Power Letters 2022: Mohamed Ebeid, CEO, EFG Hermes’ Investment Bank; group executive committee member

2021 was definitely a great recovery year for EFG Hermes’ Investment Bank. We saw a lot of ECM (equity capital market) deals and M&A (merger and acquisition) transactions across different jurisdictions – it’s actually going to be a record year for us. So it’s not just recovery from Covid-19, but we definitely saw a large number of transactions, lots of change in hands in terms of private assets, a number of privatisations, ECM and DCM (debt capital market) deals across the board.

We worked on three IPOs that came out from Abu Dhabi in 2021 as well as an acquisition for Aramex on DFM. We also worked on three other IPOs in Saudi along with an accelerated equity offering there recently. In Egypt, we closed three accelerated equity offerings, out of which one was the first dual listing of a London listed company on EGX. We think there is a lot more room for offerings and there is significant investor interest that’s coming in the MENA region and it’s not just the index trades that we’ve seen in the past few years; currently we can see broad interest and reallocation of assets and equities across the board, which is very interesting.

Overall, we have seen lots of recovery in 2021, leading to some of the recovery themes that we are expecting to happen in 2022. One of them was the hike in energy prices in 2021. Our expectations are that oil prices will remain high – at around $70 per barrel on average in 2022 as well. So this will lead to a better balance sheet for oil exporting countries. Number two, they will reshuffle those proceeds into non-oil generating assets. We have already seen a spillover of liquidity because of this everywhere in the region. And the low interest rate environment also helped in the recovery.

But for 2022, while we expect oil prices to remain high – and this is going to help the region – there are more expectations of rate hikes rather than rate cuts, which is going to be a little bit negative on EM (emerging market) economies. But in terms of the GCC, we expect to see a recovery on the banking side, especially given the peg to the US dollar that we follow. Tourism and trade will also continue to recover in frontier emerging markets.

Overall, in 2022, we do expect volatility coming from whatever Covid-19 variant is there at the time. Definitely, we will live with this virus for quite some time ahead, but we think that the main point we should be focusing on is hospital admittance rates. If they are very low and death rates are low, then even if the case numbers are high, it will be positive, because that means that Covid-19 is getting to be more of a normal flu rather than a pandemic. We all hope that this will start to happen in the next few months or a year or so, but hopefully, this is the way that we can get out of this crisis. While there will always be volatility coming back and forth because of that, we have to ignore it and look at the bigger themes.

For EFG Hermes, from an investment bank perspective, we definitely want to continue remaining the number one player in ECMs in the frontier emerging markets where we operate. We want to continue operating in the equity offerings in the UAE – whether that’s in DFM or ADX. We are also planning to have a big push in Saudi as we had a very successful year there in 2021. Another area we are looking at is further working with the Egyptian government on the privatisation programme. We also want to make sure that we are still dominant on the brokerage side and on the research side with our globally-ranked product. On a different note, we are also hoping that we can go back again to physical conferences this year – we have our ‘One on One’ conference scheduled in March. We are expecting around 200 companies to be presenting and around 800 investors to attend from across the world. I hope it will be feasible to have the event – we are optimistic about it.