Stock - Riyadh skyline / Saudi economy / Saudi Arabia
EFG, which advised on the initial public offerings of Ades Holding and Aramco in recent years, sees Riyadh as a "very, very important" market. Image Credit: AFP

Egypt's biggest investment bank plans to increase headcount in Saudi Arabia by a third this year, joining other financial firms that have beefed up operations in the kingdom amid a flurry of deal-making activity.

EFG Holding S.A.E. has moved some very senior resources to the kingdom, and has budgeted to increase headcount by 30% to 47 people, Chief Executive Officer Karim Awad said in an interview.

"We have big plans for hopefully increasing our market share, either at brokerage or investment banking through more deals," he said. "We need to have a lot more focus there."

The kingdom is emerging as one of the key battleground markets for global investment banks, drawing in the likes of Rothschild & Co., which last month unveiled plans to set up a new office in Riyadh.

Part of the draw is a string of deals in the offing, including a potential $20 billion secondary share sale in Aramco. Meanwhile, the Public Investment Fund is considering equity offerings in its portfolio companies to help fund a trillion-dollar economic transformation, Bloomberg News has reported.

EFG, which advised on the initial public offerings of Ades Holding and Aramco in recent years, sees Riyadh as a "very, very important" market not only because of the liquidity and investor base, but also because of the range of industries that are available.

"It's very unique in the region in terms of the depth of the industries that are already listed over there or that are seeking to list," Awad said.

The Cairo-based bank is expecting to participate in as many as six IPOs in Saudi Arabia this year, has three to four deals in the pipeline in the United Arab Emirates, one in Kuwait and up to two in Egypt. It plans to continue hiring in the UAE, where it has 130 employees "- its second biggest office after Cairo "- even as Awad said it's "currently well-manned for our business there."

Core markets

At the same time, the firm is shuttering operations in regions including Singapore and Pakistan. "There are some African markets that are still very interesting," Awad said, citing Kenya, "but at the end of the day we need to refocus our resources on what makes more sense to us."

With expected expansions in Saudi Arabia, the UAE, Egypt and Kuwait "we have more than enough to drive our growth going forward," he said.

EFG's net income jumped 39% to 2.5 billion Egyptian pounds ($52.3 million) in 2023 and Awad is confident of "a very decent 2024" fueled by its Gulf and Egypt operations as well as a liquid balance sheet.

EFG still has the capacity to execute frontier operations for its clients, the CEO said, "but having an on the ground presence there no longer makes sense for our shareholders and for our clients."

Egypt's opportunity

Awad said Egypt has turned an "important corner," but for the IPO market to bounce back, "you will have to see more foreign inflows into the stock market and more investments, and I believe it'll come."

Authorities, who'd been grappling with the worst economic crisis in decades, have since mid-February won pledges of more than $50 billion in global aid and investments. They also enacted a long-awaited currency flotation, allowing the Egyptian pound to lose around 40% of its value against the dollar.

The pound "is now in the price-discovery phase," and its value could be somewhere between 43-45 per dollar toward the end of the year, according to Awad. The next step for Egypt is to attract further foreign direct investment, he said.

"The momentum is there and this is when you can capitalize on it, for sure."