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Travco mulls 25% public offering to fund expansion

CAIRO — Travco Group, Egypt’s largest tourism company, said it’s considering a 25 per cent initial public offering as it expands its Steigenberger Hotels and Resorts unit in Europe, the Middle East and Asia.

“We are studying a dual listing,” Hamed El Chiaty, the chairman and chief executive officer, said in an interview in his Sheikh Zayed City, Egypt office.

“We will start talking to banks in February. We are also studying the possibility of an Egyptian pound bond, or in euros.” Tourism, one of Egypt’s most important sources of foreign currency along with the Suez Canal and remittances from abroad, accounts for 13 per cent of jobs in the country. In 2011, Egypt aims to attract more than 16 million tourists, generating in excess of $14 billion in revenue, Minister Zoheir Garranah said in an interview in October.

Egypt has had two initial public offerings this year, Juhayna Food Industries, the country’s biggest producer of packaged milk, and Amer Group Holding, a real-estate company. Egypt’s benchmark EGX30 Index has gained 11 per cent this year. El Chiaty declined to disclose the value of the offering Travco is considering.

Travco initially considered an initial public offering in 2008, he said. It shelved the plans after the global financial crisis, purchased a 99.6 per cent stake in Steigenberger and decided to focus on expanding through the German hotel chain, El Chiaty said. Since the crisis it has managed to finish or almost complete hotel projects in Egypt including a 1,500 room hotel in the Red Sea resort of Hurghada, he said.

“Our current strategy is to expand outside of the German speaking countries into Europe, into the Middle East and the Arab speaking countries,” El Chiaty said. “The need for expansion is even more pressing. Our international expansion will all be under Steigenberger because they are more world- renowned then Travco.”

El Chiaty said he is considering expanding Steigenberger into countries such as Italy, France, the United Kingdom, Poland, Ukraine and Russia and plans to form joint ventures in these countries. — Reutres

“We plan to establish a regional hub in Dubai because it’s closer to many countries where we plan to develop,” he said.

Travco operates more than 150 hotels, resorts and cruise ships in Europe, Egypt and the Middle East. It also offers aviation services, including ticket offices and aircraft ground handling. In September 2009, it formed an airline with Air Arabia, the United Arab Emirates’ biggest discount carrier, that will fly to Europe and the Middle East from Egypt.

Travco’s revenue from its Egypt and Middle East operations in 2010 will be more than 5 billion Egyptian pounds ($861 million) compared to 3.7 billion pounds in 2009 and 4.8 billion in 2008, El Chiaty said. Revenue for activities in German speaking countries in 2010 is expected to be about 500 million euros, he said.—