Aur Capital has signed an agreement with Wadi Degla Real Estate Company, yesterday, whereby the shareholders of Wadi Degla acquire 70% of the new Aur Wadi Degla, while 30% will remain for Aur Capital. The transaction is done through increasing the capital of Wadi Degla by EGP 300m and share swap in the new entity.
“The alliance aims to integrate activities between Aur Capital, a specialist in finance, and Wadi Degla Real Estate Company to reach larger segments of Egypt’s real estate investors and add new land in the provinces by raising funding from investors,” said Ashraf Salman, co-founder of Aur Capital. Of investors and pumping money into new territories in the provinces.
Salman told Daily News Egypt that the new company will target increasing Wadi Degla lands by three folds within the coming five years to reach 18m sqm, next to integrating activities between the company and the ARCO Investment Management Fund through revenue share scheme in some projects and to provide products that match all categories.
The management structure of the new entity will consist of Ashraf Salman and Maged Halmy, as fund managers. The executive management of Wadi Degla Real Estate will continue to manage the company, while Aur Capital will be concerned with the financial part and put governance rules in the company to be able to exit in five years, whether through IPO on the EGX or selling to investors.
He added that the integration process will include the integration of the contracting arm of the two companies and work independently outside the group, while competition will begin in Egypt and abroad, next to implementing contracts in the coming four to five years worth EGP 10bn at least.
Salman explained that the ARCO Investment Management Fund is managing assets of about EGP 12.6bn, while the new alliance fund will manage some EGP 2.35bn assets. Salman noted that the group will focus on the Egyptian market with internal revenues of about 30% in the coming five years.
He also unveiled Aur Capital plan to launch six new direct investment funds in the coming two years, expand education fund, and the health, leisure and food fund next year to reach EGP 40bn worth of assets under management.
Salman also told DNE that the company’s strategy is to obtain controlling stakes in the companies invested in, through a buy-change-exit methodologies. As for the education fund, the assets will reach EGP 2bn, excluding the debt part, which could raise the fund assets to EGP 4bn. It will also work to buy and build per-university schools.
The Health Fund, however, will reach a size of EGP 2.5bn, up to EGP 3.5bn through loans.
The remaining funds will manage assets of EGP 6-8bn, while investments per company will reach EGP 20-100m.
For his part, Maged Halmy, chairperson of Wadi Degla said that the new alliance will employ the potentials of the two sides to expand real estate projects in the local market. The leaders and staff of Wadi Degla Real Estate will continue to manage the company. The new alliance will increase the capital of the company and the speed of implementation of current projects of Wadi Degla Real Estate Company, where the company’s capital after the merger will amount to EGP 1.1bn.
“The alliance targets different segments of the community and new areas outside Cairo, Ain Sokhna, and the northern coast,” he said, stressing that Egypt is the ideal country for investors in the real estate sector for those wishing to achieve high profitability rates and capital development both in the near and long term.
Wadi Degla has a land portfolio of 6m sqm and has delivered about 7,000 residential units. Ahmed Amin, CEO of Wadi Degla Real Estate, said the company is seeking to boost deliveries to 10,000 units by the end of this year. The company has a stock of up to 30,000 units.
Salman also announced the establishment of Aur Hospitality Investment as part of the partnership plan for the hotel and tourism industry, which will own all the hotels owned by Arco Real Estate Development Company and Wadi Degla Real Estate Company. The company will also own and operate current resorts of 6,000 rooms in the coming five years.
He also announced the completion of the establishment of a company to invest in the non-banking financial sector. Its board approved last week the establishment of companies in six non-banking financial activities, namely financial leasing, privatization, micro finance, insurance, insurance brokerage, and real estate mortgage finance. The company will apply to obtain the licenses in September to the Egyptian Financial Supervisory Authority.