B Investments [BINV]: Portfolio Restructuring
B Investments announced a reduction in its stake in Gourmet by selling 26mn shares for EGP 416mn, bringing its ownership down from 40% to 33.5%. The proceeds from the partial divestment could provide the company with greater flexibility to redeploy capital, either through new investments or potential cash distributions to shareholders.
Meanwhile, the company’s Board approved the acquisition of a 53.5% stake in BIG Investments, which owns a 20.4% stake in Madinet Masr. Given B Investments’ existing 7.35% direct stake in Madinet Masr, the transaction would increase BINV’s total direct and indirect exposure to Madinet Masr to around 17%-18%.
The acquisition will be executed through a share swap, with BINV issuing new shares to finance the transaction. As a result, the increase in BINV’s share count would initially lead to EPS dilution.
However, the higher exposure to Madinet Masr would increase BINV’s share of the company’s earnings and cash distributions, which could help offset part of the dilution impact on BINV’s EPS, depending on Madinet Masr’s earnings performance and the final terms and valuation of the transaction.
Importantly, using a share-swap structure rather than cash allows BINV to preserve its existing liquidity, providing the company with additional flexibility to deploy its cash into other investment opportunities.
Overall, the recent transactions appear to represent a restructuring of BINV’s investment portfolio, with the company reducing its exposure to Gourmet while increasing its exposure to Madinet Masr, while maintaining financial flexibility to pursue additional investment opportunities.
Walaa Mosalam
WMosalam@egy.primegroup.org