Medium-range and emerging investment banks are anticipating the expected merger between CI Capital and Beltone Financial. The deal has become the focus of attention of these banks, since all parties of the financial services market share the same goal of expanding businesses volume.
By doing so, they hope to compensate for the recession in the market throughout the three years following the January 25 Revolution in 2011.
Chairman of AT Financial Holding Khaled Abu Heif said the company seeks to expand in the sector of promoting and launching IPOs after it recently obtained the licence from the Egyptian Financial Supervisory Authority (EFSA). This allows the company to branch into brokerage, promotion, and asset management activities.
Abu Heif does not expect the deal to have a great impact in the future of the medium-sized companies, like AT, taking into consideration that these companies were able to survive under the crises the financial services sector witnessed since the global financial crisis that erupted in 2008.
On the contrary, he believes Sawiris’ deals reflect his vision that the market will witness more activity in the upcoming period, which warrants the pumping of about EGP 1.5bn in acquisition deals.
Abu Heif said this alliance may positively reflect on the medium investment banks by providing some of its human resources to them, because the two companies are expected to give up on some of their employees by way of limiting the expenses as one of the known goals of the merger.
CEO of Mubasher Trade Ehab Rashad said his company is moving towards converting into a financial holding company after establishing a research department and a company for managing financial portfolios. It is awaiting EFSA’s approval to grant it licences for both financial consultancy and managing funds activity.
After establishing the holding company, Mubasher will be ready to undertake mergers with or acquisitions of other entities, provided that the deal achieves added value, whether by adding a new category of customers or benefitting from a specific technology.
According to Rashad’s opinion, the CI Capital–Beltone deal would increase the pace of mergers in the Egyptian market because the number of the financial companies is much larger compared to the market’s size. For example, 140 companies are competing over daily trades of only about EGP 400m in the stock market.
He said the merger will enable companies to decrease expenses and at the same time improve the quality of services by adding financial research departments or attract new talents to provide asset management services, in addition to promoting and launching IPOs.