First Abu Dhabi Bank (FAB), the largest bank in the United Arab Emirates, has made a non-binding preliminary offer to acquire a majority stake in EFG Hermes Holding, an Egypt-based financial services group led by leading investment banker Karim Awad.
Since 2013, Awad has served as the CEO of the financial services group.
The proposed transaction, which is subject to approval by EFG Hermes’ board of directors and shareholders, as well as regulatory approvals from the relevant authorities, is FAB’s second major transaction in Egypt after it purchased Lebanon’s Bank Audi’s Egyptian business in 2021.
Upon the conclusion of the EGP9.4-billion ($600 million) deal, the Abu Dhabi-based bank will acquire a total 51-percent stake in the Egyptian financial services group under the counsel of Rothschild & Co, a multinational investment bank and financial services group.
Through the leading lender, it will acquire at least 496,266,042 shares in EFG Hermes at an estimated price of EGP19 ($1.21) per share, representing a 10.4-percent premium over the financial services group’s current market price.
The move, which is consistent with FAB’s strategic diversification plans, may present an opportunity for EFG Hermes investors to realize value from their investment as shareholders such as DF EFG3 Limited, RA MENA Holdings LLC, Rimco EGT Investment LLC and Bank of New York Mellon. They may opt to sell their stakes under the proposed offer.
In response to the announcement, shares in EFG Hermes were trading at EGP17.21 ($1.1) on the Egyptian Stock Exchange at the time of writing, 9.28-percent higher than its opening price on the local exchange on Wed., Feb. 9.
Since the start of the year, the company’s share price has risen from EGP14.71 ($0.93) to EGP17.21 ($1.1), representing a 17-percent gain for shareholders.
In the first nine months of 2021 its profit after tax increased from EGP840 million ($53.4 million) in the first nine months of 2020 to EGP1.05 billion ($67.1 million).
