Billionaire's Investment Banking Foray Bets on Egypt Revival

  • Sawiris sees no regulatory objections to the buyout deal
  • Orascom Telecom Media shares advance most in six weeks

Egyptian billionaire Naguib Sawiris expects his acquisition of two investment banks to pay off with the recovery of the country’s battered economy, allowing him to challenge EFG-Hermes’ dominance in the financial services’ industry.

Sawiris, in an interview in Cairo on Sunday, said he will complete the purchase of CI Capital Holding this month to create Egypt’s second-biggest investment bank. The 924 million Egyptian-pound deal ($118 million) is in "execution mode" after the share-purchase agreement was signed, he said, adding that he sees no regulatory objections. Shares of Orascom Telecom Media & Technology, Sawiris’ investment arm, advanced the most in six weeks.

The acquisition comes about four months after the company paid more than 600 million pounds for Beltone Financial Holding SAE, another Egyptian investment bank, even as the nation reels under a dollar shortage fueling speculation that policy makers will be forced to devalue the currency.

"There’s a major crisis in the economy," Sawiris said. "If you believe that when things get really bad, that’s when they start to get better, it’s the right time to" invest, he said. "The end game is definitely to create the largest player in Egypt."

Economic Growth

The government has cut its economic growth forecast for the current fiscal year to about 4 percent from 5 percent after the downing of a Russian passenger jet last year battered tourism.

Finance Minister Hany Kadry Dimian also said last month the budget deficit may range between 11 percent and 11.5 percent of gross domestic product in the year that ends June 30. Egypt’s benchmark stock index has tumbled more than 35 percent over the past 12 months, the world’s worst performer after Ukraine’s gauge.

The deteriorating outlook hasn’t deterred Sawiris. He said the acquisition of CI Capital is “purely a market opportunity because the investment, brokerage and asset management scene in Egypt was divided into one big player and lots of small and medium-sized fraction players."

Egypt’s biggest investment bank is EFG-Hermes, which has in the past rebuffed offers from the billionaire.

Expansion

Sawiris said he plans to merge Beltone and CI Capital to create a company that controls about 25 percent of brokerage business in Egypt and will seek to expand regionally and internationally.

The investment bank would also benefit from having Orascom Telecom Media as its main shareholder because it gives clients “assurances that there’s someone with deep pockets that could participate” in fundraising activities such as buying shares in an initial public offering, Sawiris said.

OTMT climbed 5.3 percent on more than twice the stock’s average volume in the last three months. The advance trimmed its losses this year to 15 percent.

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