Sawiris Backs Planet IB’s Bid For EFG-Hermes

Egyptian billionaire Naguib Sawiris is helping finance a takeover bid for Egypt’s biggest investment bank EFG Hermes (HRHO.CA) that would ensure the company is not broken up, the bid consortium said on Friday.

Planet IB, the group of Gulf investors and bankers behind the bid move, is led by financial industry interests including Chief Executive Ahmad al-Husseiny, who until last month was managing director of Egypt-based private equity firm Citadel Capital.

The move comes as EFG, whose market value has more than halved to less than $870 million since the national uprising that ousted President Hosni Mabarak last year, is in the process of forming a joint venture with Qatar’s QInvest that would give the Qatari firm control over its main business.

According to Reuters, Husseiny said Planet had lined up debt finance for its cash bid and “substantial equity commitments from leading Egyptian business figures” including Sawiris, Gulf-based investors such as Tariq bin Faisal al-Qassimi and a top Bahraini institution.

“The proposed acquisition keeps a flagship Egyptian multi-national intact and prevents its break-up,” said Hussieny in a statement. He said EFG would operate as a fully-controlled universal bank.

Sawiris, one of Egypt’s richest men, built a global telecoms empire by venturing into frontier markets with strong growth potential.

Now 57, he has eased off day-to-day management of his empire after selling assets including Italian operator Wind and his most lucrative business, Algeria’s Djezzy, to Russia’s Vimpelcom in a deal worth $6 billion.

He is due to reap further billions from selling most of his stake in the Egyptian mobile telecoms company he founded, Mobinil, to France Telecom and is now eyeing new growth opportunities in telecoms.

EFG has securities brokerage, investment banking, asset management, research and private equity operations and a controlling interest in Lebanese lender Credit Libanais.

Planet IB’s chairman, banking industry veteran Mahmoud Abdel Latif, said the buy-out plan would see EFG expand into Africa and cut its costs while keeping staffing “intact”.

“Our bid is expected to be at a customary premium to the trading price,’ he said.

Under Egyptian Exchange (EGX)’s rules, Planet IB would have to bid for all of EFG’s share capital.

Egyptian share prices have tumbled since the uprising that ousted President Hosni Mubarak last year, and many investors have been looking to snap up assets seen as undervalued. EFG’s shares have more than halved in that time.

The bank came under further pressure on Wednesday, when its two chief executives, Hassan Heikal and Yasser El Mallawany, were referred to trial alongside Mubarak’s two sons as part of a probe into illegal share dealings. EFG said it would defend the two CEOs.