Neveen El Tahri greets you with quick pecks on the cheeks and chitchat about her son’s hobbies and her daughter’s recent graduation, and then asks to see pictures of your wedding, making you feel at ease in minutes. In a way, she is the personification of your next-door auntie.

But she is far more than that as chairwoman and managing director of Delta Holding for Financial Investments. Known as the leading “lady of finance,” she has become a celebrity in the world of financial markets. And yet, she is not in the least bit intimidating.

Dubbed the Working Woman of the Year in 2000 and the Enterprising Woman of the Year at the Global Summit in 2005, it is safe to say El Tahri’s record as a leading authority in the world of local and international finance and investment is proven.

During her 30 years in finance, El Tahri established one of the first securities companies in Egypt in 1994, Delta Securities Egypt, acquired companies, dissolved others, reworked corporate structures, landed investors like American Express and ABN AMRO bank, to name a few, and sat on the board of major Egyptian firms.

She was responsible for turning her company into an LE 1 billion firm at its peak.

El Tahri started out her career with Chase National Bank, where she worked for 12 years. After gaining valuable experience, she decided to establish her own finance company, taking advantage of Egypt’s untapped securities market.

Her journey includes many remarkable highlights, not the least of which was becoming the first woman to sit on the EGX board (formerly known as the Cairo and Alexandria Stock Exchange) and serving as a board member for the General Authority for Investment. (She currently holds positions on the boards of Banque Misr and Telecom Egypt, among others.)

El Tahri is also a silent partner at Delta Asset Management and Delta Capital Investments, companies she established from scratch, as well as the country representative of the Royal Bank of Scotland — that is when she isn’t out scouting for small- and medium-sized enterprises (SMEs) and startup businesses to fund on the Nilex.

Before the revolution

Market indicators climbed steadily in 2010 and company figures never looked better, which is why the full economic damage caused by the revolution isn’t being seen in company reports for the fiscal year ending June 2011.

“The market was doing well, it was attracting a lot of outside investments, there were huge [figures] of investments coming in and because nobody could have [predicted] the revolution, all the closing figures of 2010 were very good,” says El Tahri. “In a year, if you take it from June to June, it will be good because half of it is balanced, but if you look at the budgets from January to December [2011], these are going to be very highly affected.”

Although the real blow came after January 25, El Tahri believes things started to come apart on December 31 with the Alexandria church bombing.

“This instigated a lot of negativity from everything, investors, cash outflows, a lot of things. But up until that day, we were named as one of the five fastest-growing economies,” says El Tahri. “Growth figures were high, companies were doing well, all budgets were doing very well.”

State-owned companies led the charge. Telecom Egypt recorded its best earnings in its history, despite growing competition in the telecommunications sector. Banque Misr also reported significant increases in profits for the first half of the financial year. But those figures were marred by the revolution and its aftermath.

Given the uncertainty of Egypt’s political scene, economy and capital market, many are left wondering what is to come.

According to El Tahri, there are no easy answers.

“The most important thing to remember is that the capital market is a mirror of the economy,” says El Tahri. “So when we talk about the political status we are in right now, we are nowhere. We don’t have a leader or a clear way forward and if you don’t have a clear way forward it is very difficult to sit back and say this is the financial status of the capital market.”

Investing in companies now isn’t necessarily safe, particularly since foreign investors are still wary of the market and some of Egypt’s biggest business leaders remain embroiled in corruption scandals. Even blue chips stocks, usually a sure bet, are at the mercy of ongoing unrest.

“Where it stands right now, you have a lot of witch-hunting happening and they are all very big names in the industries,” says El Tahri.

She adds that corruption cases against businessmen associated with major market players have brought down the market value of companies significantly. This has caused unnecessary but inevitable turbulence in the stock and capital markets, despite the fact that numerous publicly traded firms are still fundamentally sound.

“They are companies that have corporate governance and proper structuring and so on,” says El Tahri. “So I can’t imagine how we are bringing down value to that extent.”

And the conflicting policy reforms handed down (and sometimes immediately revoked) by the military and interim government aren’t helping.

“Everyday you’re hearing things like ‘We’re putting caps on salaries.’ Oops, caps on salaries means a very socialist form of [the economy.] We are going back many years as we are making those decisions,” says El Tahri. “Therefore, when an investor is trying to understand where are we going, are we going socialist? Are we continuing to be a capitalist country? Is the Muslim Brotherhood coming in? Or the Salafis?”

Until things settle down, it will take a while for investors to trust the market.

“So capital markets are going to take some time for confidence to really build up,” says El Tahri.

Wait and see

In uncertain times, the best bet in most cases is to play the wait and see game. “Everyone has held back, shied away. Everybody is very scared to sign anything or make any decisions because our largest corporates have been hit and as they were hit, the suppliers of all those companies […] and everyone around these companies feeds into that,” says El Tahri. “So it is a massive domino effect.”

El Tahri adds that the economy is on hold — banks are reluctant to lend to SMEs as they are perceived to be high risk. At the same time, big corporations are either plagued with corruption cases or are worried of being targeted in the future and are being cautious this year.

“You don’t know what will happen tomorrow morning and if you are going to be indicted for having done this or that,” says El Tahri. “So there is that big hollow status of wait and see.”

But the wait-and-see strategy isn’t the winning bet in all industries. For some sectors, these times are as good as ever to invest.

“There are industries in a country of our size and population that really aren’t going anywhere — they are going to have to grow,” says El Tahri. “If you talk about food, anything that has to do with real estate and complimentary industries, paint and so on, all this won’t go anywhere because the fact of life is that we have 600,000 marriages per year. Even if they get diluted or stopped for a while, you’re just delaying where the growth is.”

El Tahri believes some industries present huge investment opportunities but investors will have to have “guts and the liquidity” in spades to succeed. 

Catch a falling star

Investors are most likely to shy away from the local market. But El Tahri sees many golden opportunities for strategic, long-term investments that are bound to yield millions in a year or two. That is, if investors can handle waiting to see a return.

Her “perfect portfolio” consists of a diverse mix of real estate, food, industrial and fertilizer producer stocks. She explains that real estate and food will always rise in value thanks to Egypt’s population, adding that 2012 will be a difficult year for agriculture due to a number of factors that will see price hikes in all related areas,  including fertilizers.

The majority of firms involved in corruption investigations will find their way back to the top when the dust settles, predicts El Tahri, which will eventually push up the price of their stocks.

“I think it is a very good time to cherry pick some of the worst performers in very solid industries, which means you really have to identify those that have fundamental strengths in the companies,” she says. “To do that, I have to look at companies in much greater detail [and ask] why this company was valued that way and so on.”

El Tahri explains many companies are now under valued due to political issues. “I would be stupid not to buy [Ezz Steel stocks, Ahmed] Ezz being jailed or whatever, it is the same. It is a very well-established company,” says El Tahri. “Will we use steel or not?”

But investors need to realize these are long-term investments that will not go up in value in a week or two.

“If you look at the real estate companies, Talaat Moustafa or Palm Hills or SODIC, the assets are there and there is demand and there are people who are getting married,” says El Tahri. “So I think that this is a blip that will definitely take its turn.”

Diamonds in the rough

El Tahri is betting on youth, namely entrepreneurial youth. She has seen potential in the undeveloped SMEs market — so much potential that she became a silent partner in Delta Firms to launch a new company that funds SMEs she believes will eventually pay off big. 

The SME market accounts for 95% of local companies, says El Tahri, which means that Nilex, the stock exchange dedicated to companies whose capitals are smaller than EGX requirements, could see huge growth in the next few years if SMEs are willing to take a chance by going public.

“This 95% should use the market; not to trade only, but to raise capital off that market,” says El Tahri. She adds that it is crucial for investors to show SMEs the value of a stock exchange designed for them. This, she believes, is the future for investors.

“We need to focus and see how Nilex can be an effective market on its own,” says El Tahri.

For a company with LE 600,000, tripling its capital is far easier than it would be for a larger corporation.

“Their growth potential is [huge], 30% or 70% growth year on year, because they don’t have the same cost structure and burdens of other bigger companies, so it is much faster,” says El Tahri. “So if you want LE 1 or 2 million to triple your capital, it is nothing.”

El Tahri believes there is a mismatch between supply and demand in the SMEs sector in terms of funding projects, which means young entrepreneurs are out there looking for the right investors. She believes in the market so much that she thinks all industries could eventually benefit on the Nilex.

“I didn’t target any one sector because there is so much under supply to SMEs to the extent that you have an opportunity in anything,” says El Tahri. “But I chose the youth. […] Most of the companies that we took on for growth or even startups came from the youth.”

El Tahri adds that Egypt has unlimited potential and a diverse economy, but the ideas to jump start its potential need to come from within.

“We have always depended on importation and franchising,” says El Tahri. “You have a very energetic young generation that has come in and has the potential.”

The future, although uncertain, holds many possibilities, but few are optimistic about the short term, she adds. “The growth [figure] is probably going to be negative. [The government] isn’t saying it yet, but they are starting to say that the figure is zero and they are probably eventually going to say [the economy is shrinking].” bt