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Cabinet approves of Sovereign Fund/EFG Hermes acquisition of AIB

The acquisition of 76 percent of AIB will increase the paid-in capital of the bank to LE 5 billion

By: Business Today Egypt

Thu, May. 20, 2021

We are one step closer to Egypt’s first bank privatization in over a decade after yesterday’s cabinet approval of Sovereign Fund of Egypt (TSFE) and EFG Hermes Holding S.A.E (EFG Hermes) acquisition of the capital of Arab Investment Bank (AIB).

The acquisition of 76 percent of AIB will increase the paid-in capital of the Bank to LE 5 billion.

Shares are segregated as follows, financial group Hermes holds 51 percent with Egypt's sovereign fund contribution of at 25 percent, while the National Investment Bank will maintain a ratio of 24 percent, having previously held a 91.4 percent stake.

It is worth noting that the implementation of the acquisition deal requires the approval of the competent regulatory authorities, especially the Central Bank of Egypt, despite cabinet approval.

 “Completing the AIB partnership transaction underscores TSFE’s pivotal role in unlocking and maximizing the value of state-owned assets,” said Hala El Said, Minister of Planning and Economic Development and Chairperson of TSFE.

“This transaction complements Egypt Vision 2030’s third objective of achieving knowledge-based economic growth and digital transformation; increasing the resilience and competitiveness of the economy; increasing employment rates; improving the business environment; and realizing financial inclusion,” she added.

Under the terms of the agreement, EFG Hermes will subscribe to 423 million newly issued shares of the Bank at a price per share of LE 6.03 and a total value of LE 2.55 billion. At the same time, TSFE will subscribe to 207 million newly issued shares of the Bank at the same price per share, for a total value of LE 1.25 billion. 

 “AIB’s financial indicators will witness a substantial improvement, as will its competitiveness within the market. It will be better poised to comply with the Central Bank of Egypt’s regulatory requirements, drawing on the technical expertise available in TSFE and EFG Hermes, AIB’s new partners,” stated El-Said.

“The transaction’s success is a result of the cooperation protocols TSFE signed with different state bodies including the National Investment Bank, benefitting from its large portfolio. It reflects the close collaboration between different state bodies, in coordination with the Cabinet, working towards attracting private investments to government projects,” she added.