Saturday, May 05, 2012

DUBAI (Zawya Dow Jones)--Egypt's EFG Hermes (HRHO.CI) and Qatar's QInvest said they have reached agreement on the creation of a joint investment bank with operations across the Middle East, Africa, Turkey and Asia.

Qinvest will hold a controlling 60% stake in the new bank, to be known as EFG Hermes Qatar, and will inject $250 million into the business in the form of a capital increase, the two banks said in a statement.

"EFG Hermes' position as the largest provider of investment banking, asset management and brokerage services across the Arab world will be strongly complemented by QInvest's financial strength and client base," the statement said.

The two banks announced in March they were in talks to create what could become one of the Middle East's largest investment banks.

The joint bank includes EFG Hermes' brokerage, research, asset management, investment banking and infrastructure fund operations. In previous statements, EFG has said its private equity unit and its Lebanese subsidiary, Credit Libanais, will be excluded from the deal.

EFG Hermes will hold a 40% stake in the new bank and will retain the right to sell its shareholding to Qinvest for 1 billion Egyptian pounds ($165 million) at any time during the period between 12 months and 36 months from the signing of the joint venture transaction, the joint statement said.

The deal is subject to the approval of EFG Hermes shareholders.

"The aim will be to offer an enhanced product offering to QInvest's extensive corporate and private client base in Qatar and the (Gulf Cooperation Council) region and to use the combined platform and resources to expand the joint venture's reach into the fast growing regions of Sub-Saharan Africa and South and South East Asia," the two banks said.

The new bank will be headed jointly by EFG Hermes' head of investment banking Karim Awad and its head of asset management Kashif Siddiqui, the statement said.

Last month, EFG Hermes said its net profit dropped 81% in 2011 to EGP133 million as the global economic downturn and turmoil in the Arab world hurt the company's brokerage and investment banking business.

-By Dubai bureau, Dow Jones Newswires, +9714 446 1697

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

05-05-12 0825GMT