EFG-Hermes concludes African DPI first venture into Egypt market

Egyptian investment bank, EFG-Hermes announced Thursday that it had concluded its advisory to B.TECH for Trading and Distribution on its strategic partnership with African private equity firm Development Partners International (DPI).

Development Partners International (DPI), an African private equity specialist with USD1.1 billion under management, is to invest 300 million Egyptian pounds ($33.7 million) through its ADP II fund in Egyptian household appliances and electronics retailer B.TECH.

The alliance with B.TECH is considered DPI’s first venture into the Egyptian market.

This is the sixth transaction that EFG Hermes Investment Banking has managed since the beginning of the year. The division’s transactions, valued at approximately $640 million included two IPOs totalling $168 million for dairy-maker Domty and healthcare firm Cleopatra Hospital Company.

“The successful close of this transaction reaffirms the continued international interest in Egyptian retail and consumer plays,” said Moustafa El Chiati, Managing Director of EFG Hermes UAE.

“As a leading consumer electronics distributor, B.TECH is set to benefit from this sector’s growth potential driven by Egypt’s large and young population and rising disposable income. We are optimistic that these factors will carry forward into 2017 the significant global interest that we witnessed during the past two years,” El Chiati added.

EFG Hermes Investment Banking was sole financial advisor to B.TECH; Zulficar & Partners and White & Case acted as legal advisors.

B.TECH operates a fast-growing portfolio of 67 retail stores across Egypt with a network of 362 wholesale dealers supported by three main warehouses and 57 after-sales service centres. B.TECH distributes leading household appliances and consumer electronics products including leading global brands such as Indesit, Ariston, Miele, Apple and Braun.

B.TECH has consistently grown its business at an impressive 18 percent annualised sales growth over the last five years driven by growing demand for consumer durables and electronics from Egypt’s middle class. Sales are supported by B.TECH’s market leading installment payment system which has served over 700,000 Egyptians to date.  B.TECH’s unique combination of physical retail, installment payments, and a fast-growing online presence supported by an advanced warehouse and after-sales capability gives the business a dominant position serving customers across a broad demographic range. 

Runa Alam, CEO and co-founder of DPI, said: “Our investment thesis is to back strong companies which serve the developing needs of the emerging middle class across Africa. B.TECH is our first investment in Egypt and has a proven track record in serving the needs of the emerging and established middle classes.”

“We believe the shift from traditional towards organised retail and the increasing formation of new households will support increasing consumption of durables and open new markets and channels for the business.”

Adding to this, DPI deal partner Sofiane Lahmar said: “B.TECH has a strong track record of growth and profitability, an excellent management team, and a clear long term strategy.  We are excited to partner with Dr. Khattab and his team and look forward to working together with B.TECH to continue the company’s growth story in Egypt and expand outside of Egypt in other African countries.”

Mahmoud Khattab, Chairman and CEO of B.TECH said: “B.TECH has grown over the last ten years to be the leading household appliances and consumer electronics retailer in Egypt with a distribution platform that is second to none. B.TECH’s unique integrated business model offers a strong value proposition to its customers in terms of range of products, affordability and accessibility across the country both offline and online. The investment and partnership between our company and DPI demonstrate the outstanding work accomplished by our team and highlights the growth potential of B.TECH in Egypt and Africa”