EFG Hermes awarded investment banking deal

Najla Moussa
5 Min Read

CAIRO: EFG-Hermes, a key player on the Cairo and Alexandria Stock Exchanges and a mover and shaker in the industry, is lending its expertise to the MENA region, while at the same time not losing sight of expansion plans at home.

To begin with, EFG Hermes announced that it has just been awarded what is considered the first, sizable investment banking deal for the company in the United Arab Emirates (UAE), as well as one of the largest IPO’s on the Dubai Financial Market (DFM).

The company has won the mandate to underwrite the IPO of a 20 percent stake in the Emirates Telecom Corp – Etisalat deal, evidence of the company’s growing reputation and presence in the region.

As the lead manager and financial advisor for Emirates Telecom Corp, a company licensed to offer mobile services, fixed phone lines, internet and other services in the UAE; EFG-Hermes will be responsible for overseeing the financial aspects of the deal, which is estimated to be worth DHS 2.5 billion.

The IPO, which is targeted at Emirati nationals, is set to open on Feb. 18 and to close at Feb. 27, 2006.

The stock will start to trade on the Dubai Financial market in no more than 10 days after the allocation process is finalized. Yet while keeping their regional expansion goals in check, EFG Hermes has still managed to take care of business at home.

The company has just announced the opening of subscription in the first tranche of its capital increase that amounts to 16 million shares issued at the fair value of LE 115 ($20.05) to be paid fully in U.S. dollars.

The capital increase, which shall be done through a private placement on a pro rata basis, will primarily be offered to those shareholders that are registered as at the end of the trading session of Feb. 9, 2006, thus giving them the right to participate in the private placement.

Institutional buyers, which previously funded the company’s significant 20 percent acquisition of Bank Audi for $456 million, are also allowed to subscribe with a minimum of $10 million in the uncovered portion of the capital increase.

The payment shall be made in U.S. Dollars at the price of $20.05, equivalent to the fair value amounting to LE115 for each share, on the basis that the exchange rate is LE 5.7358 for $1. Each shareholder wishing to participate shall pay $1 for each share as placement fees.

Subscription will be made automatically by way of debiting the credit balance of the participating investors, and will begin on Feb. 12 and end on Feb. 19.

Subscription for the second tranche, which amounts to 194.15 million shares issued at par (LE 5 per share), shall be offered to all existing shareholders, following the closure of the first tranche.

According to a press release issued by the company, the shares representing the increase in capital that are being offered to investors through private placement are being offered in order for the company to finance their acquisition of shares in the Audi bank.

According to experts, this much was assumed. However, they also believe that company plans to use part of the profit pocketed from the sale toward regional expansion and acquisitions that will allow EFG Hermes to delve deeper into commercial banking.

The private placement announcement comes on the heels of a general shareholders meeting that took place on Feb. 2, and approved the resolution regarding the increase of issued capital. The meeting also approved the company’s authorized capital from LE 700 million to LE 3200 million.

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