Overview
EFG Hermes’ Investment Banking division has grown into a regional leader in M&A advisory, ECM executions, and DCM capabilities, becoming the trusted partner for MENA and non-MENA FEM corporations, multinationals, and governments throughout the Arab world. The division is constantly expanding its reach, executing some of the largest and noteworthy deals across its geographical footprint. EFG Hermes Investment Banking deploys the largest and most diverse group of investment banking professionals in the region who bring deep understanding of companies, industries, markets, and economies with proven global knowledge. The team’s on-the-ground presence combined with a flexible business model that quickly adapts to changing market and macroeconomic dynamics have allowed the Firm to offer invaluable advisory to ever-growing client base.
In 2019, EFG Hermes Investment Banking deployed a three-pronged strategy to expand its deal count, bolster its DCM capabilities, and widen its geographical footprint with a specific focus on the evolving Saudi market. Over the last twelve months, the division advised on two LSE listings by non-MENA headquartered companies, a trend expected to continue as it receives new non-MENA mandates across its growing FEM footprint. In tandem, EFG Hermes Investment Banking continued to succeed in its home market of Egypt, capturing 100% of ECM deals in the country and successfully issuing the first short-term securitization transaction under the new Short-Term Debt Instrument (STDI) decree.
Operational Highlights of 2019
2019 was a challenging one for emerging markets, which have had to navigate shifting macroeconomic conditions made even more difficult when coupled with rising geopolitical tensions. Despite the volatility in global equity markets and the subsequent postponement of several public listings, the division still managed to book a record 22 transactions for the year, representing an aggregate value of USD 33.6 billion. Its success was recognized by multiple international awarding bodies this year, having been named Best Investment Bank – Middle East, Best Investment Bank – Egypt and Best Equity Bank in Africa by Global Finance Magazine. It was also named Best Investment Bank in MENA and Best Investment Bank in Egypt by Euromoney.
By leveraging improved efficiencies across the full spectrum of its operations, its growing network of strategic relationships, and improved execution capabilities, EFG Hermes’ Investment Banking team closed seven DCM transactions at a value of USD 462.2 million, nine ECM transactions worth USD 31.4 billion, and six M&A deals valued at USD 1.7 billion.
In May 2019, EFG Hermes Investment Banking concluded advisory on Finablr’s GBP 337 billion IPO on the LSE, acting as joint bookrunner in the global payment and foreign exchange solutions provider’s listing. The Firm also acted as joint bookrunner on the USD 749 million IPO of Arabian Centers’, the first Reg/144A offering out of Saudi Arabia. The landmark transaction, which was also concluded in May, was the second largest in the history of the kingdom and underscores the division’s commitment to expand business in Saudi Arabia.
In September, the division was pegged as joint bookrunner in Saudi Aramco’s highly anticipated IPO on the Tadawul Exchange, working alongside 15 international bulge bracket firms serving as joint global coordinators. The transaction marked the largest IPO in history, showcasing EFG Hermes’ ability to compete in global equity markets alongside other leading investment banks.
In line with EFG Hermes’ strategy to expand beyond its traditional MENA market, the Firm acted as joint bookrunner on Helios Towers’ USD 361.7 million IPO on the LSE. The listing of Helios Towers, the second concluded by the Firm in non-MENA FEM markets, demonstrates EFG Hermes’ unmatched ability to bookbuild and transact in non-MENA frontier markets by leveraging an unrivalled global distribution platform supported by world-class research, brokerage, and advisory services.
On the M&A front, the division completed advisory on LSE-Listed NMC Health plc’s joint venture with Hassana Investment Company. The deal, which was concluded in May, was EFG Hermes’ first M&A transaction in Saudi Arabia and the second consecutive Saudi deal in May 2019 following advisory on ACC’s IPO. At the start of the year, the division had also advised on the sale of Helwan Cement’s white plant to Emaar for EGP 694.5 million. Later in the year, EFG Hermes Investment Banking concluded Global Telecom Holding’s (GTH) sale of 1.9 billion shares in a mandatory tender offer (MTO) launched by majority shareholder VEON to acquire 42.3% of the company. The total purchase price for the shares stood at EGP 9.7 billion at EGP 5.08 per share, making it the largest MTO to date.
The Firm continued to be active on the home front as well, capturing a market share of 100% in the ECM space and advising on four initial public offerings and accelerated bookbuilds on the EGX. In August, the Firm concluded advisory on Fawry’s EGP 1.64 billion IPO. The electronic payments platform operator’s listing was Egypt’s first public offering in 2019 and marked a continuation of EFG Hermes’ track record of bringing new sectors to equity capital markets. Meanwhile, EFG Hermes successfully advised Al Ezz Dekheila Steel on its restructuring plans, a mandate that involved an MTO to acquire 100% of Ezz Rolling Mills for USD 424.0 million. The division also advised on the acquisition of a 56% stake in Ezz Flat Steel worth USD 129.4 million. EFG Hermes Investment Banking closed 2019 with the conclusion of a share purchase agreement between Japan-based Tokio Marine Group, GB Capital, and EFG Hermes Finance, which saw the sale of a 75% stake in Tokio’s Egyptian life insurance subsidiary Tokio Marine Egypt Family Takaful.
The team started the year with the EGP 1.7 billion offering of 4.5% of Eastern Company S.A.E., Egypt’s leading tobacco manufacturer, a highly anticipated deal that marked the first offering of a state-owned company on the EGX in more than a decade. Later in the year, the team successfully concluded the EGP 2.6 billion sale of 31.5% of Cleopatra Hospitals Group (CHG), Egypt’s largest private hospital group both by number of beds and operating hospitals. In September, EFG Hermes Investment Banking advised on the follow-on sale of 69.1 million shares by Ibn Sina Pharma S.A.E., representing 8.4% of the company’s shares on the EGX. EFG Hermes acted as sole bookrunner on behalf of the selling shareholders, the Abdelgawad Family, the Mahgoub Family, and the European Bank for Reconstruction and Development (EBRD).
2019 saw the division turn its focus towards developing its DCM capabilities and product offering. The division completed seven deals in Egypt and across the wider MENA region, supported by the introduction of a DCM-dedicated team. In October, the division completed Egypt’s first short-term securitization transaction under the new STDI decree, issuing an EGP 167 million bond on behalf of Premium International for Credit Services. This landmark transaction was not only the first of its kind from a tenor perspective, but also the first in the consumer finance industry. Similarly in December, the division completed Egypt’s first short-term bond transaction, arranging the issuance of EGP 400 million — the first tranche of an EGP 2 billion program. Throughout the year, the division also completed multiple other transactions including advisory on the issuance of a securitization bond for leading real estate player Madinet Nasr for Housing and Development.
Landmark Deals in 2019
Throughout the year, EFG Hermes concluded multiple landmark deals across MENA and non-MENA frontier emerging markets.
Arabian Centres IPO – Joint bookrunner on the USD 748.8 million Arabian Centers’ IPO, the first Reg/144A offering out of Saudi Arabia.
Fawry IPO – Advisory on Fawry’s EGP 1.64 billion IPO on the EGX, Egypt’s first public offering in 2019.
Finablr IPO – Joint bookrunner on Finablr’s GBP 337 million IPO on the LSE.
Helios Towers IPO – Joint bookrunner on the GBP 361.7 million IPO of Helios Towers on the LSE.
Global Telecom Holding MTO – Concluded GTH’s sale of 1.9 billion shares in a an MTO by majority shareholder VEON to acquire 42.3% of the company.
Cleopatra Hospitals ABB – Concluded an EGP 2.6 billion sale of 31.5% of CHG in an equity offering representing 503 million shares.
Eastern Tobacco Co. ABB – Advised on the EGP 1.7 billion offering, the first offering of a state-owned company on the EGX in more than a decade.
Edita Food Industries ABB – Sole bookrunner on the accelerated equity offering of Chipita’s 13.1% stake sale in Edita, amounting to USD 97 million.
Ibn Sina Pharma ABB – Sole bookrunner in the follow-on sale of 69.1 million (8.4%) shares of Ibn Sina Pharma S.A.E’s shares on the EGX.
Suez Cement Group – Advisory on the sale of Helwan Cement’s white cement plant in El Minya to Emaar Industries for EGP 694.5 million.
NMC Healthcare plc – Advisory on LSE-Listed NMC Health plc’s JV with Hassana Investment Company.
Orascom Development – Advised Orascom Development on the sale of its 87% stake in Tamweel Group for USD 21 million.
NUCA – Selected to be one of the managers of the first tranche of an EGP 10 billion bond securitization valued at approximately EGP 6 billion.
NBK Capital Partners (Debt Arrangement) – Arranged USD 5 million to finance the earn-out for an acquisition transaction.
TMG (Securitization) – Led the issuance of a three-tranche, EGP 498 million securitized bond for TMG.
Al Ezz Dekheila Steel – Advised Al Ezz Dekheila Steel on its restructuring plans, including the MTO to acquire 100% of Ezz Rolling Mills for USD 424 million and a 56% stake in Ezz Flat Steel worth USD 129.4 million.
Premium International for Credit Services – Issued an EGP 167 million bond on behalf of Premium International for Credit Services in a two-year program worth EGP 2.0 billion.
Madinet Nasr for Housing and Development – Led the issuance of a three-tranche, EGP 305.0 million securitized bond for MNHD.
Hermes Securities Brokerage – Executed Egypt’s first-ever short-term bond transaction on behalf of Group subsidiary HSB, arranging the issuance of EGP 400 million, representing the first tranche of an EGP 2 billion program.
Aramco IPO – Joint bookrunner on the IPO of Aramco on Saudi Arabia’s Tadawul, marking the largest IPO in history and displaying the Group’s ability to compete in global equity markets with the highest-profile investment banks.
Key Financial Highlights of 2019
The division reported total revenues of EGP 328 million in FY19, representing a 10% decrease compared to FY18 revenues of EGP 364 million. EFG Hermes Investment Banking fees and commissions contributed approximately 7% of EFG Hermes’ total revenue in FY19.