CIB acquisition finalized

Waleed Khalil Rasromani
5 Min Read

CAIRO: The sale of 18.7 percent of Commercial International Bank (CIB) to a consortium of investors was announced yesterday in a deal worth approximately $230 million.

All regulatory approvals for the acquisition have been obtained.

The consortium, led by Ripplewood Holdings, Eton Park Capital Management and RHJ International, will purchase the stake at the equivalent of LE 53.50 per share.

The stake represents the last remaining shares of National Bank of Egypt (NBE) in CIB, and the investment consortium will take over NBE s seats on the board.

CIB will continue to work closely with NBE despite the latter s divestment. NBE was an extremely professional investor and partner, says Sahar El-Sallab, vice chairperson and managing director of CIB. We are not really losing NBE. NBE is going to always be our ally, our partner in many of the businesses.

The consortium has appointed a number of prominent business leaders to the board, including Tim Collins, chief executive officer of Ripplewood Holdings, Robert Willumstad, former president and chief operating officer of Citigroup and Lucio Noto, former chairman and chief executive of Mobil Corp.

Former Federal Reserve Chairman Paul Volcker will also be an advisor to the bank.

The new board members were chosen by the consortium based on consultations with CIB, says CIB Chairman Hisham Ezz Al-Arab, adding that this reflects the common interests of the consortium and the bank.

Collins declined to reveal the consortium s target return. The new investor group also has no specific holding period exit strategy, but rather considers CIB a long-term investment.

The consortium will also support CIB s expansion in the consumer market, says Willumstad, by providing technical expertise for new retail products.

Ripplewood is a private equity fund manager based in New York with investments of over $2 billion. One of its highest profile investments was the Long-Term Credit Bank of Japan, now named Shinsei Bank. The fund helped turn around the bank when it was ailing in 1999.

I think there are very powerful parallels, but there are also stark differences, says Collins, contrasting the CIB acquisition to his fund s experience in Japan. We learned that we can add capital, products, services and expertise from around the world and make a very important contribution to not only the financial system, but to the economy in general.

NBE s divestment is part of the government s initiative to disassociate public and private banks in an effort to encourage private-sector participation in the financial sector. The sale of Bank of Alexandria, the smallest government-owned bank, is also up for sale and is expected to be acquired within two months.

The government s economic reform program contributed to the consortium s interest in CIB. We re bullish on Egypt in general, says Collins. The reforms make it a very attractive place, and we think it s at an inflection point.

Transforming from a leading Egyptian bank to an eminent regional bank Ezz Al-Arab explains that the consortium possesses the right technical expertise to maximize CIB s shareholder value and assist it for future capital increases within Egypt and abroad.

The current investors are gaining a lot, says Ezz Al-Arab, adding that CIB s share price increased sharply when news leaked of Ripplewood s involvement in the deal. Everyone knows the added value that these guys are going to bring. So they are adding value to themselves, but also to the market.

The transaction follows close to a year of study of Egypt and CIB by the consortium. We ve taken around a year to process a proper due diligence and a proper data room for the investor to take the proper decision with his advisor, says El-Sallab.

Eton Park Capital is an investment company with offices in New York and London and $4.5 billion of funds under its management. RHJ International is a Belgian investment company.

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