Raya Information Technology, a subsidiary of Raya Holding for Financial Investment, the conglomerate led by Egyptian tycoon Medhat Khalil, is gearing up for a significant strategic move. The IT arm is eyeing a strategic acquisition as part of its expansion plans, aiming to diversify its business interests and bolster its operational capabilities.
Recent updates indicate that Raya Information Technology is actively pursuing the acquisition of a firm specializing in outsourcing and application development. This strategic maneuver underscores the subsidiary’s commitment to enhancing its service offerings and expanding its footprint in the competitive IT sector.
Raya Information Technology prepares for growth with IPO and acquisition plans
The decision to pursue a strategic acquisition comes hot on the heels of Raya Holding’s announcement regarding the initiation of an initial public offering (IPO) for Raya Information Technology. The IPO, slated for the first half of 2024, aims to open doors for potential investors to own a portion of the IT subsidiary, with a planned sale of 30 to 35 percent of its shares.
Simultaneously, Raya Information Technology has been finalizing discussions for a $35.5-million medium-term syndicated loan. This financing structure, designed as credit limits, is intended to support the IT arm’s expansion by facilitating bank letters of guarantee.
Established in 1999 through a merger involving entities owned by Khalil and Orascom Group, Raya Holding has become a significant player in Egypt’s investment scene. Medhat Khalil holds the majority stake in Raya Holding, amounting to 58.1 percent, represented by 1,245,661,205 shares.
Medhat Khalil’s stake in Raya Holdings faces financial headwinds as Egyptian pound devalues
Despite Raya Holding’s robust presence in the market, recent developments have posed challenges to Medhat Khalil’s financial standing. The devaluation of the Egyptian pound against the U.S. dollar has significantly reduced Khalil’s stake value to under $120 million from more than $200 million earlier this year.
This decline stems from the Central Bank of Egypt’s shift to a more market-oriented exchange rate system to address foreign currency shortages. Additionally, the bank’s decision to raise interest rates by 600 basis points to 27.25 percent aims to tackle economic challenges.
The steps were meant to facilitate an agreement with the International Monetary Fund, which is expected to confirm the extension of its current $3-billion financial support package for Egypt.
In response to evolving market dynamics and economic reforms, Raya Information Technology is taking proactive steps. Through strategic initiatives like an upcoming IPO and pursuing strategic acquisitions, the IT subsidiary aims for sustained growth and resilience in the competitive technology and innovation landscape.
