Sarwa shares fall nearly 10% after OIH stake acquisition: Sarwa Capital’s share price ended yesterday’s trading session at EGP 6.52, down 9.96% from its opening price of EGP 7.23 a share. The decline came after Orascom Investment Holding bought a 30% stake (c. 216 mn shares at EGP 7.36 per share) in the consumer- and structured- finance player on Monday — and marks the lowest close this month.

CLARIFICATION- In our coverage yesterday of the OIH-Sarwa transaction, we compared OIH (as a holdco) to EFG Hermes and CI Capital. That touched off a mini firestorm of calls / messages / emails from readers across the industry spectrum who quite correctly pointed out that (a) the investment banking industry isn’t the center of gravity of the non-bank financial services (NBFS) sector, (b) that even if it were, OIH isn’t exactly an investment bank and that (c) the term NBFS itself is just too broad to make our comparisons work. So why did we play it as we did?

Investment banks are Johnny-come-latelys to the NBFS party. GB Capital (which had a portfolio of about EGP 7.2 bn as of 9M18) is by most measures the largest NBFS player in the country and was established back in 2008 by GB Auto — not an investment bank. It has grown since to include microfinance, consumer finance and leasing. Corplease became the dominant player in the leasing industry well before it was scooped up by CI Capital in 2016. We could go on, but you get the point.

But we’re nerds on the periphery of finance, and that sometimes means we get high on our own supply. EFG Hermes touched off scramble among investment banks to diversify into NBFS (and thus smooth-out earnings). And as for OIH? Nope, not an investment bank — but it owns Beltone (by any measure a top three investment bank in Egypt in the ranks with EFG and CI) and now it owns a chunk of Sarwa, the industry leader in structured- and consumer-finance. OIH is a holdco, and it is holding Sarwa as an investment held at arm’s length. And Sarwa’s management certainly has a proven track record of keeping its head down and building a great business no matter who owns a big chunk of it (at various times, EAEF and CIB have both been shareholders). But that guy named Naguib Sawiris would just love to own a bank and … hence our interest yesterday.