Ahmed Zayat

Ahmed Zayat was an Egyptian businessman who acquired Al Ahram Beverages, the country’s monopoly beer producer, during the privatization program of the 1990s. His purchase turned on political access and a financing scheme: after a better-connected bid prevailed over a rival consortium, Zayat used a London share offering to obtain control of the company, which he sold to Heineken five years later for a 563 percent profit. The episode illustrates how privatization could enrich connected businesspeople without opening markets to competition.

Position in Egypt’s privatization program

During the 1990s, international financial institutions and economists promoted reforms intended to free markets and reduce the state’s role in the economy. Privatization was a central instrument. But in Egypt, as in Mexico, selling state-owned assets did not necessarily break up monopolies or foster competition; it could instead transfer monopoly control to private owners with political connections.

At the time privatization began, Egypt’s economy was dominated by thirty-two wealthy businessmen known locally as the whales. The regime-connected business elite could influence how state assets were sold, shaping the process to their advantage. Zayat’s purchase of Al Ahram Beverages is presented as a clear example of that institutional pattern.

Acquiring Al Ahram Beverages

In 1996, the government decided to privatize Al Ahram Beverages, the monopoly producer of beer in Egypt. A consortium led by real-estate developer Farid Saad submitted a bid of 400 million Egyptian pounds. Its members included the Egyptian Finance Company, Egypt’s first venture-capital company, former tourism minister Fouad Sultan, Mohamed Nosseir, and businessman Mohamed Ragab. Although the group had connections, its bid was rejected as too low; the account contrasts its access with Zayat’s greater political connections.

Zayat did not have the funds to buy the company outright. Instead, Luxor Group floated Al Ahram Beverages shares for the first time on the London Stock Exchange and acquired 74.9 percent of them at 68.5 Egyptian pounds per share. The share flotation gave him a route to control the company despite lacking the purchase money at the outset.

Resale and profit

Three months after Luxor Group acquired the shares, they were split in two and sold at 52.5 pounds each. The sale generated a 36 percent profit, which Zayat used to finance the purchase of Al Ahram Beverages for 231 million pounds the following month. The company was already profitable: it earned around 41.3 million Egyptian pounds annually and held cash reserves of 93 million pounds, making the acquisition a bargain by the figures given in the account.

In 1999, Al Ahram Beverages expanded beyond beer by purchasing Gianaclis, the privatized national wine monopoly. Gianaclis operated behind a 3,000 percent tariff on imported wines and earned a 70 percent profit margin on its sales. In 2002, Zayat sold Al Ahram Beverages to Heineken for 1.3 billion Egyptian pounds. The sale yielded a 563 percent profit in five years.

Significance

Zayat’s transaction shows how a privatization program intended to free markets could preserve concentrated market power in private hands. The acquisition and resale did not emerge as an example of competition displacing monopoly: Al Ahram Beverages began as a state monopoly, expanded into wine through the purchase of another monopoly, and was ultimately sold to a multinational brewer at a large gain for its owner.

In the book’s wider account, Egypt’s political connections helped protect favored businesses and shape access to state assets. Zayat’s profit is therefore more than a story of an ingenious financial maneuver: it exemplifies a system in which the design and implementation of economic reform could benefit a connected elite while leaving the broader institutional structure of concentrated economic power intact.