Tawasoa for Factoring announced that its Board of Directors has approved an increase in the company’s issued capital from EGP 75 million to EGP 115 million, representing a capital hike of EGP 40 million. The decision comes as part of the company’s strategic plan to support expansion, enhance its financing capacity, and strengthen its position within the Egyptian non-banking financial services sector.
According to the disclosure report submitted to the Financial Regulatory Authority (FRA), the capital increase will be executed through the issuance of 40 million new shares, each with a nominal value of EGP 1. The shares will be offered for cash subscription through a rights issue directed to existing shareholders, each according to their ownership percentage prior to the increase. Subscription rights will be traded separately from the original shares, in line with the applicable listing and disclosure rules.
Allocation of Capital Increase Proceeds
Tawasoa for Factoring stated that the proceeds from the capital increase will be used in a manner consistent with the nature of factoring activities, which rely heavily on the availability of immediate liquidity to finance short-term receivables. The company emphasized that the allocation plan aims to ensure operational sustainability while improving financial and operational efficiency.
A specific portion of the capital increase, estimated at approximately EGP 2 million, will be allocated to cover expenses related to the establishment and preparation of new branches. This includes branch setup costs, the provision of the required operational and technological infrastructure, and the initial human resource requirements necessary to operate these branches in compliance with regulatory standards. The company clarified that this item represents the only direct and clearly defined allocation from the capital increase, as it is linked to identifiable operational expenses.
Strengthening Working Capital and Core Operations
The remaining portion of the capital increase, estimated at around EGP 38 million, will be directed toward supporting working capital and the company’s core factoring operations. This approach aligns with the liquidity-driven nature of the factoring business and is intended to enhance the company’s ability to meet growing demand while maintaining prudent risk management.
Within this framework, Tawasoa for Factoring outlined a functional and indicative distribution of this amount across several key areas. Approximately EGP 20 million will be allocated to support and expand the factoring portfolio and overall financing capacity. This will enable the company to increase the volume of existing operations, enter into larger factoring agreements, and finance new clients across diversified economic sectors. The strategy also aims to reduce risk concentration and support portfolio growth without compromising asset quality or credit risk levels.
In addition, around EGP 8 million will be used to improve cash cycle management and liquidity efficiency. This allocation is expected to help reduce timing gaps between incoming and outgoing cash flows, thereby enhancing the stability of cash flows associated with daily operations.
Enhancing Financial Solvency and Client Base
The company also plans to allocate approximately EGP 6 million to strengthen financial solvency indicators and shareholders’ equity. This includes supporting net equity levels, improving capital adequacy ratios, and providing a financial buffer to mitigate potential economic fluctuations, operational challenges, and credit risks. Such measures are intended to reinforce the company’s financial resilience and long-term stability.
Furthermore, an estimated EGP 4 million will be dedicated to the gradual expansion of the client base and the diversification of the financing portfolio across different sectors. This step supports balanced growth and reduces exposure to sector-specific risks, while opening new opportunities in underpenetrated segments of the market.
Regulatory Disclosure and Management Flexibility
Tawasoa for Factoring stressed that the outlined allocation represents an indicative and functional distribution for regulatory disclosure purposes only and does not constitute a detailed accounting commitment. The company explained that the effects of the capital increase are closely intertwined with working capital dynamics and the operating cycle, which necessitates a degree of management flexibility. Accordingly, resources may be reallocated in response to actual business requirements, within the regulatory framework approved by the FRA.
The company added that increasing the issued and paid-up capital serves as an integrated financial tool to support stability and growth. While geographic expansion through new branches has been clearly and directly allocated, the remaining proceeds will contribute both directly and indirectly to various aspects of operations, in a manner consistent with the nature of factoring activities and regulatory requirements.
Board Resolutions and Next Steps
With regard to governance, the Board of Directors unanimously approved the justifications and rationale for increasing the issued and paid-up capital. The Board also approved the disclosure report prepared in accordance with Article 48 of the Egyptian Exchange listing and delisting rules and authorized proceeding with all required steps to complete the capital increase.
Additionally, the Board resolved to authorize the Chairman or the Managing Director to undertake all necessary legal and regulatory procedures to obtain FRA approval of the disclosure report, incorporate any amendments requested by the authority, and sign the Board meeting minutes and all related documents. The Board also approved submitting a proposal to the Extraordinary General Assembly to increase the issued and paid-up capital from EGP 75 million to EGP 115 million through a cash increase of EGP 40 million. The increase will be financed by inviting existing shareholders to subscribe to the new shares in proportion to their ownership, through the issuance of 40 million shares at a nominal value of EGP 1 per share, with subscription rights traded separately from the original shares.
Through this capital increase, Tawasoa for Factoring aims to reinforce its financial base, support sustainable growth, and enhance its ability to serve a broader client base while maintaining sound risk management and regulatory compliance.
