EFG-Hermes Holding SAE posted its biggest gain in three weeks after the largest publicly traded Arab investment bank started talks with Qatar’s QInvest LLC to form a joint-venture investment bank.
Shares of the Cairo-based company jumped 5 percent, the most since March 5, to 13.43 Egyptian pounds at the 2:30 p.m. close in Cairo. That brought the stock’s gain this year to 34 percent. The benchmark EGX 30 Index fell 1.1 percent to 4,908.43, the lowest level since Feb. 12.
The partnership would include securities brokerage services and asset management, as well as investment banking, EFG-Hermes said in a Regulatory News Service filing today. QInvest, a unit of Qatar Islamic Bank, already operates in the target markets, which include the Middle East, Africa, Turkey, southern Asia and southeast Asia.
“The rally is coming on the back of the possible tie-up with QInvest,” Omar Darwish, equity sales trader at Cairo-based Commercial International Brokerage Co., said by telephone. “Whether it lasts in the short term is speculative, but the news is good for the company in the long term and it’s helping pick up the market today from its intraday low.”
EFG-Hermes Chief Executive Officer Yasser El-Mallawany said in January his company is “adopting a very aggressive cost-reduction plan” to counter the effects of the decline in regional stock markets because of political unrest over the past year. The company’s third-quarter profit plunged 64 percent to 32 million Egyptian pounds ($5.3 million). The investment bank’s revenue slumped 38 percent.
If an agreement is reached, the new company will seek to “play a vital role in the flow of foreign capital” into the region and enable Arab investors to participate in investment opportunities, EFG-Hermes said in the statement. Its private-equity business is excluded from the negotiations.