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Interview: Philip Blumberg Says Egypt’s Market Is Preferable To US Companies

Amwal Al Ghad (PDF)

Amwal Al Ghad English has had an interview with Mr. Philip F. Blumberg over the investments of US companies in the Egyptian market, specifically the US Blumberg Capital Partners Company. Mr. Philip F. Blumberg is founder, Chairman and Chief Executive Officer of the Blumberg Capital Partners group of companies. Mr. Blumberg is Chairman of the firm’s Investment Committee.

Amwal Al Ghad En: Could you tell us about the investment funds managed by Blumberg Capital and the total volume of the company’s assets by the end of 2012?

Blumberg: First, the company’s investment funds are institutional funds. Moreover, we have had real estate funds from 17 years. The average annual return of these funds is 17.6%, which is the highest annual return moreover; it is number one in the US. This annual rate attains because the company does not use a lot of debt and in order not to inflate the return. As to the company’s assets, they reached $ 7 billion by the end of 2012 in different fields, such as real estate and commodities.

The company now is looking at other areas that have real estate business, besides other investments, like manufacture, commodities industry and agribusiness.

Here in Egypt we are looking to do investments in industrial sector and manufacture and there may a possible large project in two month that can provide thousands jobs for Egypt for direct investments and expertise.

Therefore, my company focuses on real estate investments, commodities industry and soon agrobusiness, agriculture and manufacture.

Amwal Al Ghad En: Could you tell us the features of the company’s strategies this year, 2013?

Blumberg: The Company has a general specific strategy, which is "it invests in a little point and we sell at a high point". The strategy of company has changed over the years. In 2006, the company started growing in selling. In 2008, it sold our real estate with no debt and all in cash. In 2009, we started to look for alternative investments; we started to invest in commodities, manufacture and agriculture.

For real estate sector, we always eye those markets, which do not have much capital. My role is that when the prices drop below, we can placement the costs. We always see opportunities in new development and in existing buildings to make them better.

Here in Africa and MENA we see many opportunities in industry, trading and infrastructure. Those are strategic right now.

We now see potentially Egypt as the hub of our large business, and more competitive than some of the Gulf States and MENA companies.

Right now, we have discussions with the Egyptian government over establishing large many factories, which employ thousands of Egyptian. I think it would be the largest project that the US Company would have in Egypt so far.

Amwal Al Ghad En: We have heard about a negotiation between Blumberg Capital and the Egyptian government over a joint project in infrastructure, Could you tell us about the details?

Blumberg: First of the US has significant infrastructure projects that would help Egypt in food supply and other fields as well.

Now we are looking for a major hub for our project, therefore we are discussing with Egyptian government along with other government in MENA, which want to win this project. However, we it could possibly be Egypt.

I cannot say more about this right now. These statements depend on the results of the negotiation with the Egyptian government, and the negotiations with the IMF mission as well. I think the IMF would be positive for Egypt infrastructure.

Egypt has much better potentials, so we want to be in Egypt and start our businesses here.

Amwal Al Ghad En: Could you tell us about the Company’s expansions across the world?

Blumberg: In fact, we are expanding now in South Africa, specifically in Ghana. Our project there is in the field of manufacture, Also there is a possible project in UAE in the real estate sector and another project in Ukraine in manufacture, while we’re expanding in India in the field of agriculture infrastructure. Moreover, there would be a possible project in South America in the fields of infrastructure and manufacture.

We also have some other plans; we have some small resources developments like mineral developments in some markets like Pakistan. We always eyes expansion in developing markets, because they offer better opportunities more than we have in Europe.

Egypt is a positive hub for investment and its market has great confidence, which can be restored easily.

As to the real estate’s opportunities in Egypt, as a matter of fact, there are some investors contacted me to look into the available opportunities here.

Nevertheless, the Blumberg Company’s business is focusing now on finding a hub for export in manufacture. The company’s second focus is agriculture and agrobusiness expansion, then real estate opportunities, office buildings and opportunities here in Cairo.

The IMF discussions are positively completed, the US government will give Egypt one billion dollar for the infrastructure development. The IMF’s conditions are tough but it is very important, so I hope the conditions would be met by the Egyptian government.

In case of reaching a deal with the IMF, there much money will come to Egypt for the private and public sectors.

As for the project that we were talking, is a PPP project but we do not any money from the Egyptian government. We only want the Egyptian government to help make the project possible. The company will build the factory, employ the people, train them and we want to assist in better infrastructure and be a part of the exports.

The Egyptian government now needs to have a financial stabilization, so the IMF deal would be help to give Egypt 1 billion dollar. Therefore, if Egypt improved its infrastructure by the IMF’s loan, there would be a financial stabilization.

Amwal Al Ghad En: What is the company’s vision over the real estate sector in Egypt even the challenges it facing amid the political turmoil? In addition, what are the market’s current demands?

Blumberg: First, my expectations in Egypt it will attract investments as soon as possible because investments in real estate travel very quickly. Secondly, the affordable houses are important and much needed in Egypt, which also the Egyptian government can assist. The housing sector should support the PPP system.

We think there are opportunities in the office-building sector that we can reposition them from the C to A class.

We look to the region of Egypt as it has more jobs; it is a promising market for exports and manufacture, more and above it is the great real estate residential sector for affordable houses.

The companies will not come if they will not see stabilization in Egypt. Therefore, we are looking now for US government support for Egypt

John Kerry, US Secretary of State, has allocated $250 million for Egypt; it will be released as soon as the IMF discussion is over, for the Egyptian government’s projects. We believe they go to the infrastructure and job creation to help people.

There is another $ 750 million but the US government is waiting that how the Egyptian government could utilize the $250 million.

Amwal Al Ghad En: What about the budget that had been allocated by Blumberg Company for Egypt?

Blumberg: If we come to an agreement with the Egyptian government, our company’s investments would be $ 250 million. In fact, Egypt is a crucial country to the Middle East, as Germany is crucial to Europe. Egypt is the best core in the MENA to invest in it; specifically in the fields of agriculture, trade, industry and manufacture.

Amwal Al Ghad En: Is Blumberg capital a private or state company?

Blumberg: It is 100% private. It is an independent company but we sometimes work for and cooperate with the US government. The company is self-finance; it does not depend on banks, and does not invest in the stock as well.

Amwal Al Ghad En: Are there any other investments in MENA?

Blumberg: There are discussions with the government in Oman to have investments there. Moreover, we have a project in UAE, I have mentioned. The company will also have discussions soon with Morocco over investments there.

Finally, we are optimistic about Egypt in the long-term. It has the right things for the infrastructure, but the government should provide stabilization for the financial market and the currency.

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