Qatar’s Qinvest May Acquire Majority of New Bank With EFG-Hermes

EFG-Hermes Holding SAE (HRHO.CA) said Qatar’s QInvest LLC may hold a majority stake in a planned investment bank that would take over the Egyptian bank’s brokerage, investment banking and asset management businesses.

The investment bank would be the largest in “the Arab World, Africa, Turkey, South and South East Asia, with the possibility of QInvest holding majority stake,” Cairo-based EFG-Hermes said in a statement today. QInvest, a unit of Qatar Islamic Bank (QIBK), concluded talks to buy a 60 percent stake in EFG- Hermes, Egypt’s Al Shorouk newspaper reported yesterday, citing an unidentified person familiar with the talks.

The investment may help EFG-Hermes ride Egypt’s worst political and economic crisis in at least 30 years after last year’s popular uprising. Profit of the largest publicly traded Arab investment bank slumped 81 percent slump in 2011 and its shares plunged 63 percent, under-performing the benchmark index. The shares gained 8.2 percent to 13.90 pounds at 12:44 p.m. in Cairo, valuing the company at 6.7 billion pounds ($1.1 billion).

“The anticipated valuation and possible cash dividend payment are the main drivers of the shares,” said Mohamed Radwan, head of equities at Pharos Holding for Financial Investment in Cairo.

Founded in 1984, EFG-Hermes has operations in countries including the United Arab Emirates,Saudi Arabia, Kuwait and Oman, according to its website. It employs more than 1,000 people, it said.

QInvest, which got a license to operate in 2007, is based in Qatar, the world’s biggest exporter of liquefied natural gas, whose economy expanded at the fastest pace in the world for the past two years, according to International Monetary Fund estimates. Qatar’s economy is picking up as the Persian Gulf nation prepares to host the 2022 soccer World Cup.

EFG-Hermes said its private equity business and Lebanese commercial bank Credit Libanais SAL, in which it bought a 65 percent stake in 2010, are excluded from the discussions.

“It is not yet clear to us how the structure will be out in place,” said Jaap Meijer, director of equity research at Arqaam Capital Ltd. in Dubai. “QInvest may do an offer for 60 percent of the shares, with EFG selling Credit Libanais, or alternatively buy 60 percent of the investment banking platform, leaving EFG with a 40 percent minority.”

Credit Libanais dismissed a report that EFG-Hermes may sell its stake, Al-Akhbar newspaper reported April 21. The appointment of EFG-Hermes co-chief executive officers Hassan Heikal and Yasser Al Mallawany to the board of Credit Libanais indicates EFG-Hermes’s intention to retain the stake, Al-Akhbar said, citing the information office of the Lebanese bank’s chairman.