EFG Hermes completes purchase of 51% in AIB during Q3

CAIRO – 23 May 2021: CEO of Egyptian financial group Hermes Karim Awad said, Sunday, that the group will complete the acquisition of a majority stake in the Arab Investment Bank during the third quarter of the year.

Karim Awad's comments to Reuters come days after the announcement of the Egyptian government’s approval of Hermes’s acquisition, in alliance with Egypt's sovereign fund, of 76 percent of the Arab Investment Bank by increasing its capital to LE 5 billion ($ 320.3 million).

Awad said in an interview: "Our share in the bank will be financed through the available liquidity the company owns .We started immediately after obtaining the government's approval for the deal to fulfill all the conditions and approvals."

However, he refused to give details about the amount of liquidity available to the group, which is the largest investment bank in the Middle East.

Execution of the deal requires approval from the Central Bank of Egypt.

Hermes’s stake in the Arab Investment Bank will reach 51 percent through subscribing to 423 million shares at a total value of LE 2.55 billion at a price of LE 6.03 per share, Egypt's sovereign fund will hold 25 percent with a total value of LE 1.25 billion, and the National Investment Bank 24 percent.

"We will not dispense with any of the current employees of the Arab Investment Bank," Awad said, adding that changing the bank's name is under consideration with partners.

He continued: "The most important thing for us is how to make it among the banks operating in Egypt."

A stake in the Arab Investment Bank, which was established in 1980 to finance government projects, was sold as part of a program that the government began in 2004 to sell its stakes in banks.

Awad said, "We do not enter the banking sector in order to compete with the big banks operating in Egypt. Rather, we seek to create a part of the market that we focus on and provide services in which to help us grow ... We can sell the bank's services to the group's clients, including companies and individuals, and focus on technological services."

He declined to answer when asked about the name of the bank’s president after completing the acquisition.

When asked about any plans to offer Arab Investment Bank shares on the Egyptian Stock Exchange in the future, he said, "We prefer to put all the value on the shares of the financial group Hermes ... Whenever the Arab Investment Bank grows; this will be reflected in Hermes's share."

He said that Hermes is examining investment opportunities available in the emerging markets and is targeting direct investment in emerging companies through the acquisition of minority stakes and the activity of expanding the value of consumer finance unit in one of the Arab countries during 2022, expecting that non-banking financial services will contribute 40 to 50 percent of revenues within 18 months. .

EFG Hermes' non-bank finance sector revenue increased 22 percent in the first quarter to 441 million pounds by the end of March, equivalent to 35 percent of the group's revenues.

Awad said, "We are very optimistic about the Arab Investment Bank deal in light of the attractiveness of the Egyptian banking sector and the significant growth opportunities expected for the sector."