Dubai Financial Group and Abraaj Capital agree on transaction for 24.62% stake in EFG-Hermes

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Dubai Financial Group (DFG), the financial holding company of Dubai Group (a member of Dubai Holding) and Abraaj Capital have agreed a transaction whereby DFG will acquire 100% of Abraaj Egypt Ltd. and Abraaj SPV 26 Ltd. (which collectively own a 24.62 per cent stake in Cairo-based EFG-Hermes) from Abraaj Capital (the leading private equity firm in the MENASA region) for a total consideration of approximately US$ 1.1 billion. The transaction makes DFG, through its offshore subsidiaries, the single largest shareholder in the premier regional investment bank.

Mohammad Al Gergawi, Chairman of Dubai Holding said: “Through this investment, Dubai has achieved yet another distinctive success in driving its regional footprint in the banking industry. I am excited about the possible synergies that Dubai Group’s new partnership with EFG-Hermes will bring to all their stakeholders.”

EFG-Hermes is the leading full-service investment bank in the Arab world. Listed in London and Cairo, EFG-Hermes has a market capitalisation in excess of US$ 4 billion.

Soud Ba’alawy, Executive Chairman, Dubai Group said the transaction was in line with the group’s mandate of investing in leading financial institutions.

“EFG Hermes is recognised as the regional leader in its field and has demonstrated a strong historical growth impetus. Investing in financial sector in high-growth potential markets is our core focus at Dubai Financial Group. We are a long term investor providing active support to managements,” said Ba’alawy.

Arif Naqvi, Executive Vice Chairman and Chief Executive Officer of Abraaj Capital, said: “We are proud to have been associated with what we believe is the best investment banking franchise in the region. During the past year and a half we have provided both strategic guidance and financial support during a transformative period fortifying the company in its quest to further consolidate its leading regional position. We are also confident that Dubai Financial, as a specialized investor in financial services, will be a great partner for EFG-Hermes during the next phase of regional growth.”

Dubai Financial Group pursues a long term strategy to invest in significant stakes across global and regional institutions. It also focuses on aligning itself with the management to create significant value for all its stakeholders. The group has key stakes in leading regional and global financial institutions such as Marfin Popular Bank, Taib Bank, BankMuscat, Global Investment House and Dubai Bank.

Abraaj Capital is the premier investment firm specializing in private equity investment in the Middle East, North Africa and South Asia (MENASA) region. The management team has brought together some of the most compelling and successful transactions in the history of leveraged acquisitions across the region.

EFG-Hermes has seen impressive regional growth and continued positive financial performance over the last twelve months. It has diversified its services into retail products, while focusing on consistent expansion across the GCC, including Saudi Arabia. Unaffected by the volatility of regional markets, EFG-Hermes has moved into 2007, cementing its position as a premier regional investment bank. Furthermore, EFG owns 28.6% stake in Bank Audi which is one of the best managed banks in the region
 
© 2007 Al Bawaba (www.albawaba.com)