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Sunday, 17 April 2022

FAB drops its bid for EFG Hermes. Plus: Incolease, Mondi in transactions.

Emirati lender First Abu Dhabi Bank (FAB) has dropped its bid for a majority stake in leading financial services corporation EFG Hermes, it said in a statement Thursday, citing “ongoing global market uncertainty and volatile macro-economic conditions.”

FAB first made its offer for EFG Hermes in February, when it proposed buying a controlling stake for EGP 19.00 a share, valuing the bank at EGP 18.5 bn (c. USD 1.2 bn). FAB said at the time that the transaction would help strengthen its offering and regional presence. The Emirati bank purchased Bank Audi Egypt last year, making it one of Egypt’s largest foreign banks in terms of assets.

Are regulatory delays really to blame? That’s the question raised by Bloomberg, which claims Egypt’s financial market regulator was “slow and imposed new demands” on FAB, citing unnamed people familiar with the matter. The lender would have been unable to finalize the acquisition within a planned timeframe, Bloomberg writes.

“Egypt remains a strategically important market for FAB,” the bank said, adding that it “will continue to “invest in the growth of its well-established partners and operations in Egypt.”

EFG Hermes’ shares fell 20% to EGP 15.46 during trading on Thursday. The EGX briefly suspended trading of the bank’s shares twice after the stock price fell 10% following news of FAB’s withdrawal. FAB shares fell 3.2% on Thursday, and closed down 6.7% for the week at AED 22.30 on Friday, according to data from the ADX.

This came the same week as Abu Dhabi wealth fund ADQ invested USD 1.8 bn in several EGX-listed companies. The fund purchased government-held stakes in five companies including lender CIB and fintech player Fawry under an agreement with the Egyptian government to help us cope with fallout from Russia’s invasion of Ukraine.


Four state-owned institutions exit 38.7% stake in Incolease: A consortium made up of Banque Misr, Misr Ins. Holding (MIH) and its subsidiary Misr Life Ins., and the National Investment Bank (NIB) has sold its 38.7% stake in the International Company for Leasing (Incolease) for a total of EGP 316.9 mn, the consortium announced in a statement (pdf), without disclosing who bought the shares. The transaction values the company at around EGP 819 mn, by our calculations. Bank officials did not respond to a request for comment yesterday.

Incolease shares have seen a lot of activity lately: Palm Hills Developments in March bought another 13.7% in Incolease in two separate transactions, upping the developer’s stake in the leasing firm to some 15.4%. El Tarek Automotive also acquired a 23% stake in Incolease in March. PHD, El Tarek, and the Banque Misr consortium all paid the same price of EGP 41 per share in the transactions.

Packaging group Mondi has acquired two of Lafarge Cement Egypt’s paper production assets, National Bag and Egypt Sack, for an undisclosed sum, it said in a press release on Wednesday. The acquisition would raise Mondi’s paper bag capacity by around 150-180 mn bags annually and boost the group’s position in the industry in Egypt. Per a long-term supply agreement, Mondi will also become “a key supplier” of paper bags to Lafarge Cement Egypt.

Mondi already operates two plants in Egypt, and has made a series of acquisitions to consolidate its market position in recent years, including the purchase of two paper bag lines from Helwan Cement Company and InterCement Sacs in 2020.

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