The board of EFG Hermes said it was discussing the tender offer by a consortium led by Naguib Sawiris, the Egyptian telecoms entrepreneur, to buy an 18 per cent stake in the Cairo-based regional investment bank.
Some analysts say the bid – which would be one of the largest such deals in the country since the 2011 revolution – could signal the start of a revival of interest in Egyptian assets on perceptions of a return to political stability after the recent election of Abdel Fattah al-Sisi as president.
Mr Sisi, a former defence minister who last year ousted the elected Islamist president Mohamed Morsi, enjoys the backing of state institutions and many prominent businessmen.
“This sends a message that there is confidence from a high-profile businessman who had previously exited the Egyptian market,” said Karim Khadr of CI Capital, a private equity firm, of Mr Sawiris’s bid.
But he warned that Egypt still needed to see more investments coming in, especially from external investors.
“We need FDI to create inflows of foreign currency to help with job creation and boost the balance of payments”, he said.
Mr Sawiris, who was one of the most outspoken opponents of Mr Morsi and his Muslim Brotherhood group, had promised after the change of regime that he would invest generously across different sectors of the economy. He is a founder of the Free Egyptians party, which supported the candidacy of Mr Sisi.
Before Mr Sawiris merged his telecoms empire with VimpelCom of Russia in 2011, his company, Orascom Telecom, operated mobile phone networks across the Middle East, Africa and Asia.
The $257m tender offer for a stake in EFG was based on a share price of 16 Egyptian pounds. It was presented jointly by the New Egypt Investment fund, backed by Mr Sawirism who is seeking a 17.8 per cent stake, and Beltone Financial, a rival investment bank which plans to acquire a 1.09 per cent stake. Beltone Capital Holding is seeking a further 1.09 per cent.
“EFG Hermes has a solid regional presence and if you combine it with an expected turnround in regional stock markets and merger and acquisition activities, then it is attractive to take a stake in it,” said Angus Blair, president of the Signet Institute, a regional consultancy group.
The bank is seen as having successfully weathered the tough economic and political climate of the past three years.
EFG’s board welcomed Mr Sawiris’s approach on Monday night, calling it a “vote of confidence”, but made clear it had reservations about the attempts of a rival investment bank to acquire a stake.
It said: “The board feels that the highly dominant position of the company in the market does not warrant the consideration of consolidation with any of its competitors in Egypt, which would likely negatively affect the shareholders’ value.”
It said it would appoint an independent financial adviser to give a view on the fair value of the stock and the fairness of the offer.
Source: The Financial Times