KEY THEMES
Sometimes companies need certain corporate actions or pieces of news to unlock some of their hidden value. A case in point is Orascom Investment Holding [OIH] which whose BoD held a meeting on 11 September 2021, revealing that the company is in talks to sell one of its subsidiary's assets in Brazil worth the equivalent of EGP1.2bn. The assets are composed of seven floors in a building owned by OIH’s Brazilian subsidiary. As per H1 2021 financials, the book value of the assets considered to be sold is EGP694mn (implying a 73% capital gain). We note that the proceeds of the potential sale is equal to c.100% of OIH’s current market cap. We believe such proceeds could either (1) help deleverage OIH’s balance sheet, bringing its net cash-to-market cap ratio to 65%, (2) be used to distribute special dividends, or (3) be used to acquire investments that complement OIH’s investment strategy.
POSITIVE
OIH: We believe that regardless of H1 2021 results, the aforementioned trio of options should unlock hidden values within the OIH's investment portfolio.