EFG Hermes Frontier
In 2019, EFG Hermes’ Frontier division witnessed another year of growth, further solidifying its presence across existing and new frontier markets in the midst of shifting market, macroeconomic, and geopolitical dynamics. FEM economies faced multiple economic and political challenges over 2019, including continued tensions between China and the US over trade tariffs, Iran-GCC tensions, fluctuating oil prices, and an overall slowdown in the global economy. 2019 was also characterized by a reversal of trends seen in 2018 as central banks across both developed and emerging markets opted for widespread rate cuts, with FEM economies expected to benefit from lower rates in the US and other developed markets. Against this backdrop, FEM markets where the division operates reported a second year of subdued volumes and general illiquidity.
Despite these generally adverse market dynamics, EFG Hermes Frontier advised on multiple key transactions throughout the year, while expanding its on-the-ground presence by strengthening its network of analysts and traders. Its successes garnered the Firm a number of accolades, including top frontier market brokerage house on the 2019 Extel Survey for the second year running, the second-highest ranked house in the Middle East and North Africa, and, for the second time in as many years, the leading Africa (Ex-South Africa) Equities House by the Financial Mail.
Sub-Saharan Africa
In Kenya, the division reported a second year of outstanding results. EFG Hermes now stand as the second-ranked brokerage player in the country just two years after entering the market. Despite fluctuating volumes in the Kenyan market, the division tripled its market share during year, supported its ability to capture the majority of trades following the MSCI rebalancing. Also in 2019, the team launched a fixed income desk in the country and worked to map and onboard clients.
In Nigeria, EFG Hermes concluded the acquisition of Nigerian brokerage house Primera Africa in February and commenced operations in the country in March. Leveraging EFG Hermes’ expertise and Primera Africa’s on-the-ground presence in the country, the Firm secured a third-place ranking and a market share of 26.2% by year-end 2019. In November, the division successfully executed its first ECM transaction in the country with a USD 30 million accelerated bookbuild for Zenith Bank PLC.
In October, EFG Hermes successfully completed the GBP 361.7 million offering of Helios Towers on the London Stock Exchange (LSE). The telecom tower infrastructure company’s IPO is EFG Hermes’ second frontier emerging market IPO following the successful offering of ASA International in 2018, and demonstrated the division’s ability to bookbuild and transact across its FEM footprint by leveraging an unrivalled global distribution platform and the support of the Firm’s world-class research and brokerage divisions.
South and Southeast Asia
In 2019, EFG Hermes partnered with Asia Commercial Bank Securities (ACBS) of Vietnam, the securities trading arm of Asia Commercial Bank, a leading commercial bank in the country. Under this landmark agreement, the Firm’s clients will receive on-the-ground access and intelligence to trade on the Hanoi stock exchange, the Ho Chi Minh City Exchange, and UPCOM – some of Asia’s most compelling capital markets. EFG Hermes is now the first FEM investment bank to establish an on-the-ground presence in Vietnam, an increasingly important destination for global investors given the size of the market and its liquidity. Following the official signing of the partnership agreement in May 2019, the division immediately began strengthening its team in the country by hiring two new traders. The partnership allowed EFG Hermes to expand its access across the continent, building trading capabilities in India and the Philippines.
The division embarked on an extensive restructuring program for its Pakistani operations in the face of mounting challenges for the market, including rising interest rates, fluctuating oil prices, a depreciating currency, and political tension with India weighing down on total trades executed. Nonetheless, rising participation from international investors in the second half of the year saw the division post solid performance for 2019 with its market share rising to 6.2% for the year. In Bangladesh, EFG Hermes Frontier maintained the largest market share among international institutional investors trading the market.
In November 2019, EFG Hermes successfully completed advisory to Pakistan’s United Bank Limited (UBL) on the sale of the assets and liabilities of its Tanzanian subsidiary, UBL Tanzania (UBLT), to Exim Bank Tanzania Limited. The advisory is EFG Hermes’ first cross-border M&A transaction in East Africa since entering the Kenyan market in 2017.