properties that are either fully constructed or nearing completion. Then, we lease them to international and Egyptian companies. So, in essence, what we do is similar to how individuals invest in real estate, but we do it institutionally, while focusing on leasing commercial and office spaces,' Shamel Aboul Fadl, Bonyan's CEO, said in a recent interview with Arab Finance.
'Our activity is completely different from that of typical real estate developers operating in the market. We do not build or develop properties, we acquire finished, ready-to-use properties for leasing purposes,' he added.
Market observers view this line of business as a lifeline for real estate developers. By selling their units directly to businesses like Bonyan, developers can recover the needed capital and shift their focus to building new units, rather than having to wait for the properties to be sold through long-term instalment schemes. Meanwhile, the buyers of Bonyan shares gain easy access to diversified, professionally managed real estate, without owning property.
Amr Hassan Al-Alfi, an equity analyst at Thndr, a trading platform and mobile app focused on investment, wrote in a report on Bonyan: 'For the first time, investors can buy in a business that owns income-generating commercial and administrative real estate like Walk of Cairo and gives you exposure to stable rental income, all through the stock market.'
Bonyan is offering 21 per cent of its shares through initial public offering and private placement, selling stake to targeted institutional investors. In this case, investment banks collect orders from investors before the listing. On launching day, shares are priced and sold, before the stock starts trading publicly.
ValU's offering took place differently. EFG Holding, the parent company of ValU and one of the region's leading investment banks, opted to distribute a portion of its profits through an in-kind dividend, offering a partial stake in ValU instead of cash. The company allocated approximately 20.5 per cent of ValU's shares to EFG's shareholders, with the transaction valued at around LE3.2 billion. As a result, each EFG shareholder now owns a stake in ValU. The shares are officially listed on the stock exchange, though they are not necessarily actively traded. This is known as 'technical listing', whereby shares are listed on the exchange but only sold at a later stage, contingent upon future demand.
On its first day of trading among EFG shareholders, the value of ValU shares surged by 852.4 per cent from their opening price of LE0.78.
Bonyan's private placement was 6.88x oversubscribed and until Monday the retail offering was 5x oversubscribed. The subscription closing day was scheduled for 16 July.
Building on their sound performance, the two companies have plans for expansion. ValU is preparing to launch its services in the Jordanian market.
Bonyan's Aboul Fadl said that in addition to the company's focus on the office real estate market, it is exploring investments in the warehousing and logistics sector, particularly facilities leased to multinational corporations and major Egyptian companies.
The company's investment portfolio hovers around LE17 billion as of March.
According to Thndr, Bonyan owns 10 premium commercial properties in East and West Cairo with 93 per cent occupancy. The 119 tenants of the company's units include major brands such as Nestlé, Turkish Airlines, Grohe, GE, Johnson & Johnson, and Vodafone. Moreover, 56 per cent of the properties are leased in US dollars, providing a built-in hedge against inflation.
As for Valu, beyond its lending and payment services, its financial solutions portfolio includes a cash redemption programme, savings plans, and a financing option designed to facilitate the purchase of big-ticket items worth up to LE15 million.
'We want people to use their ValU cards to top up their mobile phone credit, and we're also seeing them use our app to buy yachts,' Walid Hassouna, CEO of ValU, told Enterprise Online news service.
The number of clients within Egypt's consumer finance segment grew nearly 16-fold between 2020 and 2024, rising from over 250,000 to more than four million. Currently, there are 45 companies licensed to provide consumer finance services in Egypt, according to Thndr.
Valu and Bonyan's listings have injected much-needed vitality into the market, which has seen little to no initial public offering activity in recent months — the most recent being the public offering of United Bank in November.
The growing appetite for such offerings is expected to encourage the government to advance its stalled privatisation programme. Prime Minister Mustafa Madbouli recently stated that the government intends to privatise a number of public companies via the stock exchange, with targeted proceeds ranging between $5 and $6 billion.
The slow pace of the privatisation programme is the primary reason behind the IMF's decision to postpone the disbursement of the fifth tranche of its $8 billion loan, according to Madbouli.
* A version of this article appears in print in the 17 July, 2025 edition of Al-Ahram Weekly
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