Investment Banking
Overview
EFG Hermes’ Investment Banking division has fortified its regional flagship position in Merg- ers and Acquisitions (M&A) advisory, Equity Capital Markets (ECM), and Debt Capital Markets (DCM) deal executions, becoming the regional investment bank of choice for frontier emerging markets’ (FEM) partners and clientele. The Invest- ment Banking division continuously works toward expanding its geographical footprint, carrying out the majority of the largest, most prominent transactions in its focus markets. The division’s team houses the region’s most renowned profes- sionals who provide knowledge on key economic, industry, market, and company-focused insights through their extensive global and regional ex- pertise. Boasting a robust business model and a plethora of innovative, value-added product and service offerings, the Group’s Investment Banking division continues to steer the region with its solid on-the-ground presence and its exceptional track record. By 2021, ECM, DCM, and M&A transac- tions across the division’s footprint recorded a total of 41 deals, with an aggregate value of over USD 7.9 billion.
Operational Highlights of 2021
2021 was a turnaround year for global markets. As the world continued to navigate through the global pandemic, financial stability risks were sustained, on the back of the ongoing monetary and fiscal policy support, and the significant re- covery in global economic activity. ECM activity in emerging markets was relatively stagnant in the last few months of 2021, with extremely minimal early month gains. Market expectations for Fed policy tightening and tapering, paired with the uncertainty over the outlook for growth, supply- chain disruptions, and inflation created by the new Omicron variant, heavily weighed on investors’ risk appetite and dampened deal activity. However, in the GCC region, equity markets began signifi- cantly picking up in the third quarter of the year, with the region witnessing a substantial increase in IPOs, particularly in the UAE and KSA.
Throughout the year, EFG Hermes’ Investment Banking division successfully captured the substantial ramp up in GCC market activity, playing an active role in ECM, DCM and M&A transactions. As a result, the division completed a record-high 41 transactions at year-end 2021. Backed by 43 of some of the region’s highest caliber investment banking professionals, the division concluded advisory on a multitude of cross-border transactions throughout the year, having managed to successfully close 16 DCM transactions valued at USD 560.4 million, 12 ECM transactions valued at USD 4.9 billion, and 13 M&A transactions worth USD 2.4 billion.
The division’s performance was commemorated by numerous awards and accolades, including the “Best Debt Bank in Africa” and “Best Investment Bank in Frontier Markets” awards from Global Finance under the Best Investment Banks of 2021, the “Sukuk Deal of the Year” award from Global Finance under the World's Best Islamic Financial Institutions of 2021, “Most Notable Listing: Main Market” from the Saudi Capital Markets Award (SCMA), “Best Corporate Investment Bank in Egypt” from Asiamoney, “Egypt’s Best Investment Bank” from the EMEA Finance African Banking Awards for 2021 and “UAE’s Best Equity House” from the EMEA Finance Middle East Banking Awards for 2021.
As part and parcel of its strategy to further expand its footprint in the GCC region, EFG Hermes acted as joint bookrunner on the landmark USD 144 million IPO of Saudi Arabia’s water desalination company “Alkhorayef Water and Power Technologies”, as well as a joint bookrunner on the IPO of the Saudi-based car rental company “Theeb Rent a Car” worth USD 138 million. In the UAE, the Firm successfully completed advisory to Mubadala–owned “Al Yah Satellite Communications” (Yahsat), a leading fixed and mobile satellite services operator, on its AED 2.7 billion IPO on the Abu Dhabi Exchange (ADX), marking the first on the exchange since 2017. Another IPO in the UAE that gained high traction was that of “Fertiglobe”, the world’s largest seaborne exporter of urea and ammonia, and the MENA’s largest producer by production capacity at 6.5 million tons of urea and merchant ammonia. EFG Hermes advised the company on its USD 795 million IPO on the ADX, which was deemed one of the largest ever listings on the bourse, and the first ever listing of a free zone company onshore in the country. The Firm also completed advisory to “Abu Dhabi National Oil Company” (ADNOC) on the IPO of ADNOC Drilling Company PJSC (ADNOC Drilling), the largest national drilling company in the Middle East by rig fleet size, on its USD 1.1 billion offering on the ADX. In the Egyptian equity market, EFG Hermes successfully acted as financial advisor and bookrunner on the dual listing of “Integrated Diagnostics Holdings” (IDH) on the Egyptian Exchange (EGX) in the second quarter of 2021. The offering, which marked the first of its kind on the exchange, comprised of an accelerated equity offering portion worth USD 30 million, and aimed to increase the stock’s liquidity and to unlock untapped value.
In the M&A space, 2021 was an exceptional year for EFG Hermes’ Investment Banking division, with the Firm participating in landmark transactions across its regions of operation. The division successfully advised the UAE’s “Agthia Group” on two acquisitions, namely the cross-border acquisition deal of "Al Faysal Bakery & Sweets”, one of Kuwait’s leading industrial bakeries, and Egypt-based “Atyab”, for a total value of USD 153 million. The division also concluded advisory to Bank Audi S.A.L. on the sale of 100% of its wholly-owned Egyptian subsidiary, Bank Audi S.A.E., to First Abu Dhabi Bank PJSC (FAB), marking the largest M&A transaction in Egypt in the last five years. In the third quarter of 2021, the Firm acquired a 51% stake in the Arab Investment Bank (aiBANK), officially marking its strategic entry into the rapid-growing Egyptian commercial banking sector and transforming it into a universal bank in Egypt. Another high-profile cross-border M&A transaction for the year was EFG Hermes’ successful conclusion of advisory to American private equity platform “TPG” on the sale of a 50% stake in Base Consultancy FZ, the holding company of Pakistani diagnostics provider “Islamabad Diagnostic Center” (IDC), worth USD 72.35 million in December 2021, marking the Firm’s first ever M&A transaction in Pakistan.
In addition to the stellar performance across regional equity markets and the M&A space, the Firm’s Investment Banking division focused heavily on growing and developing its DCM capabilities and product offering in 2021, especially through securitization issuances. Securitization in particular is a new and nascent asset class in Egypt that has recently been gaining high interest from investors. EFG Hermes focused on offering key securitization issuances for clients in 2021, and successfully closed eleven securitization transactions with a combined value of USD 401 million. Landmark securitization transactions for the year included two securitization issuances worth USD 24.3 million for “Premium International for Credit Services”, a USD 44.7 million securitization issuance for “Amer Group” and “Qasatli”, three securitization issuances for “Talaat Moustafa Group” (TMG), the first securitization issuance worth USD 40 million for “Pioneers Properties” for Urban Development, and the first securitization issuance of USD 51 million for “Misr Italia Properties”. The team also acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and arranger on valU’s first USD 20.5 million securitization issuance, EFG Hermes Corp-Solutions’ first USD 50 million securitization issuance and SODIC’s USD 21.8 million securitization transaction.
2021 Deals
Throughout 2021, EFG Hermes booked an outstanding number of landmark deals across MENA and non-MENA frontier emerging markets.
Theeb Rent a Car IPO: Joint bookrunner on the USD 138 million initial public offering on Tadawul.
Alkhorayef Water IPO: Joint bookrunner on the USD 144 million initial public offering on Tadawul.
Integrated Diagnostics Holding (IDH) Accelerated Offering: Financial Advisor and bookrunner on the dual listing on the EGX, with an accelerated equity offering worth USD 29.6 million
Fawry Capital Increase/Rights Issue: Sole bookrunner and Financial Advisor on the USD 25.5 million capital increase through a rights issue on the Egyptian Exchange.
Al Yah Satellite Communications IPO: Joint bookrunner on the USD 731 million initial public offering on the Abu Dhabi Exchange.
Fawry Accelerated Offering: Sole Financial Advisor and Joint bookrunner on the USD 80 million accelerated equity offering of a 4.3% stake.
Geopost Accelerated Offering: Co-Financial advisor and sole bookrunner on the USD 383.2 million accelerated equity offering.
Fertiglobe IPO: Joint bookrunner on the USD 795 million initial public offering on the Abu Dhabi Exchange.
ACWA IPO: Joint bookrunner on the USD 1.2 billion initial public offering on Tadawul.
ADNOC Drilling IPO: Joint bookrunner on the USD 1.1 billion initial public offering on the Abu Dhabi Exchange.
Abu Qir Fertilizers Accelerated Offering: Joint bookrunner on the USD 143 million accelerated equity offering of a 10% stake.
Theeb Rent a car Accelerated Offering: Joint bookrunner on the USD 127.6 million accelerated equity offering of a 21% stake.
Hilal Cement MTO : Advisor to Heidelberg Cement on the sale of a 100% stake in its subsidiary Hilal Cement, through a mandatory tender offer (MTO) on the EGX worth USD 10 million.
Agthia Acquisition: Buy side advisor to UAE-based Agthia Group on the cross-border acquisition of Al Faysal Bakery & Sweets.
Foundation Holdings Sale: Buy side advisor to Foundation Holdings on the acquisition of Saudi-based Shifa Al Munthaza Polyclinic Company.
ADES Take Private: Take-private and delisting of ADES International from the London Stock Exchange in a transaction worth USD 178 million.
First Abu Dhabi Bank Sale: Sell side advisor to Bank Audi S.A.L (Bank Audi) on its sale of 100% of the share capital of its Egypt-based subsidiary, Bank Audi S.A.E, to First Abu Dhabi Bank PJSC (FAB).
Hayah International Academy Sale: Sell side advisor on Hayah International Academy’s sale to the Egypt Education Platform.
China Three Georges (CTG) Sale: Buy side advisor to China Three Gorges Corporation for the acquisition of 100% of Dubai-based wind and solar developer, Alcazar Energy Partners (AEP) worth USD 485 million.
Raya Contact Center Stake Sale: Buy side advisor to Raya Contact Center’s Acquisition of 100% of Bahrain-based Gulf CX in a Deal Worth USD 12.2 Million.
Agthia Acquisition: Buy side advisor to UAE-based Agthia Group on the cross-border acquisition of 70% of Atyab with a value of USD 153.4 Million.
aiBANK Acquisition: Concluded the acquisition of a 51% stake in aiBANK by EFG Hermes Holding alongside the Sovereign Fund of Egypt which acquired 25% of the bank.
SODIC MTO: Sell side advisor to Sixth of October for Development and Investment Company (SODIC) in the sale of 85.5% of its shares through a mandatory tender offer (MTO) to UAE real estate development company Aldar Properties and Abu Dhabi Developmental Holding Company (ADQ) worth USD 388 million.
Agthia Sale: Buy side advisor to UAE-based Agthia Group on the cross-border acquisition 100% in UAE health snacks company BMB Group at a value of USD 172 million.
TPG Stake Sale: Sell side advisor to TPG’s Evercare Group on the Sale of its 50% Stake in Islamabad Diagnostic Centre to Integrated Diagnostics Holding for a total consideration of USD 72.4 million.
ADES Investments Debt Arrangement : Worth USD 43.0 million.
Premium Card Securitization Program: The division acted as financial advisor, MLA, and underwriter on the USD 10.8 million fourth issuance and USD 13.4 million fifth issuance of a securitization program for Premium Card.
Amer Group/Qasatli Securitization Program: The division acted as financial advisor, MLA, and underwriter on the USD 44.7 million first issuance of a securitization program for Amer Group.
TMG Holding Securitization Program : The division acted as financial advisor, MLA, and underwriter on the USD 71.3 million second issuance, USD 28.3 million third issuance, and USD 49 million fourth issuance of a securitization program for TMG Holding.
National Printing Lease Financing: The division secured a lease financing for National Printing Company, a large Egyptian paper and packaging company, worth USD 24.8 million.
SODIC Securitization Bond : The division acted as financial advisor, arranger, manager, promoter, and co-underwriter of a USD 21.8 million securitized bond for Sixth of October for Development and Investment Company (SODIC).
valU Securitization Program: The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and arranger on the first issuance worth USD 20.5 million of a securitization program for valU, EFG Hermes’ Buy-Now, Pay-Later (BNPL) fintech platform.
Hermes Securities Brokerage Unsecured Bond: The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and arranger on the third issuance for Hermes Securities Brokerage, EFG Hermes’ wholly owned subsidiary, in a USD 35 million senior unsecured short-term note.
Misr Italia Properties Securitization Program: The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and sole arranger on the first issuance, worth USD 51 million, in Misr Italia Properties’ securitization program.
Pioneers Securitization Program: The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and sole arranger on the first issuance, worth USD 40 million, in Pioneers Properties for Urban Development’s EGP 3.0 billion securitization program.
EFG Hermes Corp-Solutions Securitization Program : The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and arranger on the first issuance worth 50 million of a securitization program for EFG Hermes Corp-Solutions, EFG Hermes’ leasing and factoring arm.
Key Financial Highlights of 2021
EFG Hermes’ Investment Banking division reported total revenues of EGP 494 million in FY21, reflecting a 108% increase compared to EGP 237 million in FY20.
2022 Outlook
Regional equity markets are expected to ramp up their activity next year, and the division aims to capture the upside of this recovery, both in the MENA region and in FEMs. As the GCC region strengthens its IPO activity, EFG Hermes Investment Banking grows more optimistic about the potential prospects in Saudi Arabia, the UAE, and Kuwait. In the MENA region, Egypt’s ECM activity is also looking to pick up, which is expected to develop and rejuvenate the movement of capital flow in the market and raise trading levels on the EGX.
EFG Hermes’ Investment Banking division has significantly expanded both, its product offering and geographic footprint over the years, breaking ground in some of the world’s most rapidly growing markets across various regions and filling the gap between Egypt and the GCC region by providing a plethora of compelling investment opportunities. In 2022, the division aims to continue building on its robust track record of successful achievements, with an eye to remain the regional investment bank of choice not only for its existing base of intra-regional clients, but also for international clients looking to access opportunities in compelling FEM markets.
A constituent element to the division’s growth strategy in 2022 is to capture a larger share of the DCM space and expand its footprint into more frontier markets. In Egypt specifically, the division aims to continue capitalizing on the high demand present in the market and growing its DCM activities, particularly through introducing more pre-funding deals, securitization transactions, and leasing products into the local market. EFG Hermes Holding also aims to continue capitalizing on the cross-selling deals between its other lines of business, with an eye to grant clients access to a broad range of funding solutions. Additionally, the Firm’s recent acquisition of aiBANK will enable EFG Hermes Holding to further offer its clientele a holistic range of financial products, targeted towards individual consumers, SMEs, and large corporations.