The bid submitted by business tycoon Naguib Sawiris' New Egypt Fund and Beltone Financial for a 20 per cent stake in investment Bank EFG Hermes did not meet regulatory requirements and was still incomplete as more documents were needed, said the Egyptian Financial Regulatory Authority (EFRA), the stock market regulator, on Tuesday. The buy offer sees the shares of the investment house valued at LE16, making the whole value LE257 million. The significance of the deal lies in the parties involved and the message it conveys about the market. Sawiris is one of Egypt's highest-profile businessmen, and his family own the Orascom Group of companies. EFG Hermes is one of the biggest investment banks in the Middle East. The buy offer also marks a return in interest in the local stock market, which has been stagnant for more than three years. The government of Dubai owned 11 per cent of EFG Hermes as of the end of March, making it the biggest shareholder, according to Thomson Reuters. EFG has about 67 per cent of its shares free floating, or readily tradable. A proposed deal, which would have seen EFG Hermes merging with Qatar's QInvest to create an investment bank with operations spanning the Middle East, Africa and Turkey, was declined EFRA approval last year. Al-Mal, a financial daily, reported on Sunday that the offer by the New Egypt Investment Fund, Beltone Financial Holding (BFH) and Beltone Capital Holding (BCH) was the first step towards an intended merger between Beltone and EFG. Beltone Capital was established in 2006 as an investment vehicle of Beltone Private Equity. It seeks control of companies through majority stakes either directly or in conjunction with co-investors and has set its maximum exposure in a single investment to 20 per cent. “In this case, Beltone Capital apparently amalgamated with BFH and a consortium of businessmen led by billionaire Naguib Sawiris to execute the transaction,” noted Pharos Holding, another local investment house. EFG Hermes issued a statement on Tuesday saying that its board of directors had convened on 9 June to discuss the offer. “Although the board considers this action as a potential change in the company's shareholder structure and not an acquisition, it still felt that it would be in the best interest of all shareholders to appoint an independent financial advisor to opine the fair value of the stock and the fairness of the offer, upon its approval by the EFRA, in order to help shareholders evaluate its attractiveness,” it said. The board welcomed investment by a prominent investor and successful entrepreneur like Sawiris, considering it a vote of confidence in the company and its management, it said. However, it did not feel that the dominant position of the company in the market warranted consolidation with competitors in Egypt, which would likely negatively affect shareholder value, it concluded.
