The Sovereign Fund of Egypt, EFG Hermes sign agreements for acquisition of Arab Investment Bank
The Sovereign Fund of Egypt (TSFE), and EFG Hermes announced they have executed agreements to acquire 76% capital of Arab Investment Bank (AIB). The acquisition will be structured as a capital increase that will increase the paid-in capital of the Bank to EGP 5 billion, making it compliant with the regulatory requirements of the Egyptian Banking Law.
Under the terms of the agreement, EFG Hermes will subscribe to 423 million newly issued shares of the Bank at a price per share of EGP 6.03 and a total value of EGP 2.55 billion. At the same time, TSFE will subscribe to 207 million newly issued shares of the Bank at the same price per share, for a total value of EGP 1.25 billion.
Following the execution of the capital increase, EFG Hermes will become the largest shareholder of AIB with a stake of 51%, while TSFE will become the second-largest shareholder with 25%. The National Investment Bank, which is currently the majority shareholder of the Bank, will hold the remaining 24% after purchasing stakes currently held by minority shareholders (prior to the execution of the capital increase).
The transaction received the approval of the Egyptian Cabinet on Wednesday, 19 May, but is still subject to the fulfillment of a number of conditions precedent, including the final approval of the Central Bank of Egypt.
H.E. Dr. Hala El Said, the Minister for Planning and Economic Development and Chairperson of TSFE said, “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.”
Mona Zulficar, the Chairperson of EFG Hermes 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. I am also hopeful that it will set the mold for future cooperation between the Egyptian private sector and TSFE.”
Ayman Soliman, the CEO of TSFE said, “The partnership with EFG Hermes in AIB aims to capture compelling growth opportunities in the Egyptian banking sector. Driven by the strong commitment of the Egyptian Government towards boosting financial inclusion and digital transformation as a driver to serve wider segments of the society, AIB is now well-positioned to become a significant catalyst of this goal. Furthermore, this partnership embodies TSFE’s mandate of attracting local and international private-sector investors to state-owned assets and maximizing returns for future generations.”
Karim Awad, CEO of EFG Hermes said, “We are thrilled to be partnering with TSFE on one of their first investments. The acquisition of a controlling stake in AIB represents a strategic milestone for the company, transforming us into a universal banking platform that offers its clients a full spectrum of financial services. As a company, we continue to be extremely bullish about what the future holds for Egypt and are proud to be committing a multi-billion pound investment in our home market in a vital sector that holds significant potential for future growth.”
The parties will begin working on the fulfillment of the conditions precedent immediately, with the transaction expected to close in the third quarter of 2021.