EFG-Hermes Takeover By Qinvest Mired In Delays As Deadline Nears

The takeover of EFG-Hermes Holding SAE (HRHO.CA), Egypt’s biggest investment bank, by Qatar’s QInvest LLC is mired in delays almost a year after the transaction was agreed.

The deal is set to expire on May 4 unless it receives a so- called no objection from Egypt’s regulator on the transfer of its assets to Qatar, Hanzada Nessim, investor-relations manager at Cairo-based EFG-Hermes, said yesterday by telephone. The regulator hasn’t given a date for a decision, with the May deadline being a year since the transaction was announced.

QInvest, a unit of Qatar Islamic Bank (QIBK), and EFG-Hermes plan to create an investment bank with operations in the Middle East, Africa and Turkey, as well as southern and southeastern Asia. The takeover would include EFG’s main investment-banking, asset- management and brokerage businesses, and exclude its private- equity business and Credit Libanais SAL unit.

EFG-Hermes’s co-chief executives, Yasser Al Mallawany and Hassan Heikal, are also defendents alongside former Egyptian president Hosni Mubarak’s two sons, Alaa and Gamal Mubarak, and five others on charges of illicit gains related to the 2007 sale of El Watany Bank of Egypt. The trial began in July 2012.

“I don’t think the deal will go through before the lawsuit is finalized,” Hany Genena, head of research at Cairo-based Pharos Securities Brokerage, said yesterday by telephone. “It is not clear when the lawsuit will end.”

The terms of the deal include a four Egyptian pound per share dividend once it is complete.

EFG’s shares were down 1.3 percent at close in Cairo yesterday. The bank’s shares are down 6.3 percent so far this year, compared with a 3.9 percent for EGX 30 Benchmark Index.

Bloomberg