Suez Canal Authority Plans First Asset Sale With IPO for Subsidiary
The Suez Canal Authority is planning to sell a 20 percent stake in one of its maritime services subsidiaries, the Canal Company for Mooring and Lights (CCML).
CCML provides linehandling and boat services for mooring during canal transits, as well as the required Suez Canal searchlights - the special purpose lamps that all transiting ships must install or rent from CCML before making a nighttime passage through the canal. CCML electricians are typically required to connect and operate the lamp. These services add up to several thousand dollars per transit, ensuring a steady revenue stream for CCML.
SCA Chairman Osama Rabie announced Wednesday that CCML will be the first subsidiary transferred into a newly-formed sovereign holding company, which the Egyptian government created to enable the sale of SCA assets to private shareholders. As a test run, 20 percent of the shares in CCML will be offered in an IPO on the Egyptian Stock Exchange. There may be more sales to come, said Rabie - but never the canal itself, which is a symbol of national identity and will remain in the hands of the Egyptian state.
"It is out of question to privatize [the canal itself] or lease it,” he said. “The assets of the authority are owned by the Egyptian people.”
The Suez Canal Authority is one of Egypt's biggest generators of foreign exchange income, and last year was its best ever, Rabie said. The SCA pulled in $9.4 billion during the 2022-23 fiscal year, more than ever before, and it handled nearly 26,000 ships with 1.5 billion tonnes of cargo.
Rabie's team said that the canal's recent high performance can be chalked up to SCA's flexible pricing and marketing policies, which have helped to attract new business, as well as management's success in "dealing with accidental variables in the maritime industry."
Egypt is under intense economic strain due to a foreign exchange shortage and rampant inflation, and SCA's income is more important to the national economy than ever. The creation of the new holding company for asset disposition has raised concerns locally that the canal itself might be sold or leased - fears which the SCA and the Egyptian government have tried to assuage.