EFG Hermes' strategic partnership with QInvest injects $250m of FDI into the Egyptian economy
The agreement helps restore confidence in the Egyptian investment environment and will pump more liquidity into the Egyptian capital markets
Cairo, 3 June 2012
EFG Hermes Holding S.A.E. ("EFG Hermes Holding" or the "Company") is pleased to announce that the Company's shareholders', including its primary shareholders; Abu Dhabi Investment Authority and Dubai Financial Group, have overwhelmingly voted in favour of all the items on the agenda of its Extraordinary General Assembly Meeting ("EGM"), paving the way to implement the strategic alliance with QInvest . The resulting joint venture company, EFG Hermes Qatar, will be 60% owned by QInvest and 40% owned by EFG Hermes.
Commenting on the transaction Mona Zulficar, EFG Hermes Holding Chairperson said, "This strategic alliance will boost the Egyptian economy with foreign direct investment of $250 million and will play a vital role in restoring investors' confidence in Egypt's economic environment that has been negatively impacted by the recent political upheaval. The joint venture will potentially play a pivotal role and will be a strong catalyst for speeding up the pledged investments from the Gulf countries, potentially bringing in huge amounts of foreign currency investments into the Egyptian economy."
According to Zulficar, EFG Hermes has been advised for the past two months by J.P. Morgan, a top-tier global financial advisory firm and Freshfields, a leading international law firm. As a result of the transaction, the proceeds will be utilized to distribute a dividend of EGP 4 per share, representing a dividend yield per share of 36%, in the form of actual annual profits, capital gains, retained earnings and capital reduction, she added.
Zulficar pointed out that after reaching the required quorum in the EGM, the shareholders approved to enter into a strategic alliance with QInvest that would see a transfer of ownership of a number of subsidiaries currently held by EFG Hermes. These include the Brokerage, Research, Asset Management, Investment Banking and Infrastructure Fund businesses along with all the tangible and intangible assets necessary to carry out these businesses and the brand name of EFG Hermes, to EFG Hermes Qatar. Such businesses within the perimeter have contributed 14.6% and 24% to the total EFG Hermes Holding revenues in 2011 and 2010 respectively (an average of 19.13%). "This partnership will not, by any means, affect the legal or financial arrangements between the Company and other third parties whether individuals or corporations," she emphasized.
As part of their resolutions presented, shareholders have voted in favor of the transfer of 60% of the seed capital of the asset management business to QInvest at market value on the date of closing.
In addition, shareholders' have approved the valuation report presented by the Independent Financial Advisor, which has been approved by the board of directors by virtue of its meeting held on May 29, 2012, and approved by the company's auditor, concerning the fair value of a number of companies subject to the strategic alliance
Furthermore, the shareholders have authorized the EFG Hermes Board of Directors to exercise a put option granted by QInvest to sell the remaining 40% shareholding in the EFG Hermes Qatar to QInvest in accordance with the terms and conditions of the agreements entered into with QInvest for a consideration of EGP 1 billion. In addition, shareholders' have authorized the board of directors to grant QInvest a call option to acquire from EFG Hermes the remaining 40% interest owned in EFG Hermes Qatar pursuant to the terms and conditions of the agreements entered into with QInvest in a consideration of USD 165,000,000 (with a maximum value to the purchase price). Such call and put options will be exercisable during the period starting the 12th month until the 36th month following the date of the approval of the board of directors on the strategic alliance with QInvest .
When asked about the news covered in various media outlets regarding the Planet IB Ltd. intention to launch a tender offer to acquire 100% of EFG Hermes Holding shares, Zulficar replied, "EFG Hermes has received from Planet IB Ltd two letters, dated 30/5/2012 and 1/6/2012. The letters were read to the shareholders at the beginning of the EGM. They stated that Planet IB were offering to acquire EFG Hermes Holding shares at a minimum price of EGP 13.5 per share. Such offer is conditional to the completion of legal, financial and technical due diligence during a period of 60 days." "The letters did not provide any legal commitment or guarantee to EFG Hermes Holding nor to its shareholders to conclude such tender offer. Additionally, no proof to availability of funds has been presented to the Company nor any information about the identity of the investors who will provide the necessary funds for the tender offer," She added.
Planet IB Ltd should have filed its tender offer to the Egyptian Financial Supervisory Authority under the provisions of Chapter XII of the Executive Regulations to the Capital Market Law no. 95 for the year 1992, regardless the approval of the Company's shareholders, general assembly, or the management."