EFG Hermes sets Arab Investment Bank acquisition deal in motion

The stake of EFG Hermes would stand at 51%

A trader works at the Egyptian stock exchange in Cairo, Egypt September 23, 2019.

A trader works at the Egyptian stock exchange in Cairo, Egypt September 23, 2019.

REUTERS/Mohamed Abd El Ghany

EFG Hermes has announced that its Board of Directors has approved the deal to acquire 76% of the Arab Investment Bank (AIB), in alliance with The Sovereign Fund of Egypt (TSFE).

This would see an increase in the bank’s issued and paid-up capital to EGP 5bn. The stake of EFG Hermes would stand at 51%.

The share of TSFE’s stake, through the Egypt Subsidiary Fund for Financial Services and Digital Transformation, which it fully owns, is 25%. Meanwhile, the National Investment Bank (NIB) maintains 24% after the increase in the capital.

The Board of Directors at EFG Hermes also approved the fair value report for the capital increase of AIB, which was prepared by the independent financial advisor, PricewaterhouseCoopers.

The Financial Regulatory Authority (FRA) has issued a letter confirming its agreement with the criteria for financial evaluation of establishments.

PricewaterhouseCoopers determined the fair market value of the AIB shares at between EGP 1.1bn and EGP 1.2bn, using the discounted cash flow method. It also determined a fair market value ranging from EGP 800m to EGP 1.4bn, as the fair market value is estimated at EGP 1.1bn.

On 24 June, EFG Hermes and TSFE announced that they had obtained approval from the Board of Directors at the Central Bank of Egypt (CBE) to start the process of due diligence on AIB.

This was with the aim of acquiring 76% of the bank’s capital, most of it through subscription of issued and paid up capital increase. This would also take place with a potential to purchase a limited number of shares owned by the current major shareholder, the NIB.

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