Egypt’s EFG Hermes looks to Saudi business for expansion

Egyptian investment bank EFG Hermes hopes to close a deal to acquire a Nigerian broker next month and is hoping to win IPO mandates in Saudi Arabia as it seeks new growth markets.

Saudi Arabia could be a major growth market for EFG Hermes, which is the biggest investment bank in the Middle East but derives much of its business there from Egypt and the United Arab Emirates.

It has already announced plans to expand its staff as it targets mandates in Saudi Arabia, where it expects the IPO market to pick up by the end of this year.

Mohamed Fahmi, co-head of investment banking, told Reuters on Tuesday that EFG Hermes was looking to win mandates to advise on private sector IPOs and mid-market mergers and acquisitions in Saudi Arabia.

Many potential candidates for IPOs in the kingdom are looking at dual listings and at issuing global depository receipts (GDRs), he said.

These listing options have not been approved yet but the Capital Markets Authority of Saudi Arabia is looking to implement them, he said.

The Saudi market, with a capitalisation of about $500bn, is bracing for heavy inflows of foreign funds in 2019 — analysts predict $20bn or more — as it joins emerging market indexes compiled by MSCI and FTSE Russell. Saudi authorities are working on initiatives to deepen the market with initial public offers of equity.

On Nigeria, EFG Hermes announced in July that it would acquire Lagos-based Primera Africa, which offers brokerage and research services to local and foreign investors. The bank favours the country’s long-term growth potential after the country introduced a series of reforms including currency devaluation.

An EFG spokesperson said on Tuesday the deal is expected to close in November subject to regulatory approval and certain conditions.