Better together

4 March 2013 By Una Galani Follow @ugalani

Ten months have passed and the Qatari firm is still waiting for regulatory approval for its deal to carve up the region’s top investment bank. Criminal allegations against EFG’s co-CEOs make this a political hot potato for Egypt. But both firms may be weaker if nothing is done.

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A joint venture agreed between Qatar’s QInvest and Egypt’s EFG Hermes will lapse if the tie-up does not obtain regulatory approvals by May 4, according to two sources familiar with the deal.
The Egyptian Financial Supervisory Authority has not yet ruled on the agreement struck 10 months ago that would see the Middle East’s top investment bank inject its core businesses into a joint venture 60 percent controlled by QInvest.
The transaction includes EFG’s brokerage, research, asset management, investment banking and infrastructure businesses. QInvest would inject $250 million into joint venture and have the right to buy the remaining 40 percent between 12 and 36 months after the close of the transaction for $165 million or a fair market valuation.
EFG shareholders will receive a one-off dividend of 4 Egyptian pounds per share following the close of the deal, which was originally expected in the third quarter of 2012. EFG’s private equity business and the firm’s majority stake in Credit Libanais were to be excluded from the joint venture and will remain listed in Cairo.
The Egyptian bank’s co-chief executives, Hassan Heikal and Yasser El Mallawany, face allegations of insider trading relating to Al Watany Bank in 2007. The board of EFG has previously stated its full support in the firm’s CEOs.
State-backed Qatar Islamic Bank is the single largest shareholder in QInvest.

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