Transaction is one of the largest foreign direct investments
in Egypt since the 25 January Revolution
EFG Hermes Holding S.A.E ("EFG Hermes") and QInvest L.L.C.
("QInvest") are delighted to announce that they have entered
into a definitive agreement involving EFG Hermes' Brokerage,
Research, Asset Management, Investment Banking and
Infrastructure Fund businesses (the "Business"). Pursuant to
the agreement, EFG Hermes and QInvest will enter into a joint
venture at the level of EFG Hermes Qatar LLC ("EFG Hermes
Qatar" or the "JV Company"), to be 60% owned by QInvest and
40% owned by EFG Hermes. The JV Company shall be the entity
holding the Business post-closing. This announcement follows
the initial press release on March 26, 2012, when the two
parties agreed to explore a potential strategic alliance with
the aim of creating a leading investment bank with operations
in the Arab world and beyond, comprehensively covering the
Middle East, Africa, Turkey and South and South East
Asia.
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 aim will be to offer
an enhanced product offering to QInvest's extensive corporate
and private client base in Qatar and the GCC 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. QInvest's clients will
benefit through the developed platform of EFG Hermes from
direct access to the investment bank's services in markets
across the Arab world, as well as to trading platforms on the
major Arab exchanges.
The joint venture will provide a strong catalyst for the
further development and deepening of the MENA financial
markets and their interconnection with the rapidly growing
nascent markets in Africa and South and South East Asia as
well as Turkey. The joint venture will also facilitate
cross-border capital flows and enable international investors
and corporates to actively participate in the economic
development of the region.
As a result of the transaction, QInvest will inject US$250m
in the form of a capital increase at the level of EFG Hermes
Qatar that will be used in consideration for transferring the
Business to the JV Company. EFG Hermes will have the right to
sell its entire 40% shareholding in the JV Company to QInvest
at any time during the period between 12 to 36 months from
signing of the transaction at a price of EGP 1,000m
(c.US$165m). QInvest will have the right to acquire from EFG
Hermes its entire 40% shareholding at any time during the
period between 12 to 36 months from signing of the
transaction at the higher of US$165m or fair market value at
the time of the exercise subject to a cap. At closing QInvest
will also acquire from EFG Hermes 60% of the seed capital of
the asset management business at market value.
Closing is conditional on shareholder approval at the general
assembly of EFG Hermes and the receipt of relevant regulatory
approvals. The transaction is expected to close in the third
quarter of 2012. The JV Company will operate under the EFG
Hermes brand name and will be led by Karim Awad and Kashif
Siddiqui as Co-CEOs, who are currently Head of Investment
Banking and Head of Asset Management respectively.
Commenting on the announcement, the Chairman of QInvest, H.E.
Sheikh Jassim Bin Hamad Bin Jassim Bin Jaber Al Thani said:
"We look forward to establishing this strategic partnership
with EFG Hermes that will position our firms to leverage the
large potential for economic growth in the region and to play
a pivotal role in its long-term development. The alliance
will enable us to bring the expertise necessary to capitalize
on the desires of many regional and foreign investors who are
seeking to play a significant role in the region's economic
development and who are willing to invest across the Middle
East, Africa, Turkey and South and South East Asia."
Shahzad Shahbaz, Chief Executive Officer of QInvest
commented, saying: "By bringing together our own capabilities
at QInvest with EFG Hermes' position as the region's largest
investment bank, we are confident that we can create the
leading investment banking platform of choice across the
Middle East, Africa, Turkey and South and South East
Asia."
EFG Hermes' Board of Directors Chairperson Ms. Mona Zulficar
commented, saying: "We share a common vision with respect to
the future prospects of various markets including Egypt and
other high-potential economies in Africa and Asia. Such an
alliance will continue to entrench the testament of our value
creation strategy that we have implemented for our
shareholders."
"Our primary objective reflected by these agreements will be
to create an investment banking platform that will play a
vital role in the flow of foreign capital into the region
while enabling Arab investors to participate in future
investment opportunities in the geographies that will fall
under the umbrella of this new platform and to continue to
build on the success that our team has achieved over the
years," commented EFG Hermes' CEO Hassan Heikal, who will be
overseeing the transition phase to the JV Company.
EFG Hermes' CEO Yasser El Mallawany commented, saying: "The
alliance with QInvest through which we can combine our
expertise in our chosen businesses would be a significant
turning point in supporting investments in the Arab world and
it would crystallize the value of our preeminent investment
banking platform. EFG Hermes' stakeholders will benefit from
this alliance which aims to accelerate the development of our
businesses and strengthen our footprint with a durable
partner for growth."
Following the closing of the transaction, EFG Hermes will
recommend to its board of directors an EGP4 special dividend
per share.
EFG Hermes was advised by EFG Hermes Investment Banking, J.P.
Morgan and Freshfields, QInvest was advised by Goldman Sachs
International, QInvest Investment Banking and Hogan Lovells.
distributed by |