EFG-Hermes is an investment bank in the Middle East and North Africa (MENA) region and specializes in securities brokerage, asset management, investment banking, private equity and research.

It serves a range of clients including governments, corporations, financial institutions, high net worth individuals and retail customers. EFG-Hermes is listed on the Cairo and Alexandria (CASE) and London (LSE) stock exchanges.

In FY 2007, its market capitalization exceeded USD 4.6 billion, shareholders equity was USD 1.7 billion and net profit grew by 89% to USD 232 million. EFG-Hermes is the largest shareholder in Bank Audi, one of the region’s leading banks, with a stake exceeding 28%.

EFG-Hermes has offices in Egypt, the United Arab Emirates (UAE), the Kingdom of Saudi Arabia (KSA), Qatar and Oman with over 850 people from 30 nationalities. They serve clients from including the Middle East, North Africa, Europe and the United States.

History

EFG, also known as the Egyptian Financial Group, became the first investment banking firm in Egypt when it was established 1984. The company created and analyzed privatization plans for the Egyptian government for several years. In 1993, The Egyptian Financial Group made a move into brokerage. The company brought many investment strategies that were common to the west to Egypt, for example The Egyptian Financial Group established the equity index in all of Egypt.

In 1994, Egyptian Financial Group entered into asset management. Fueled by organic growth, the company soon reached the point that further growth was not possible without a wide network of local and international clients. This led to a merger in 1994 with Hermes a financial institution, which had significant international experience (Arab Decision, 2003).

Management

Mr. Yasser El-Mallawany-CEO & Board Member

Mr. El Mallawany is CEO of EFG-Hermes Holding Company and chairman of EFG-Hermes Private Equity. He is also chairman of ACE General and ACE Life Insurance, member of the Policies High Committee of the National Democratic Party, board member of the National Investment Bank, and member of the Advisory Council of the Emerging Markets Private Equity Association (EMPEA), USA and treasurer of the American Chamber of Commerce in Egypt.

Mr. El Mallawany has played a major role in the consolidation of the investment banking sector in Egypt, facilitating the emergence of EFG-Hermes as the Arab regions most prominent investment bank. He began his career with Commercial International Bank (CIB), formerly Chase National Bank, where he has worked for 16 years, culminating in the position of General Manager of the Corporate Banking division.

Mr.Hassan Heikal-CEO & Board Member

Mr. Heikal joined EFG-Hermes in 1995 from Goldman Sachs, where he served in the Corporate Finance Division. He is credited with the growth of EFG-Hermes, particularly into new markets. Under his leadership, the group has advised clients such as Vodafone plc, Sainsburys, Heineken, PepsiCo, Orascom Telecom, Pirelli and Bayer. Mr. Heikal was also instrumental in pushing EFG-Hermes acquiring the stake in Bank Audi in 2006.

Structure

EFG-Hermes has four Divisions

Securities Brokerage

Securities Brokerage facilitates transactions for institutions, high net worth individuals and retail clients in all the major MENA markets. For many years EFG-Hermes has held a high position as a securities broker on the Cairo and Alexandria stock exchange ([[Cairo & Alexandria Stock Exchange|CASE]) and has maintained the #1 position in the UAE. In KSA, the brokerage arm reached the #2 position among the 9 independent brokerage companies.

Asset Management

Asset Management offers a broad range of investment series to retail, institutional and high net worth investors. Currently the Asset Management team manages 21 funds covering various countries, strategies and sectors including Islamic funds, Money Market funds, Equity and Capital Guaranteed funds. Total Assets under Management are currently above US$ 7.6 billion.

Private Equity

Private Equity provides alternative investment opportunities for high net worth individuals and large institutional investors, who invest in a broad range of sectors, including industrial, real estate, retail, agriculture and telecommunications. Currently private equity manages six funds exceeding US$ 1 billion, in addition to the firm’s proprietary investments.

Investment Banking

Investment Banking covers public and private transactions including mergers and acquisitions, restructuring, privatization and advisories on the issuance of equity and debt financing. Major international clients include American Express, Bayer, Etisalat, GlaxoSmithKline, HSBC, Kraft Foods, MTC, Nestlé, Orascom and PepsiCo. Major regional clients include Arafa Holding, Du, El Sewedy Cables, MIBank, NSGB, Olympic Group, Oriental Weavers, Telecom Egypt and Thuraya. EFG- Hermes is the only investment bank to have advised multiple governments in the region – Egypt, UAE, KSA and Jordan.

Research

The Research department is an independent unit, regarded as a provider of high quality information on MENA markets. It has widely increased the coverage across the region to reach 82 active stocks across 7 countries.

EFG-Hermes in the Region

EFG-Hermes global strategy relies heavily on expanding in the MENA region. Therefore, the company has made its priority to enter into the major financial hubs of the Middle-East, namely Egypt, the United Arab Emirates, Saudi Arabia, Qatar & Oman.

United Arab Emirates

EFG-Hermes launched its brokerage activities in the UAE in early 2005, and by early 2007 had captured dominant market share on Dubai Financial Market. The firm is also within the top two ranked brokers on the Abu Dhabi Securities Market. EFG-Hermes Brokerage UAE has branches in Dubai, Abu Dhabi, Ras Al Khaimah and Al Ain.

In December 2005, EFG-Hermes was granted a license to conduct asset management and investment banking activities from the Dubai International Financial Centre (DIFC). EFG-Hermes UAE is regulated in this capacity by the Dubai Financial Services Authority (DFSA), an independent regulatory authority that operates to the standards of major financial centers such as London and New York. Out of Dubai, the firm manages the region’s top performing funds and has closed a number of landmark investment banking transactions. In February 2006, EFG-Hermes UAE was also granted a license to conduct brokerage activities from within the DIFC and became the first regional trading, clearing and custody member of the Dubai International Financial Exchange (DIFX), its wholesale exchange.

Kingdom of Saudi Arabia

EFG-Hermes was granted a license from the Saudi Capital Market Authority (CMA) to launch its operations in the Kingdom of Saudi Arabia in March 2007 offering securities brokerage, investment banking, asset management and research services in the largest investment market in the region. The brokerage arm reached the #1 position among the 12 independent brokerage companies, despite having started trading properly only in 3Q 07.

Qatar

EFG-Hermes established its business in Qatar at the end of 2007 having been granted a license by the Qatar Financial Centre Authority (QFCA) for investment banking and asset management business.EFG-Hermes Qatar is a joint venture, fully managed and 51% owned by EFG-Hermes and is capitalized at USD 37 million.

Oman

In April 2008, EFG-Hermes acquired 51% of Vision Securities Co. LLC in Oman at a PE ratio of 11.5 compared to EFG-Hermes’ PE ratio of 16.6.EFG-Hermes has long since accounted for substantial flows into the Omani market on behalf of its foreign institutional clients, and is now able to serve a broader base of clients from its presence on the ground in Oman.

Now a member of the EFG-Hermes Group, Vision Securities is one of Oman’s leading local brokers and has market share of 9.2% and net profit after tax of USD 2.6 million as of end 2007.

References

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