Last checked at 8 May 2012 07:00
EFG Hermes and QInvest enter into a definitive agreement to create the leading investment bank in the Arab world and beyond
EFG Hermes Holding S.A.E ("EFG Hermes") and QInvest L.L.C. ("QInvest") announced that they have entered into a definitive agreement involving EFG Hermes' Brokerage, Research, Asset Management, Investment Banking and Infrastructure Fund businesses (the "Business"). Pursuant to the agreement, EFG Hermes and QInvest will enter into a joint venture at the level of EFG Hermes Qatar LLC ("EFG Hermes Qatar" or the "JV Company"), to be 60% owned by QInvest and 40% owned by EFG Hermes. The JV Company shall be the entity holding the Business post-closing. This announcement follows the initial press release on March 26, 2012, when the two parties agreed to explore a potential strategic alliance with the aim of creating a leading investment bank with operations in the Arab world and beyond, comprehensively covering the Middle East, Africa, Turkey and South and South East Asia.
EFG Hermes' position as the largest provider of investment banking, asset management and brokerage services across the Arab world will be strongly complemented by QInvest's financial strength and client base. The aim will be to offer an enhanced product offering to QInvest's extensive corporate and private client base in Qatar and the GCC region and to use the combined platform and resources to expand the joint venture's reach into the fast growing regions of Sub-Saharan Africa and South and South East Asia. QInvest's clients will benefit through the developed platform of EFG Hermes from direct access to the investment bank's services in markets across the Arab world, as well as to trading platforms on the major Arab exchanges.
The joint venture will provide a strong catalyst for the further development and deepening of the MENA financial markets and their interconnection with the rapidly growing nascent markets in Africa and South and South East Asia as well as Turkey. The joint venture will also facilitate cross-border capital flows and enable international investors and corporates to actively participate in the economic development of the region.
As a result of the transaction, QInvest will inject US$250m in the form of a capital increase at the level of EFG Hermes Qatar that will be used in consideration for transferring the Business to the JV Company. EFG Hermes will have the right to sell its entire 40% shareholding in the JV Company to QInvest at any time during the period between 12 to 36 months from signing of the transaction at a price of EGP 1,000m (c.US$165m). QInvest will have the right to acquire from EFG Hermes its entire 40% shareholding at any time during the period between 12 to 36 months from signing of the transaction at the higher of US$165m or fair market value at the time of the exercise subject to a cap. At closing QInvest will also acquire from EFG Hermes 60% of the seed capital of the asset management business at market value.
Closing is conditional on shareholder approval at the general assembly of EFG Hermes and the receipt of relevant regulatory approvals. The transaction is expected to close in the third quarter of 2012. The JV Company will operate under the EFG Hermes brand name and will be led by Karim Awad and Kashif Siddiqui as Co-CEOs, who are currently Head of Investment Banking and Head of Asset Management respectively.
Following the closing of the transaction, EFG Hermes will recommend to its board of directors an EGP4 special dividend per share.
EFG Hermes was advised by EFG Hermes Investment Banking, J.P. Morgan and Freshfields, QInvest was advised by Goldman Sachs International, QInvest Investment Banking and Hogan Lovells.