Nov. 8 (Bloomberg) -- Egypt’s Beltone Financial and Pioneers Holding agreed to merge in a share swap, aiming to create the biggest investment bank in the Middle East and North Africa. Shares of Pioneers surged as much as 13 percent.

Pioneers, Egypt’s second-biggest publicly traded securities firm, will raise its capital by 100 million shares, and privately held Beltone’s investors will have about 17 percent of the combined company, according to a statement today. Beltone Chairman Aly El-Tahry declined to discuss the deal’s value.

The combined bank will have “big critical mass, with all the tools for it to become the port of call” for investors in the region, El-Tahry said by phone from Cairo.

The deal combines Pioneers’ 30 offices in Egypt, Saudi Arabia, the United Arab Emirates, Syria and Bahrain with Beltone, which has 28.7 billion Egyptian pounds ($5.2 billion) of assets under management and an investment-banking business that concluded 34 deals worth 42.6 billion Egyptian pounds over the past five years, according to the firm’s October report.

Aladdin Saba will remain chief executive officer of Beltone, while Walid Zaki will remain Pioneers’ CEO, said Beltone’s head of investor relations Osama Rashad. Both will report to the board of the new, combined entity, he said. Both companies are based in Cairo.

Pioneers, whose services include investment management and fund administration, has had several failed attempts to expand this year. On Oct. 8, it canceled a bid to buy a Moroccan firm, saying the acquisition target failed to honor contractual agreements. In July, Pioneers said Standard Securities Co. refused a takeover offer.

Pioneers shares were up 8.4 percent to 7.40 pounds as of noon in Cairo. The transaction is subject to due diligence before it’s completed.

To contact the reporter on this story: Alaa Shahine in Cairo at asalha@bloomberg.net

Last Updated: November 8, 2009 05:17 EST