x Abu Dhabi, UAEThursday 27 July 2017

Investors launch EFG-Hermes bid

A consortium of Arab investors has launched a hostile takeover on EFG-Hermes less than 24 hours after co-chief executives were named in a corruption scandal.

A consortium of Arab investors has launched a hostile takeover on EFG-Hermes less than 24 hours after co-chief executives were named in a corruption scandal.
Egypt's biggest investment bank said its chairman received an email at 11.40pm on Wednesday from a company called Planet IB, saying that it would seek to place a tender offer for 100 per cent of the bank's shares.
The bid came soon after state media reported that two sons of the former president Hosni Mubarak and several EFG-Hermes executives would face charges of illicit profiteering, surrounding the bank's sale of Al Watany Bank in 2007.
The bank said it would defend itself against allegations of corruption levelled by Egypt's public prosecutor.
"EFG-Hermes confirms the soundness of its legal position, the position of its subsidiaries involved in the acquisition of Al Watany Bank transaction, as well as that of its two chief executive officers and all its staff members," the bank said in a statement.
The bank's shares initially increased 10 per cent yesterday, hitting trading limits. The shares were then suspended by the Egyptian Exchange (EGX) until the bank provided details of the takeover offer.
The bidding company had been formed by Arab investors and Egyptian bankers for the sole purpose of making the acquisition, according to the letter from Planet IB, which was released to the EGX.
"We reveal this intention of ours . in our belief that the current share price is below the valuation that we made, based on published information and made public by way of the stock exchange," the letter said. It did not include financial terms.
The stock fell 10 per cent upon the resumption of trading, before recovering to close 3.4 per cent higher at 10.97 Egyptian pounds each.
Last month, EFG-Hermes and Qatar's QInvest announced a deal to create a joint venture. It is unclear how the deal might be affected by Planet IB's takeover offer.
On Wednesday, state media reported that Gamal and Alaa Mubarak had been referred to Cairo's criminal court over the US$522 million (Dh1.91 billion) sale.
Gamal Mubarak had been viewed as the heir-apparent to the Egyptian presidency before the revolution that overthrew the country's government in February last year.
Seven others, including the EFG-Hermes co-chief executives Yasser El Malawany and Hassan Heikal, alongside the former chief executive Amr El Kady, were also named.
Mr El Malawany had previously been hit with a travel ban in February, which prevented him from travelling to the UAE. At that time, EFG-Hermes issued a statement denying that he was under investigation.
EFG-Hermes also revealed all of its ties to the Mubarak clan, saying there were no financial links with the former president.
However, it detailed Gamal Mubarak's holdings of 18 per cent of EFG-Hermes Private Equity, which it said had always been public since they were acquired in 1997.
ghunter@thenational.ae