Dear Shareholders,
I think we can all agree that the world is currently facing significant challenges that are creating an environment of uncertainty affecting our day-to-day lives and the way we do business. Whether it is political change across the globe, climate change or economic change, we find ourselves in a situation where optimistic growth forecasts have given way to contingency plans on how to survive what economists are calling ‘the worst year of growth since 2009.
Despite the doom and gloom that we see on the news, I take comfort in the fact that we at EFG Hermes have been here before, and we have survived to see another day. In fact, I can proudly say that over the years, we have built an organization that has been able to withstand challenges and come out even stronger.
The past year marked the 35th anniversary of EFG Hermes, a company that I first became familiar with in 1984. As a young lawyer, I was tasked with the job of completing the legal incorporation and commercial registration of what was then a small financial services consultancy between three partners including our founder, the late Dr. Mohamed Taymour.
The Egyptian Financial Group (EFG), as they were called at the time, came into being during an era when private sector investors and institutions in Egypt needed professional advice in raising funds and negotiating with the banking sector that was dominated by public sector banks. Eight years later after the passage of the 1992 Capital Market Law in Egypt, I was once again a part of the Firm’s history when I was tapped to advise EFG on the legalities of forming a brokerage arm and establishing an asset management business.
Since then, I have been heavily involved with the Firm, either in my capacity as legal advisor on all the major investment banking transactions that have been executed by EFG Hermes, and also by Fleming CIIC before the two entities merged, or as Chairperson of the EFG Hermes Foundation, a position that I was pleased to accept on a pro bono basis in 2006, and finally as the non-executive Chairperson of EFG Hermes Holding in April 2008.
Barely a year into my new role as Chairperson, a position that I felt confident and comfortable occupying since I had grown up professionally with the Firm since inception and was quite familiar with its business, we were hit with the global financial crisis followed by two revolutions in our home market of Egypt in 2011 and 2013. At one point, due to some fundamental changes in management, I found myself tasked with more than my fair share of duties and responsibilities. My first priority was to protect the Firm from the external political and economic turmoil. I also felt that it was my mission to support the younger generation that had grown up in the Firm, to take over management and develop a new strategy that would surgically address the challenges and be consistent with the realities of the day.
They stepped up to the task beautifully and restructured EFG Hermes from a company pursuing a universal banking model into a fully-fledged financial services corporation, a move that has served us well and helped create a buffer against market volatility. We began our foray into non-bank financial services in 2015 by offering much-needed leasing services through our subsidiary EFG Hermes Leasing and then we continued to expand the NBFI platform (EFG Hermes Finance) with the 2016 acquisition of Tanmeyah Microfinance, Egypt’s largest private-sector microfinance company.
I am very proud of the way that EFG Hermes Finance has rapidly expanded in less than five years to become a market leader with subsidiaries in leasing, microfinance, factoring, mortgage and insurance, as well as consumer finance through our award-winning fintech solution valU. The newly outlined strategy was a very important milestone that literally reinvented EFG Hermes as a much larger entity with a broader product offering. Today, we see the rest of the market following our lead.
While we grew our NBFI platform, we simultaneously expanded our geographic footprint as an investment bank with a physical presence beyond the Arab world into North America, Europe, Africa, and Asia, where we are already starting to develop a strong presence and a winning track record. Currently, we are uniquely positioned in thirteen markets spread across four continents.
If we look at our achievements in 2019, it is clear that we have truly become a global business. We were the joint bookrunners on the largest equity offering in history, Saudi Aramco’s historic USD 29.4 billion IPO on the Tadawul. We completed our first ECM advisory to a company in Sub-Saharan Africa, Helios Towers, a leading telecom tower infrastructure company that listed its shares on the London Stock Exchange (LSE), and we followed by concluding an accelerated book build for Zenith Bank (Nigeria) on the Nigerian Stock Exchange. The year also witnessed the conclusion of our first frontier M&A with our advisory to Pakistan’s UBL’s sale of its Tanzanian subsidiary.
In our home market of Egypt, we continued to play a pioneering role, particularly in developing the debt market. We were the first issuer of both short-term bonds and short-term securitization under the new regulation passed by FRA in late 2018. We participated in all of the major transactions that took place on the EGX including the groundbreaking Fawry IPO and the accelerated book build for Eastern Company, the first public sector ECM offering in Egypt in recent years.
Our securities brokerage maintained its number one position in five MENA markets but this year we also became market leaders in Kenya where we ended 2019 as number two and Nigeria where we were ranked 3rd in market share of executions on the stock exchange. All of these milestones mean that we have proven our ability to function and excel in different ecosystems and different cultures.
Not only have we survived the upheavals of the past 35 years, we survived and became a more resilient and agile institution. Today we are in a much better position to withstand the threats that may be coming our way as a result of COVID-19 and the global economic headwinds that are already rocking markets worldwide.
We are of course doing our part to ensure that our employees, clients and communities across the globe remain safe and that moral and ethical considerations remain at the core of our business decisions. We are a people-oriented company first and foremost, and we are proud to be amongst a handful of sustainable businesses in our region that have taken the concept of impact investing to a whole new level. With private equity investments in renewable energy, education, and healthcare, we apply the principles of the United Nations Sustainable Development Goals (SDGs) in our strategy, policies, and the daily administration of our business across the board.
Eleven years into my tenure as Chairperson, I can truly say that it has been one of the great challenges of my career to date. I have been honored to watch this company grow from a six-man team in the 80s to the leading financial services firm in frontier emerging markets with a team of more than 4,400 remarkable professionals.
I would like to take this opportunity to thank our Board of Directors who are all recognized experts in their respective fields, generously adding value to the progress of the company. I am very grateful for their continued contribution to the success of EFG Hermes. I am also extremely proud of our management and the talented employees who have made EFG Hermes into the company that it is today, a flagship not only for Egypt but also for the entire region. I am confident that we will continue to be leaders in the markets we tap because of the commitments we have made to sustainability and to creating value for all our stakeholders.