Sources Close to EFG-Hermes informed Amwal Al Ghad that the company’s board of directors choice of Dubai to hold its meeting with QInvest is normal, so as to ensure attendance of Dubai Holding and Abu Dhabi Investment Authority (ADIA) officials. This meeting will decide several crucial decisions for EFG-Hermes on hard circumstances the company is facing in Cairo, Egypt.
“EFG-Hermes board had no other options but to hold the meeting in the UAE so as to avoid any objections which could be lodged by Shareholders’ general assembly”, sources said to Amwal Al Ghad. “The board had chosen Dubai so as to speed up discussing those decisions.”
Sources affirmed that Hermes’ board gathers four times each year, two meetings take place in Egypt and others meetings are held either in Dubai, Lebanon or Saudi Arabia.
Its notable that EFG-Hermes’ board approved the report made by its advisors on the planned strategic alliance with Qatar’s Qinvest.
Pursuant to the agreement, EFG Hermes and QInvest will enter into an alliance where 60% will be owned by QInvest and 40% owned by EFG-Hermes holding. The JV Company shall be the entity holding the Business post-closing.
As a result of the transaction, QInvest will inject US$250 million in the form of a capital increase at the level of EFG Hermes Qatar that will be used in consideration for transferring the Business to the JV Company.
Sources asserted that establishing this strategic partnership will achieve integration between the EFG-Hermes Holding, the biggest investment bank in the Arab region and Qinvest.
EFG Hermes will have the right to sell its entire 40% shareholding in the JV Company to QInvest at any time during the period between 12 to 36 months from signing of the transaction at a price of EGP 1,000m (c.US$165m). QInvest will have the right to acquire from EFG Hermes its entire 40% shareholding at any time during the period between 12 to 36 months from signing of the transaction at the higher of US$165m or fair market value at the time of the exercise subject to a cap.
At closing QInvest will also acquire from EFG Hermes 60% of the seed capital of the asset management business at market value.
Closing is conditional on shareholder approval at the general assembly of EFG Hermes and the receipt of relevant regulatory approvals. The transaction is expected to be finalized by 2012 Q3.
The deal means QInvest will control 60 per cent of the new bank, which will be called EFG-Hermes Qatar, and will pour in $250 million to increase its capital.
EFG-Hermes made up 27 per cent of Monday’s total turnover of LE481 million ($80 million). It gained 5.24 per cent to close at LE13.85 per share.
As a result of this deal, Arab & foreign investments in the company will reach 90%.
Sources expected that this acquisition will benefit all shareholders in the company, boosting its activities and enhancing its presence in the region adding that EFG-Hermes will remain under the supervision of the Egyptian Financial Supervisory Authority (EFSA).
On the other side, experts affirmed that the time of the deal proves the confidence in Egyptian entities.
EFG-Hermes Holding issued & paid capital is EGP2.391 billion, divided into 478.294 million shares with a nominal value of EGP 5 / share, and total equity of the group reaches EGP 8.199 billion.
The ownership structure of the group is divided between Abu Dhabi Investment Authority (ADIA) 7.02%, Bank of New York 7.93%, Dubai Holding group 11.70%, and the Dubai Holding II group 6.74%, and the rest is traded.
The current market value of the group exceeds EGP 6.6 billion which is equivalent to $ 1.1 billion.
