EFG-Hermes board accepts Abraaj bid for 25% stake

Abraaj Capital is poised to acquire a 25 percent stake in EFG-Hermes after the Egyptian bank’s board gave the nod for the transaction.

Abraaj Capital, Dubai-based private equity firm, is advancing toward the acquisition of a 25 percent stake in EFG-Hermes as the Egyptian bank’s board of directors has accepted the share offer in a transaction worth $505 million (€394.6m).

The board met in Cairo on 29 July and accepted Abraaj’s offer to subscribe to 97 million of EFG’s common shares via a capital increase at 30 Egypt pound per share, according to a statement.

The deal is now subject to approvals by a general assembly of the bank’s board and regulatory authorities, a spokesman for Abraaj said.

If approved, Abraaj Capital will become the single largest shareholder in EFG-Hermes, who in turn is the largest shareholder in Bank Audi, Lebanon.

EFG-Hermes is listed on both London Stock Exchange and Cairo & Alexandria Stock Exchange. The bank’s business includes securities brokerage, investment banking, asset management and private equity.

Its staff strength as grown to 300 from 40 in 1994, according to a presentation dated April 2006 by the bank.

Arif Naqvi, chief executive officer of Abraaj Capital said: “Our strategy moving forward will be to catalyze and accelerate the regional development plan of EFG-Hermes to become the foremost integrated financial services institution in the region. EFG’s footprint currently gives it access to 88% of the investment banking fee pot in the Middle East.”

In June, Abraaj hired Mustafa Abdel Wadood, the former chief executive of EFG Hermes in the United Arab Emirates, as managing director. Abraaj offered to acquire stakes in EFG Hermes a month later.