Following the Egyptian financial regulator’s call for additional disclosures related to minority shareholders, EFG-Hermes (HRHO.CA), the country’s biggest publicly traded investment bank, has said it will hold an extraordinary general meeting “very soon” to provide more information about a proposed joint venture with Qatar’s QInvest and reconfirm shareholder approval.
EFG-Hermes said the potential alliance with QInvest to form an investment bank is now subject to additional disclosures to the Egyptian Financial Services Authority (EFSA) and the shareholders, and that it will seek to clarify the points of the deal in a forthcoming meeting.
Mona Zulficar, EFG-Hermes Board of Directors chairperson, told Zawya Dow Jones: “The deal has not been suspended by EFSA. Only additional disclosures have been required. Hence no appeal is required.”
EFG-Hermes said it was still confident of securing a deal with QInvest and expects the transaction to be completed by the end of the third quarter of 2012.
In May, EFG-Hermes said it agreed to start an investment bank with QInvest that will be 60% owned by the Qatari firm.
EFSA on Wednesday rejected the shareholder decisions over the joint venture deal between the two banks made at Hermes’ annual meeting last month because the firm didn’t clarify various points regarding the deal, including the fate of minority rights after it is completed, the state news agency Mena reported citing EFSA Chairman Ashraf El-Sharkawy.
Analysts at Egypt-based HC Securities said on Thursday they believed this new development over the proposed JV deal could have a negative impact on the stock in the near term until there is more clarity on the deal.
“We expect this overhang to end once EFG-Hermes amends the procedural issues and responds to the regulator’s inquiries.”
Referring to an alternative offer made by Planet IB, a consortium of investors, Zulficar said: “Planet IB file has, to our knowledge, been closed as they did not file any tender offer applications with EFSA.”
