Home » Egyptian auto tycoon Raouf Ghabbour’s GB Auto approves capital reduction via treasury share cancelation

Egyptian auto tycoon Raouf Ghabbour’s GB Auto approves capital reduction via treasury share cancelation

by Omokolade Ajayi
Raouf Ghabbour

Ghabbour Auto (GB Auto), an Egyptian automobile manufacturer led by Raouf Ghabbou, one of the country’s top executives, has revealed plans to reduce its issued and paid-up capital by EGP10 million ($535,100).

According to a recent announcement, the planned capital reduction was approved by shareholders at the firm’s recently held ordinary general meeting in accordance with the group’s strategic expansion plans.

The proposed exercise, which is subject to regulatory approval, will result in the automobile manufacturer’s capital base being reduced by EGP10 million ($535,100), from EGP1.09 billion ($58.32 million) to EGP1.08 billion ($57.78 million).

The transaction, which will see the automaker reduce its capital by canceling 8.5 million treasury shares, is expected to increase shareholder value and result in a more efficient capital structure for the Egyptian automaker.

GB Auto is one of Egypt’s leading manufacturers of automobiles, buses, lorries, and motorcycles, led by Ghabbour, who founded the company in 1985.

Raouf and Nader Ghabbour, and other members of the wealthy Ghabbour family, own 62.9 percent of the leading automaker.

The group reported a 23.2-percent drop in net profit in the first quarter of 2022, from EGP298.8 million ($16.15 million) to EGP229.4 million ($12.4 million) in the same period in 2021, despite a 14.9-percent increase in revenue from EGP6.83 billion ($369.2 million) to EGP7.84 billion ($423.8 million).

Earnings fell by more than 14 percent due to a minority interest deduction of EGP136.2 million ($7.36 million), as well as an increase in marketing and distribution expenses, and administrative expenses incurred during daily operations.

To put the group’s earnings back on track, management announced plans to form a joint venture that will assemble and distribute passenger vehicles in Kenya, the largest economy in East Africa.

Shares in the leading manufacturer were worth EGP3.24 ($0.173) per share as of press time on June 6, up 125 basis points from their opening price on the Egyptian Exchange this morning.

Ghabbour Auto’s market capitalization is presently valued at EGP3.54 billion ($189.4 million), while the Ghabbour family’s stake is valued at EGP2.23 billion ($119.3 million).

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