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Egypt’s Talaat Moustafa eyes Ukraine, Montenegro

Tourism

Talaat Moustafa Group, Egypt’s largest developer by market value, is looking to build hotels in Ukraine and Montenegro to tap growing tourism, and expects stable profit in the Q2, its chairman said.

“Montenegro is a promising country and has growing demand on tourism and a weak supply of hotels,” chairman Hesham Talaat Moustafa told reporters on Wednesday.

Montenegro has seen a boom in tourism since it split from its union with Serbia in 2006 but most visitors still come by car from ex-Yugoslav neighbours, mainly Serbia and Macedonia. Talaat Moustafa added that his company has already spotted locations for the new projects and was also evaluating Ukraine. “We are always looking for political stability, high economic growth and high rates of tourism,” he said. Moustafa, whose company builds luxury hotels under the Four Seasons brand in Egypt, did not elaborate further on expansion plans. It would be the first development outside the Middle East for the company, which is also building a residential complex in Riyadh, Saudi Arabia. “Saudi Arabia is very important to us. We expect it to constitute 40% of our turnover in four years’ time,” he said. Moustafa said he expects net profit in the second quarter at about the same level as the first quarter’s 425 million Egyptian pounds ($79 million). "Profit in the second quarter will maintain first-quarter levels," he said. Sales could jump about 21% to £12.5 billion in 2008 on increased demand for real estate in Egypt, he added.

The firm said earlier this month it had formed a joint venture with US-based Hill International Inc for construction projects in the Middle East. Moustafa said that, as agreed in advance, TMG Investment, the main shareholder in the group, increased its stake to 50% through a stock exchange transaction on Wednesday. “TMG Investment bought the stake of the National Bank of Egypt (NBE) in Talaat Moustafa Holding Group for £1.275 billion,” he added. The number of shares owned directly or indirectly by NBE was 133.6 million, or about 6.6% of the group. “The NBE wanted to sell after the end of the six-month lock-up period and we bought at Tuesday’s closing price of £9.54 per share,” Moustafa said. TMG Investment is totally owned by the Talaat Moustafa family. Moustafa added that five other investors with stakes over 1% decided to keep their shares.

Investment bank EFG-Hermes said on Wednesday it believed the transaction would probably improve the stability of the TMGH shareholder base and alleviate a concern of shareholders that short-term investors might sell their stakes after the expiration of the lock-up period. “We maintain our short term-long term Buy rating and long term fair value of £16.2,” it said. Shares in Talaat Moustafa, which sold shares in an initial public offering last year, last traded 7.2% higher on Wednesday at £10.23. (Reuters)

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