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IPO Valuation, Price-Setting, and Stabilization Mechanisms in the Egyptian Capital Market

In: Handbook of Banking and Finance in the MENA Region

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  • Mahmoud Otaify

Abstract

This chapter discusses the Egyptian regulatory framework of the IPO process as well as its listing on the Egyptian Exchange (EGX). We will examine the most recent IPOs executed in the Egyptian capital market during the period of 2016–2022 to identify the valuation, pricing, and stabilization mechanisms used by investment banks in light of Egyptian laws and regulations. We use descriptive analysis for the IPO structure data to implicitly identify the incentives to go public. Interestingly, all shares offered in the Egyptian IPOs during the period of concern are secondary offerings, so Egyptian IPO firms use the capital market as an exit strategy rather than to finance expansion. A discounted cash flow model and trading multiples are the techniques most applied in the IPO valuation. The book-building pricing mechanism is widely used by investment banks in the Egyptian IPO market.

Suggested Citation

  • Mahmoud Otaify, 2024. "IPO Valuation, Price-Setting, and Stabilization Mechanisms in the Egyptian Capital Market," World Scientific Book Chapters, in: Khaled Hussainey & Tamanna Dalwai (ed.), Handbook of Banking and Finance in the MENA Region, chapter 13, pages 331-352, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9781800614734_0013
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    Keywords

    MENA; Banking Sector; Business Risk; Corporate Governance; COVID-19; Cryptocurrency; Fintech; Financial Stability; Green Finance;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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