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EFG-Hermes Targets Gulf Banking Deals as Egypt Falters

Oct. 28 (Bloomberg) -- EFG-Hermes Holding SAE, the Egyptian investment bank whose merger with Qatar’s Qinvest LLC collapsed in May, said it’s seeking deals in the Persian Gulf as political turmoil at home discourages foreign investors.

The Cairo-based bank is advising Dubai Group LLC on the $164 million sale of Dubai First to First Gulf Bank and Al-Futtaim Group on the $90 million acquisition of CMC in Kenya, Karim Awad, chief executive officer of the investment bank at EFG-Hermes, said in an e-mailed response to questions. It also worked on the listing of BLME Holdings PLC on Nasdaq Dubai.

The Arab world’s most populous country, which has yet to hold presidential and legislative elections following the ouster of former President Mohamed Mursi, has experienced its worst economic slowdown in two years amid the political upheaval. That comes as Gulf countries such as Saudi Arabia, the U.A.E. and Qatar report accelerating growth.

“Our home market has been impacted by political events that are out of our hands and we have therefore focused a lot of our energy on building a market share in the other regional markets where we are present,” Awad said. “The political situation is making a number of our clients bearish on Egypt.”

The bank is also advising “medium-size private investments” and mergers and acquisitions in Saudi Arabia that it expects to close during 2014, Awad said.

Cost-Cutting Plan

EFG-Hermes is “optimistic” it will achieve its target of 500 million Egyptian pounds ($73 million) of cost cuts for 2014 and expects to be able to generate more of its revenues from the Gulf Cooperation Council in the future, he said.

The bank’s planned merger with Doha-based QInvest collapsed because of delays in getting Egyptian regulatory approvals. EFG-Hermes recently completed another round of employee cuts and sold unused premises in Giza, though Awad said it’s “under no pressure” to sell non-core assets.

QInvest earlier this month said it’s reorganizing its business into investment banking, principal investments and asset management units. The bank is lead by former Goldman Sachs Group Inc. executive Tamim Hamad Al-Kawari.

EFG-Hermes shares fell 2.2 percent to 7.95 pounds at 2:30 p.m. in Cairo. The stock plunged 13.4 percent this year compared with a 11 percent gain by the benchmark EGX 30 Index.

To contact the reporter on this story: Tamim Elyan in Cairo at telyan@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net; Tarek El-Tablawy at teltablawy@bloomberg.net

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