First Abu Dhabi Bank offers to buy Egypt’s EFG Hermes

First Abu Dhabi Bank made an offer to buy a majority stake in EFG Hermes, in what’s likely to be the biggest acquisition yet in Egypt by the UAE’s largest lender.

EFG Hermes, Egypt’s biggest investment bank, said it received a non-binding offer from First Abu Dhabi Bank for a stake of no less than 51 per cent, according to a statement.

FAB offered 19 Egyptian pounds ($1.21) per share. The offer values EFG Hermes at EGP 18.5 billion ($1.2 billion) and represents a 21 per cent premium to EFG Hermes’ closing price of EGP 15.74 on February 8, 2022, FAB said in a statement.

The deal’s completion and final purchase price are conditional upon due diligence and regulatory approvals, EFG said.

Under Egyptian market rules, a tender offer for 100 per cent of shares is mandatory if the prospective buyer is seeking a stake of over one-third of the target company.

EFG’s stock has rebounded almost 40 per cent since last year’s low in August, giving the bank a market value of $924 million, according to data compiled by Bloomberg.

The acquisition would be the boldest move yet for Hana Al Rostamani, who took over as group CEO for First Abu Dhabi Bank a year ago. It also gives FAB a larger presence in the Arab world’s most populous country and a foothold in several emerging markets including Kenya, Nigeria and Bangladesh. Rothschild is the adviser to FAB for the EFG Hermes deal.

EFG is a major adviser on IPOs at home across the Middle East and North Africa. It has operations in 13 countries on four continents. In November, EFG finalised an acquisition of a 51 per cent stake in Arab Investment Bank, marking its entry into Egypt’s commercial banking sector.

Banks in the Arab world’s second-biggest economy have increasingly been turning overseas to sustain growth, with First Abu Dhabi Bank last year expanding into Egypt by buying Bank Audi’s local unit. Emirates NBD completed its acquisition of Turkey’s Denizbank AS in 2019.