Bloomberg/Shawn Baldwin

Markets

Egypt files criminal case against Beltone in Sarwa IPO saga

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Egypt’s regulator claimed wrongdoing in the book building for the firm that went public in October, saying it received complaints from investors.

Sunday 06, January 2019

(Bloomberg) --Egypt’s market regulator filed a criminal case against officials at Beltone Financial for alleged wrongdoing during the initial public offering (IPO) of a financial services company late last year.

The move is linked to a case filed by Beltone in the administrative court where it sought to reverse the Financial Regulatory Authority’s decision to suspend its investment bank unit’s operations for six months after the lacklustre Sarwa Capital IPO.

Sarwa’s shares plunged as much as 19 per cent in their trading debut, and have failed to rebound to anywhere close to the IPO price of 7.36 pounds ($0.41) even after Beltone’s parent Orascom Investment Holding bought a 30 per cent stake in the company.

The FRA and Beltone’s CEO Bassem Azab declined to comment. Beltone’s lawyers Matouk Bassiouny did not respond to a message requesting comment. The company has repeatedly denied any wrongdoing in the IPO process, a position restated during the court session on Saturday, al-Borsa newspaper reported.

Days after the offering, the Government postponed the first planned stake sales of state-run companies, in a move that was seen by analysts as a knee-jerk reaction to Sarwa’s float. Lawyers for the FRA said in the court hearing on 5 January that Sarwa’s IPO was one of the reasons behind the decision to delay the Government’s stake sale programme.

Beltone has said the issue was largely linked to a lack of clear guidelines by the regulator when it came to the private placement process.

The court on Saturday passed the file to its advisory arm for review and set another hearing for 26 January.

 

TAGS : Beltone Financial, IPO, FRA

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