M&A Guide 2025: Egypt

Despite facing macroeconomic headwinds – most notably, periodic currency devaluation and global market volatility – Egypt’s M&A landscape remains notably active. The country’s large consumer base, strategic geographic location, and ongoing economic reforms continue to attract inbound deals, particularly from regional sovereign wealth funds and private equity players. The government’s commitment to privatisation and partial stake sales in state-owned enterprises, guided by the State Ownership Policy Document, has fuelled further activity.

From a regulatory standpoint, one of the most significant recent developments is the introduction of mandatory pre-merger approval regulations in mid-2024. Previously, the Egyptian Competition Authority (ECA) reviewed transactions post-closing. Now, deals must obtain clearance before completion, resulting in:

• Greater scrutiny of competitive impacts;

• Evolving timelines and procedural requirements; and

• The issuance of new guidelines by the ECA, which are shaping market practice for domestic and cross-border deals.

While the exchange rate has experienced volatility, the dust has settled sufficiently to restore a measure of predictability to valuation and pricing discussions. This has reinvigorated interest from foreign investors – especially from the Gulf region – who view Egypt’s status as an emerging market with strong demographic fundamentals as a compelling opportunity for long-term returns.

The Egyptian M&A market predominantly involves private deals, with acquisitions outpacing traditional mergers. Public M&A activity is comparatively limited, in part due to the smaller number of publicly listed companies that meet the size and liquidity thresholds attracting large-scale cross-border bids.

Nevertheless, the Egyptian government’s role as a seller has created a quasi-public dimension to the market. Through its State Ownership Policy Document, it has signalled a willingness to reduce or fully divest public stakes in key sectors such as energy, banking, and transportation. This, in turn, has:

• Generated interest from regional funds seeking strategic stakes;

• Sparked debate over valuation, transparency, and governance standards in state-owned enterprises; and

• Led to calls for clearer, more streamlined procedures for international bidders.

Overall, private M&A remains the mainstay – often characterised by negotiations that can be concluded more flexibly and swiftly. Public M&A, while less common, is expected to gain momentum as the government continues to open select sectors to foreign and domestic investors.

The following have been among the key M&A transactions in the Egyptian market recently.

• The acquisition of minority stakes in listed companies by regional sovereign funds:

  • Context – one or more Gulf-based sovereign wealth funds acquired minority positions in Egyptian companies operating in sectors such as financial services, real estate, and consumer goods.

  • Debate/impact – observers raised questions about the valuation of these companies amid currency fluctuations.

• Private equity investments in technology/fintech startups:

  • Context – Egyptian fintech and digital payment platforms attracted investments from regional private equity and venture capital firms.

  • Debate/impact – these deals underscored the growing appetite for Egypt’s tech sector, as well as the potential for technology-focused SPACs or innovative financing structures.

• Government stake sale in a key infrastructure entity:

  • Context – part of the State Ownership Policy Document led to a partial divestiture of a major infrastructure holding.

  • Debate/impact – market observers watched closely how foreign investors navigated state-specific deal requirements and engaged with local regulators.

The Egyptian M&A market in 2024 had a relatively steady level of activity compared with 2023, despite ongoing macroeconomic challenges such as global inflationary pressures and persistent local currency devaluation. In the early months of 2024, some buyers and sellers adopted a ‘wait-and-see’ stance due to volatility in the exchange rate. However, as the year progressed and the currency situation began to stabilise – or at least became more predictable – dealmakers regained confidence, with the following significant factors observed:

• Sector drivers – activity has been strongest in sectors that align with Egypt’s broader economic development strategy and consumer-driven demographics, such as healthcare, financial services, consumer goods, and infrastructure. Notably, tech and fintech deals have also attracted increasing interest from regional and global investors.

• Government initiatives – the government’s push to attract foreign direct investment, (FDI) coupled with privatisation programmes under the State Ownership Policy Document, helped to sustain M&A momentum.

• Cross-border component – regional sovereign wealth funds and private equity houses have remained active inbound investors, leveraging Egypt’s population size and strategic location to build or expand their local portfolios.

Overall, while 2024 deal volume may not have reached pre-pandemic peaks, it remained robust, especially given the backdrop of global economic headwinds.

Looking ahead, many market participants maintain a cautiously optimistic outlook for M&A over the next year, driven by the following macro-level and jurisdiction-specific factors:

• Regulatory clarity and reforms:

  • The ECA’s new pre-merger approval regime is expected to gain further clarity and predictability as more deals are reviewed. This could streamline transaction timelines once parties become more familiar with the process.

  • Ongoing economic reforms and policy incentives aimed at attracting FDI, such as tax breaks or simplified customs procedures, may further encourage cross-border deals.

• Privatisation efforts – the government’s public stake sales – particularly in key sectors such as energy, banking, and industrial manufacturing – are creating transaction opportunities. As valuation and bidding processes become more transparent, potential investors are likely to move forward with controlling and minority acquisitions.

• Regional liquidity:

  • Gulf-based sovereign wealth funds and private equity investors continue to see Egypt as a strategic market, benefiting from currency differentials and the potential for high returns driven by a large consumer base.

  • If global markets stabilise – especially regarding interest rates – capital inflows into Egypt could rise further.

Although certain challenges remain, such as inflation and potential political uncertainties, most indicators suggest that M&A activity will remain strong, particularly in consumer-driven and infrastructure-related sectors.

The economic climate and the new pre-merger approval requirement have shaped deal structures in several ways:

• Distressed M&A and opportunistic acquisitions – with some local businesses facing liquidity constraints or operational difficulties, distressed transactions have emerged as an avenue for opportunistic investors. Takeover reorganisations and post-M&A restructurings are more common than in previous years.

• Financing approaches:

  • Regional banks and multilateral institutions are increasingly involved in funding, particularly for infrastructure or energy deals; and

  • Seller financing or partial earn-outs may be negotiated to bridge valuation gaps caused by currency volatility, helping buyers and sellers to reach agreement on fair pricing.

• Increased use of risk-mitigation tools:

  • Warranty and indemnity (W&I) insurance is slowly gaining traction, especially among sophisticated international investors looking to cap exposure; and

  • Completion accounts and locked-box mechanisms remain common, with parties taking extra care to manage foreign exchange risks in cross-border deals.

Private equity firms, particularly those based in the Gulf region, continue to see Egypt as a core market due to its large consumer base and high growth potential in sectors such as fintech, healthcare, and education.

While SPAC activity has recently been more subdued globally compared with previous years, some investors still explore SPAC structures for targeted acquisitions in the Middle East and North Africa region.

Venture capital interest in tech-enabled services remains strong, with deals scaling up as local startups mature.

Shareholder activism is not as prominent in Egypt as in some other jurisdictions, primarily due to market structure, corporate governance norms, and a relatively small pool of large public companies.

However, as more foreign institutional investors enter the market (via privatisation or direct acquisitions), there is the potential for greater scrutiny of board decisions and corporate strategy. In the long term, this may lead to more activist-like engagements.

M&A activity in Egypt is primarily governed by several key pieces of legislation and oversight bodies:

• Companies Law No. 159 of 1981 (as amended) and its executive regulations, which outline corporate governance requirements, procedures for share transfers, and corporate formalities;

• Capital Market Law No. 95 of 1992 (as amended), administered by the Financial Regulatory Authority (FRA), setting rules for public offerings, public M&A transactions, and disclosure obligations;

• Egyptian Competition Law No. 3 of 2005 (as amended), enforced by the ECA, which ensures M&A do not create or enhance market dominance in a way that harms competition; and

• Investment Law No. 72 of 2017, overseen by the General Authority for Investment and Free Zones (GAFI), providing incentives and guarantees for foreign investors, including streamlined dispute resolution options.

In public M&A, additional rules from the Egyptian Stock Exchange and the FRA govern mandatory tender offers (MTOs), the disclosure of material events, and shareholding thresholds that trigger public offers.

One of the most significant shifts is the ECA’s transition from a post-merger notification regime to a pre-merger approval process. Under this new framework, parties must seek clearance from the ECA before closing their transaction if the deal meets certain turnover or market-share thresholds. This change has:

• Lengthened deal timelines as parties incorporate regulatory review periods into transaction planning;

• Increased the importance of competition law due diligence, especially for cross-border deals or those in highly concentrated sectors; and

• Prompted the ECA to issue new guidelines clarifying the thresholds, timelines, and substantive assessment for merger control decisions.

In parallel, the government’s privatisation drive, as set forth in the State Ownership Policy Document, has put a spotlight on transparency and valuation procedures when the state sells or reduces stakes in public sector entities. These transactions often involve additional regulatory layers and stakeholder consultations to ensure a smooth transition and alignment with national economic goals.

Looking ahead, policymakers and market participants are closely watching for:

• Further guidance on the Competition Law, as the authority receives applications and processes them, the authors expect to see guides and policy papers being developed; and

• Digital and fintech regulations that could affect M&A in rapidly expanding tech sectors, as authorities seek to strike a balance between innovation and consumer protection.

For cross-border deals, foreign investors should remain attentive to currency controls, evolving tax incentives, and potential sector-specific restrictions, such as those related to strategic industries (e.g., telecoms and certain natural resources).

A frequently encountered misconception is that the Egyptian regulatory environment is overly complex and unpredictable. While navigating multiple authorities (the ECA, the FRA, and GAFI) requires strategic planning, recent reforms have aimed to streamline the process and provide clearer guidance. Another misconception is that only large-scale deals are feasible; in fact, mid-cap and lower-mid-cap transactions are quite common and often benefit from the same incentives available to larger deals.

Furthermore, the following aspects are often overlooked or not fully understood:

• Exchange rate strategy – many foreign buyers underestimate the importance of planning for currency fluctuations, which can significantly affect deal valuation and purchase price adjustments.

• Local partner considerations – investors often overlook the value of a strong local partner or local legal counsel, especially for navigating government approval processes.

• Post-closing integration – cultural and operational integration issues can arise, particularly for cross-border transactions. Proactive planning for HR, tax, and systems integration is key to maximising deal value.

Technology has become increasingly integral, particularly with the rise of virtual data rooms for due diligence and digital platforms that facilitate deal marketing. Electronic signatures and remote negotiations are now standard practice, accelerated by pandemic-era shifts.

The key factors in obtaining control of a public company are as follows:

• MTOs – exceeding specified ownership thresholds (often 33%) triggers an obligation to launch an MTO offer for all remaining shares.

• Regulatory approvals – clearance from the FRA (and, if relevant, ECA pre-merger approval) is required, which can shape deal timelines.

• Price and valuation – the offer price is subject to regulatory scrutiny to protect minority shareholders. Valuation methods must be robust and clearly documented.

Competitive or hostile bids are relatively rare but do occur. In such scenarios, the timing and coordination of announcements, combined with effective stakeholder outreach, become critical to success.

The common conditions in public takeovers are as follows:

• Minimum acceptance thresholds – ensuring the bidder secures a controlling stake; and

• Regulatory clearances – including competition, sector-specific approvals, and FRA sign-off.

Deal protection measures in public M&A transactions in Egypt are very limited. The most notable measure available is informal understandings with major shareholders; under which, acquirers may seek to establish informal agreements with significant shareholders regarding offer acceptance. However, it is important to note that converting these understandings into formal, binding commitments is challenging due to regulatory constraints and market practices.

The scarcity of traditional deal protection measures such as break fees, no-shop clauses, and standstill agreements reflects the regulatory environment and market norms in Egypt. This limited availability of deal protection mechanisms introduces an element of uncertainty into public M&A transactions, requiring parties to navigate negotiations and deal structuring with careful consideration of the local market dynamics.

Private deals often involve locked-box mechanisms, completion accounts, or earn-outs to manage valuation risks. The choice depends on the parties’ risk tolerance and the target’s financial profile. There is also an increasing use of escrow arrangements and W&I insurance, especially for cross-border transactions where buyers seek additional protection against unknown liabilities.

The typical conditions in private takeover offers are as follows:

• Satisfactory due diligence – finalising corporate, financial, and legal reviews;

• Regulatory consents – if the target operates in regulated sectors (e.g., banking, telecoms) or if the transaction falls under the new ECA pre-merger review thresholds; and

• Financing – securing loan or equity financing, especially in higher-value deals.

It is increasingly common for large-scale or international deals to use English law (or another neutral foreign law) in share purchase agreements. Arbitration clauses, often naming the Cairo Regional Centre for International Commercial Arbitration or international arbitral bodies, are also standard, reflecting parties’ preference for enforceable dispute resolution.

Egypt’s IPO market has been relatively subdued in recent years due to global market volatility, but there are renewed discussions around state-led IPOs and private company listings. Trade sales remain a primary exit route, particularly to strategic buyers from the region. Financial sponsors have also been active in facilitating exits through secondary buyouts, with private equity firms selling to other funds or to sovereign wealth funds. While 2024 did not see a surge in major listings, the government’s ongoing privatisation strategy could drive new IPO activity in sectors such as banking, energy, and transportation.

The Egyptian M&A market is poised for continued evolution in 2025, and the following trends can be expected:

• Increased foreign investment – with the stabilisation of the exchange rate and ongoing economic reforms, the authors anticipate a surge in cross-border transactions, particularly from Gulf-based investors and international private equity firms;

• Privatisation momentum – the government’s commitment to its State Ownership Policy Document is likely to accelerate, leading to more opportunities in traditionally state-dominated sectors;

• Tech sector growth – the TMT sector is expected to see heightened M&A activity as digital transformation initiatives gain traction across industries;

• Regulatory refinement – the pre-merger approval process introduced in 2024 will likely become more streamlined, with clearer guidelines and precedents established;

• Innovative deal structures – we may see an increase in the use of earn-outs and other contingent pricing mechanisms to bridge valuation gaps in an uncertain economic environment; and

• Sector focus – agribusiness, consumer goods, education, healthcare, renewable energy, and fintech are expected to be hotspots for M&A activity, driven by government initiatives and changing consumer behaviours.

These predictions suggest a dynamic and evolving M&A landscape in Egypt, with legal practices adapting to meet new challenges and opportunities in 2025.