Fair value of "AiBank" in Hermes - Egypt's sovereign fund deal reaches LE 1.1B

CAIRO – 14 March 2021: The Board of Directors of the Egyptian Financial Group Hermes Holding (EFG Hermes) approved a deal to acquire 76 percent of the shares of the Arab Investment Bank (aiBank) , in alliance with Egypt's sovereign fund, by increasing the bank's issued and paid-up capital to LE 5 billion.

EFG Hermes said in a statement, Wednesday, that its share in the bank will become 51 percent, and the share of Egypt's sovereign fund through the Egypt Financial Services and Digital Transformation Sub-Fund, which is wholly owned by it, is 25 percent, while the National Investment Bank maintains 24 percent after the increase capital.

The Board also approved the report on the fair value of the shares of the capital increase of the Arab Investment Bank pursuant to Article 44 of the rules for listing and delisting of securities for the Egyptian Stock Exchange, which was prepared by the independent financial advisor, "PricewaterhouseCoopers", and that the Financial Regulatory Authority issued a letter regarding it confirming its agreement with the evaluation criteria Financial establishments.

The company’s board of directors authorized the CEO to complete the negotiation to complete the agreement on the contract documents, especially the subscription contract to increase the bank’s capital, and to sign them on behalf of the company at the earliest opportunity.

The company stated that the signing will not entail the implementation of the deal until after the preconditions for implementation are fulfilled.

The Board agreed to approve the details of the reward and incentive system project by granting bonus shares, to be applied to the employees, managers and executive board members of the company, and the form of the share award contract, as well as the approval of a disclosure statement for this, in preparation for submission to the extraordinary general assembly for final approval.

The Board agreed to authorize the Chair of the Board of Directors to invite the extraordinary general assembly of the company after the Egyptian Stock Exchange agreed to publish the disclosure statement of the reward and incentive system to be applied on the screens of the Egyptian Stock Exchange, to convene within a month from the date of publishing the disclosure statement, to discuss the amendment of Articles 10, 16, 19, 37 and 40 from the articles of association of the company.

The statement mentioned that the report of the financial study to determine the fair value of the Arab Investment Bank shares concluded that the fair value range of the bank ranges between LE 900 million to LE 1.2 billion, with an average fair value of LE 1.1 billion.

In June 2020, the Central Bank of Egypt (CBE) agreed that Hermes Holding and the Egyptian Sovereign Fund would start the due diligence examination of the Arab Investment Bank with the aim of owning a stake of not less than 76 percent.

Last June, EFG Hermes stated that in the event that the deal is completed, Hermes becomes the owner of 51 percent, and Egypt's sovereign fund owns no less than 25 percent of the bank's capital, while the bank and the Union of Arab Republics will keep the rest.

During 2020, EFG Hermes achieved profits of LE 1.3 billion, compared to LE 1.37 billion in 2019, taking into account the minority rights.

EFG Hermes operates within the Diversified Financials sector focusing on Investment Banking and Brokerage. It has subsidiaries operating across the Carribian, Northern Africa and Middle East.