Billionaire Sawiris Takes Second Shot at EFG-Hermes Stake

Egypt’s markets regulator is giving billionaire Naguib Sawiris a shot at fulfilling a promise to reinvest in his home country under the new political leadership.

The Egyptian Financial Supervisory Authority said yesterday it approved a 1.83 billion Egyptian pound ($256 million) offer by Sawiris and Cairo-based Beltone Financial Holding to buy about 20 percent of EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank. EFG-Hermes, also based in Cairo, was unchanged today at 15.35 pounds, having climbed 17 percent since Sawiris’s offer was announced June 5.

It marks his second attempt to buy a stake in EFG-Hermes after the bank’s shareholders opted for a tie-up with Qatar’s QInvest LLC at the time of his first bid two years ago. EFG-Hermes’s merger plans with QInvest also failed after the banks failed to win approval from the regulator, known as EFSA.

“Naguib Sawiris has said he’s interested in investing in Egypt, and taking a stake in a regional investment bank is an easy investment to make,” Angus Blair, founder of Signet Institute, a Cairo-based research and consulting group, said by phone from the Egyptian capital. “I’m not sure it’ll be an easy purchase for him because EFG-Hermes remains relatively tightly held.”

If successful, Sawiris will own 17.82 percent of the lender, making his New Egypt Investment Fund BV the bank’s biggest shareholder, according to data compiled by Bloomberg. EFSA blocked a buyout bid for EFG-Hermes by Sawiris-backed Planet IB in 2012, before shelving a similar offer by QInvest.

Beltone will ask EFG-Hermes to buy it once the deal is done, according to the joint offer statement with New Egypt published by EFSA today. The proposal isn’t binding and the bidders won’t be allowed to vote on the matter if they get a seat on the investment bank’s board, EFSA Chairman Sherif Samy said by phone today from Cairo. EFG-Hermes said June 10 it doesn’t favor consolidation with any of its competitors in Egypt.

Sawiris Investment

In December, five months after the military ousted Islamist President Mohamed Mursi, whom Sawiris publicly opposed, he pledged to invest $1 billion in the country. Investor appetite is returning after former army chief Abdel-Fattah El-Sisi took office as president this month.

Sawiris, who set up a secular party and contested previous parliamentary elections, has sold most of his telecom businesses in Egypt since political turmoil erupted in 2011. He remains in control of Orascom Telecom Media & Technology SAE, which operates mobile phone networks in North Korea, Pakistan and Lebanon.

The deal won’t be executed unless Sawiris’s bid gets all the stock it’s targeting, EFSA’s Samy said yesterday. Beltone would own about 2 percent of EFG-Hermes, according to the offer.

Job Cuts

EFG-Hermes said yesterday it appointed HC Securities & Investment to advise on the bid, according to a statement from the company. The 16 pounds per share-offer must be publicized in two newspapers within two days of the go-ahead, after which it will remain open for 10 working days, EFSA said.

The investment bank, which had a record 540 million-pound loss in 2013, has been implementing a cost-cutting plan that included job cuts, the sale of Dubai-based jeweler Damas International Ltd. and most of its stake in Egyptian real estate developer Six of October Development & Investment Co.

Beltone retreated from a record high 35.03 pounds yesterday, falling 3.9 percent at the close in Cairo.