Gourmet‘s bold entry into the Egyptian public marketplace is a very important moment in investment—it shows us that there are still many local businesses that investors are interested in. On February 10, Gourmet Egypt Foods S.A.E. was officially listed on the EGX after raising about EGP1.3bn (USD27.8m) in an IPO and private placement (initial public offering). This transaction is likely considered by many observers as one of the most successful and widely followed IPOs of 2017.
The offering was significantly oversubscribed. The private offering was 12.2 times oversubscribed, while the public portion was oversubscribed by over 55 times. This level of enthusiasm from both regional and global institutional investors, as well as from family offices and retail investors, helped support the early demand, which drove prices higher than the initial offer price; shares were trading as high as EGP 9.50 (approximately US$0.20) on the first day, compared to EGP 6.90 (approximately US$0.15) at the time of the original offer. By February 16, shares were still trading in the EGP 9.22 range (approximately US$0.20).
Gourmet, which has been valued at around EGP 2.8bn when listed (~ $59.8m), does not seek to be a mass-market discount retailer. The supplier of high-end items such as European cheeses and Angus beef has positioned itself in a premium niche in Cairo with ready-to-heat meals sold under the ‘Made by Gourmet’ brand. It has 19 retail locations, two manufacturing facilities, and an e-commerce arm, plus nearly 1,200 employees, demonstrating how a vertically integrated food retailer can achieve scale in a rapidly converging market for convenience products and quality products.
Market analysts believe the listing of Gourmet is significant, particularly because of the excellent performance by the Egyptian Exchange (EGX) over the last year, where the primary index has increased by approximately 68% during this timeframe. Chairman of the Exchange, Islam Azzam, has indicated a large pipeline of expected listings planned for 2026 (8 expected), aided by an increase in registered investors (now approximately 276k) and the advent of mobile trading, which has introduced many of the younger generations into the marketplace.
Key advisors and marketers have been instrumental in EFG Hermes being the only global coordinator and sole bookrunner for the offering. The private equity owner of the company, B Investments Holding S.A.E. (the remaining ownership interest after the IPO of approximately 40%), is expected to enhance governance at all entities involved and create the opportunity for entities in both entities above.
On a broader scale, this listing represents a paradigm shift because the EGX will soon be converted into a public company and has announced several initiatives (such as derivatives and nominees) to enhance the investor experience and create a wider range of investment options, thereby improving the overall capital market ecosystem. The successful launch of the Gourmet stock will boost investor confidence in an otherwise volatile investment climate; therefore, all investors, including both investors and companies, will benefit from the greater access to capital and, consequently, the potential for increased return on investments.
