Banque du Caire on the Stock Exchange: Capped Pricing in the Final Weeks of the IMF Program

Today, Monday, October 19, order taking begins for Banque du Caire shares, finally realizing an idea that remained difficult to execute for many years. I have been following this file since 2008—eighteen years ago—during which I witnessed its timeline announced and postponed repeatedly.

The bank was aiming for an initial public offering in late 2019 or early 2020, but plans were postponed several times, and its shares remained provisionally listed since February 8, 2017. I understand the government's celebration of this moment, but what caught my attention in the prospectus was not the date. Just a few days ago, sources cited by 'Asharq Bloomberg' spoke of a range between EGP 4.30 and EGP 4.82, lower than the estimated fair value of EGP 5.30. Today, the approved range ends at exactly EGP 5.30, and the Financial Regulatory Authority states that the study by financial advisor Baker Tilly concluded with this fair value.

The final price has not yet been decided, as it will be determined in the order book. However, if it closes at the ceiling, the buyer will pay the full value estimated by the advisor without any discount, and in the final weeks of the IMF program. This requires us to read the prospectus through a different lens.

What is actually being sold

According to the Banque du Caire offering prospectus, the offering includes 4.575 billion shares representing 30% of the capital, from existing shares owned by Banque Misr. It is therefore a secondary offering: proceeds go to the seller, and not a single pound enters Banque du Caire's capital. Proceeds range between EGP 22.05 billion and EGP 24.25 billion, and the bank's market capitalization is estimated between EGP 73.51 billion and EGP 80.83 billion. Raising the upper limit by EGP 0.48 adds about EGP 2.2 billion for the seller at the cap—a simple calculation: the price difference multiplied by the number of shares offered.

A strong bank and a price requiring comparison

The figures announced in the offering prospectus show that in the first half of 2026, the bank achieved a net profit after tax of EGP 8.9 billion, a return on average equity of 27.6%, capital adequacy of 22.1%, and equity of EGP 66.8 billion. Net profit for 2025 reached around EGP 16.1 billion.

According to my calculations, the price of EGP 5.30 equals about 5 times 2025 earnings and about 1.21 times equity as of June 2026—here I am pairing full-year earnings with equity at a later date. At EGP 4.82, the two multiples drop to 4.6x and 1.10x. If first-half profits are doubled for an annual estimate—and this is not a forecast—the P/E multiple at the cap drops to about 4.5x.

Are these high multiples? Fairness requires stating that an initial comparison does not condemn the price. According to the CIB share page on the Federation website dated August 24, 2026, the stock was trading at a P/E multiple of around 5.3 and a P/B multiple of around 1.97. The page does not clarify whether the earnings used are for the last 12 months or a fiscal year, and figures differ slightly among data sources.

Meaning Banque du Caire's P/E multiple at the cap is close to it, while its P/B multiple is significantly lower. However, this is a comparison with a single bank—the largest and most liquid private sector bank—so it serves only as a preliminary indicator and requires comparison with other banks whose selection the advisor should explain. What matters to me here is that the price at the cap provides no safety margin below the announced fair value, and the buyer assumes pricing and liquidity risks without that margin.

Within the numbers themselves is an observation that needs reconciliation. First-half results published by the bank in August showed net profit of EGP 8.6 billion, a 15% increase over H1 2025. The offering announcement speaks of EGP 8.9 billion. The difference is small, but when a stock is priced at its fair value cap, the bank or prospectus must explicitly clarify the relationship between the two figures.

Doubling margin in nine years

In the financial market, no one buys your troubled past; rather, they buy how you transformed that adversity into a launchpad for the future. This is what Banque du Caire presents today—a bank whose stock market listing the government waited years for. It is not selling its past, but rather a story of transformation told through its numbers: return margin rose from 3.6% in 2017 to 7.4% in June 2026, the share of current and savings accounts in deposits increased from 35.2% to 53.4%, and the cost-to-income ratio fell from 48.7% to 35.9%.

The story is convincing. But whoever buys at the cap pays the full price for this platform upfront, betting that a nearly doubled margin will maintain its level and that the share of cheap deposits will not decline. The published figures do not separate the effect of rising interest rates from the effect of an improved deposit mix, so we do not know how much of the improvement is structural and how much is cyclical.

Reliance on interest is clear. Net interest income reached EGP 18.8 billion in H1, representing about 85% of total net interest income plus net fees and commissions (EGP 3.4 billion). This percentage applies only to these two items and does not describe total revenue. As for the interest rate environment, it is double-edged. The Fund expects inflation to rise to 16.7% in H2 2026 and calls for maintaining a tight monetary policy. This supports margins in the near term but does not guarantee their persistence over the life of an investment bought today. A single fair value without published scenarios for interest rates and exchange rates asks the investor for greater trust than the provided data supports.

Asset quality: numbers requiring marginal reading

The non-performing loans ratio fell from 5.0% in 2017 to 3.7% in June 2026, which is a real improvement. However, the announced ratio is calculated on total loans of EGP 280.3 billion, which includes EGP 27.2 billion in loans and advances to banks. This figure represents bank loans, not non-performing loans. If we assume non-performing loans total about EGP 10.4 billion (3.7% of 280.3) and are all customer loans, the ratio rises to about 4.1% when calculated against customer loans alone. This is an approximate estimate on my part that needs confirmation from the prospectus.

The more appealing figure, 2.5%, excludes loans granted before 2020, so it cannot be directly compared with ratios of other banks. Announcement footnotes state that some of these data are derived from management information rather than financial statements.

The latest Fund review in the background

The announced timeline is tight. The private placement order book receives orders from October 19 to 23, public subscription opens from October 19 to 28, the final price is announced no later than October 26, and the first trading day is expected in early November. The bank states that these dates are indicative and subject to change, and that it is still fulfilling necessary approvals. A few weeks later, on December 15, the IMF program officially ends.

In the Fund's statement on July 30, exit proceeds reached about $520 million so far, the divestment program progressed slower than expected, and the Fund calls for accelerating it. The offering proceeds at the cap equal about $500 million—assuming an exchange rate of EGP 48 per dollar—nearly matching everything achieved so far.

I cannot determine for sure how it will be counted toward the program targets, as proceeds go to Banque Misr, another government entity, which is a question deserving an announced answer. The tight schedule does not necessarily mean pressure on the seller, and I find nothing in the public statements explicitly tying the offering schedule to the IMF deadline. However, this concurrence makes questioning the timing and accounting of proceeds legitimate, warranting greater transparency.

95% for institutions and 5% for retail

The private placement, which consists of 4.34625 billion shares representing 95% of the offered shares (equivalent to 28.5% of total capital), is aimed at qualified investors in Egypt and abroad, including qualified US institutions. This is a point in favor of the deal, as the book will not rely solely on the local market. The retail public receives 228.75 million shares, or 1.5% of capital. Retail investors learn the final price two days before subscription closes, but accept it as determined by the institutional order book, with their demand having no impact on its formation.

The offering prospectus also contains a clause no less important than the price range. The offered shares may be increased by a maximum of 2.2875 billion shares representing 15% of total capital, raising the total to 6.8625 billion shares, or 45% of the bank, equivalent to about EGP 36.4 billion at the cap. The increase requires FRA approval and must be announced no more than three days before the public tranche closes. Meaning the final supply size may not be known until the last minute, and increased supply could pressure the stock price in initial trading sessions if not met with sufficient demand.

Speaking from memory based on eighteen years of following this file, amid over twenty years covering the economy: what I learned from this file is that a seller who has waited long often tends to rush when given the opportunity, and haste usually shows in the price. The importance of the transaction to both Banque Misr and the government makes the eagerness to complete it understandable, but it makes the buyer all the more entitled to question the price. A necessary distinction here: the announced goal of the program—expanding the ownership base—has two meanings. If the intent is transferring a stake from the state to the private sector, the local and foreign institutional book achieves this. If the intent is expanding retail participation, a public tranche of 1.5% of capital achieves it only to a limited extent.

What should be demanded before orders close

From the FRA and financial advisor, a schedule explaining the fair value at EGP 5.30, along with a comparison against multiple listed banks and sensitivity of value to interest rate and exchange rate changes. From the bank, a public reconciliation between EGP 8.6 and 8.9 billion, an NPL ratio calculated against customer loans alone, and clarification on the extent of reliance on management information in the presented figures.

From the government, clarification on how proceeds are counted within the divestment program, and an early announcement regarding any decision to increase the offering to 45%. As for retail investors, it is best not to treat the upper cap as a guaranteed price and to wait for the final price announcement before deciding.

I have followed this file since 2008, and I wish for nothing but the offering's success and completion of the bank's listing. Banque du Caire deserves to be listed, and the numbers say so. But after eighteen years, the question confronting the market is whether it will accept paying the full fair value price in a deal with a short timeline.