Egypt’s Sovereign Fund & EFG Hermes ink deal to acquire 76% in Arab Investment Bank

By Shilpa Annie Joseph, Official Reporter
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The Sovereign Fund of Egypt (TSFE) and EFG Hermes Holding have signed agreements to acquire 76 percent of the Arab Investment Bank (AIB).

According to the company statement, the acquisition will be structured as a capital increase, bringing the Bank’s paid-in capital to $318 billion (EGP 5 billion) and bringing it in line with Egyptian Banking Law regulatory requirements.

Under the terms of the agreement, EFG Hermes will subscribe to 423 million newly issued shares of the Bank for $0.38 (EGP 6.03) per share, for a total value of $162 million (EGP 2.55 billion). TSFE will also subscribe for 207 million newly issued Bank shares at the same price per share, for a total value of $79 million (EGP 1.25 billion).

The National Investment Bank, which is currently AIB’s majority shareholder, will hold the remaining 24 percent after purchasing stakes currently held by minority shareholders (before the execution of the capital increase). The transaction was approved by the Egyptian Cabinet on May 19 but is subject to several conditions precedent, including the final approval of the Central Bank of Egypt.

Dr. Hala El Said
HE Dr. Hala El Said
Minister of Planning & Economic Development – Egypt
Chairperson – TSFE

“Completing the AIB partnership transaction underscores TSFE’s pivotal role in unlocking and maximizing the value of state-owned assets. This transaction complements Egypt Vision 2030’s third objective of achieving knowledge-based economic growth and digital transformation; increasing the resilience and competitiveness of the economy; increasing employment rates; improving the business environment, and realizing financial inclusion. AIB’s financial indicators will witness a substantial improvement, as will its competitiveness within the market. It will be better poised to comply with the Central Bank of Egypt’s regulatory requirements, drawing on the technical expertise available in TSFE and EFG Hermes, AIB’s new partners.”

“The transaction’s success is a result of the cooperation protocols TSFE signed with different state bodies including the National Investment Bank, benefitting from its large portfolio. It reflects the close collaboration between different state bodies, in coordination with the Cabinet, working towards attracting private investments to government projects,” Dr. El Said concluded.

Mona Zulficar, chairperson of EFG Hermes Holding said, “The signing of this landmark transaction has helped create a partnership between TSFE and EFG Hermes, the leading financial services corporation in frontier emerging markets, as we work together to unlock the potential of the Bank and help it play an increasingly active role in the Egyptian Government’s drive for financial inclusion and digital transformation in the coming years.”

The parties will immediately begin working on meeting the pre-conditions, with the deal scheduled to close in the third quarter of 2021, as per the reports.

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