x Abu Dhabi, UAEFriday 19 January 2018

Dubai Group to trim EFG-Hermes stake

Dubai Group is looking to sell a US$91 million stake in EFG-Hermes Holding, the Egyptian investment bank.

Dubai Group is looking to sell a US$91 million (Dh334.2m) stake in EFG-Hermes Holding, the Egyptian investment bank, according to two people familiar with the sale. Dubai Financial, a finance arm of Dubai Group, is offering about 19.1 million shares valued at between 25 Egyptian pounds (Dh16.7) and 26 pounds each, one of the people familiar with the sale said, Bloomberg reported yesterday.

Shares in EFG-Hermes, the largest publicly traded Arab investment bank, fell to their lowest level since August as a result of the news. EFG shares fell as much as 7.2 per cent in trading on the Cairo bourse, valuing the company at 10 billion Egyptian pounds. The US bank Citigroup was managing the sale, which would reduce the state-controlled company's stake in EFG-Hermes from 25 per cent to less than 20 per cent, the people said.

Investor concern about Dubai World's $26bn debt restructuring is gradually spreading to other Dubai Government entities such as Dubai Holding, the parent company of Dubai Group. Dubai Holding was most at risk to be next in line in a debt restructuring, Barclays said in a research note. "The market is pricing in a swift and orderly restructuring with no lasting effect on Dubai Inc," it said on Tuesday. "Based on our recent experience, we would argue that there is little chance of this materialising, and at this point, risk is skewed to the downside."

Dubai Financial is one of six financial companies now under the responsibility of Dubai Holding Investment Group, which was formed as a result of combining the previously separate entities of Dubai Group and Dubai International Capital. In August, Dubai Holding said it was reorganising its companies into property, business park, hospitality and investment units. Moody's Investors Service on Tuesday lowered by several notches the issuer and debt ratings of another Dubai Holding entity, Dubai Holding Commercial Operations Group. No one from either Dubai Holding or EFG-Hermes was available to comment.

Dubai Holding is a diversified group whose portfolio includes the developers Dubai Properties Group, Sama Dubai and Tatweer and the hotel operator Jumeirah Group. @Email:tarnold@thenational.ae