Investment bank EFG Hermes and the Sovereign Fund of Egypt (SFE) have signed on Thursday agreements to buy a super majority stake in the Arab Investment Bank (AIB).
After receiving Cabinet approval on Wednesday, EFG and SFE announced in a joint statement that they signed the agreements to acquire 76 percent of AIB.
The acquisition is structured as a capital increase that will raise AIB’s paid-in capital to 5 billion Egyptian pounds ($319.3 million).
Under the agreements, EFG subscribes to 423 million newly issued shares for 6.03 pounds per share, at a total value of 2.55 billion pounds, giving it 51 percent stake in AIB.
SFE acquired 207 million newly issued shares at the same per-share price totalling 1.25 billion pounds, making it AIB’s second-largest shareholder with a 25 percent stake. The National Investment Bank — AIB’s parent company — will own the remaining 24 percent, after purchasing stakes of previous minority shareholders.
Turning into universal bank
The agreements see EFG transforming into a universal banking platform, its chief executive Karim Awad said in the statement. This is part of a diversification strategy that has strengthened EFG’s presence in frontier emerging markets, Awad added, noting that “as a company, we continue to be extremely bullish about what the future holds for Egypt.”
EFG has transformed from an Egypt-focused investment bank with only a presence in the Gulf into the leading investment bank in frontier emerging markets with offices in Egypt, the GCC, Nigeria, Kenya, Bangladesh, Vietnam, London, New York, and more.
The group also has turned into a financial services powerhouse in Egypt with potential to expand well beyond, adding microfinance, leasing, factoring, payments, consumer finance, insurance, mortgage finance and more to its non-bank financial services platform.
