Ghazl El-Mahalla Football Co. [GMFC]: In a League of Its Own
Welcome the region’s first listed football club
Ghazl El-Mahalla Football Co. [GMFC]
Egypt / Consumer Discretionary / Pre-IPO Note
IPO Price (including issuance fees) EGP1.02/share
Investment Rating: Not rated | Risk Rating: Not rated
The résumé:
Ghazl El-Mahalla Football Co. [GMFC] is a joint stock company that came into existence in 2021, following the separation of the football activity from Misr Spinning & Weaving Co. located in Al-Mahalla Al-Kubra, Egypt. Ghazl El-Mahalla team was formed in 1936 to participate in the Companies’ League at the time, before it took part in the Egyptian Premier League (EPL) in the 1956/1957 season. The team, one of the six fan-based football teams in Egypt, qualified for the EPL 46 times. The team won the EPL immediately upon its return in the 1972/1973 season as one of merely seven teams that won the EPL championship since its inception. Also, GMFC team came in second place in the 1975/1976 season and ranked third five times during the seasons between 1978/1979 and 1992/1993. The team regained the spotlight in the 2020/2021 season when it was promoted to the EPL after a 4-year absence since the 2015/2016 season. Moreover, it reached the Egypt Cup final six times. Regionally, the team qualified for the CAF Champions League final back in 1974.
The nitty-gritty of the IPO:
Not only is GMFC the first of its kind for being the first football company to be listed on a regional stock exchange, but it is also the first company to be listed immediately after incorporation, before the issuance of at least two years of financial statements. To carry out its IPO, GMFC should reach a minimum capital of EGP200mn with the subscription of at least 1,000 shareholders. Thus, the company is raising capital through three channels, two of which have already been successfully covered:
1) Preferred in-kind contribution of c.EGP65mn from Misr Spinning & Weaving Co., representing a 32.6% stake in GMFC. This is in return for a usufruct right for 20 years to use Ghazl El-Mahalla Stadium and the football training pitches attached to it, the trade name of Ghazl El-Mahalla and all players’ contracts, as well as the advertising and sponsorship contracts estimated at EGP29mn during the 2020/2021 season.
2) Private placement tranche of EGP37mn, which was fully covered, with an EGP15mn contribution of Misr Insurance Holding Co. Meanwhile, Egyptian, Kuwaiti, and Saudi individuals and institutions covered the remainder. We note that the shares of Misr Spinning & Weaving Co. and Misr Insurance Holding Co. (a total of 80mn shares or 40% of GMFC’s total shares post capital increase) are subject to a two-year lockup period from the stock’s first trading date.
3) A public offering of EGP98mn, which is currently underway.
Nada Wagdy
Equity Analyst
T +202 3300 5726