EFG Hermes shareholders ratify strategic alliance with QInvest

Attending shareholders represented 54.8% of the firm's equity and included all of EFG Hermes' primary shareholders, among them Abu Dhabi Investment Authority, Dubai Financial Group and HSBC Middle East.

The strategic alliance will see EFG Hermes Qatar LLC be 60% owned by QInvest and 40% owned by EFG Hermes. Following the completion of the transaction, EFG Hermes Qatar, through its subsidiaries, will offer a full range of investment banking services, owning and operating the Investment Banking, Securities Brokerage, Asset Management, Research and Infrastructure Fund businesses held at the time of the meeting by EFG Hermes.

Shareholders approved the sale of EFG Hermes' entire stake, held directly and indirectly, in its respective subsidiaries operating in the Securities Brokerage, Research, Asset Management, Investment Banking, and Infrastructure Fund businesses to EFG Hermes Qatar in consideration for $250m.

"Shareholders today have given resounding approval to the Board of Directors' vision of creating the definitive investment bank in the Arab world, a platform from which we will grow to comprehensively cover the Middle East, Africa, Turkey, and South and Southeast Asia," said EFG Hermes Chairperson Mona Zulficar. "This is a net positive for Egypt: It will catalyse the next phase of growth for an Egyptian multinational at the same time as netting $250m in foreign investment for our nation. It is also an important development for the Arab world as we create a platform that will see the firm expand far beyond our present borders."

EFG Hermes was advised on the transaction by major international firms including the leading global advisory house J.P. Morgan and law firm Freshfields; Grant Thornton was appointed as Independent Financial Advisor to prepare the fair value report for the Egyptian subsidiaries in this transaction.

Those attending the EGM today voted to approve, in principle, the distribution of EGP4 per share to EFG Hermes Holding shareholders following completion of the transfer of ownership of subsidiary companies to EFG Hermes Qatar. Any distribution will be subject to the transaction closing as well as obtaining the relevant regulatory and shareholder approvals in a separate general assembly.

Shareholders also approved the transfer of the equivalent of 60% of the total seed capital injected by EFG Hermes into a number of its managed funds to QInvest LLC at market value as of the last business day prior to the closing of the transaction.

Pursuant to the terms of the transaction, EFG Hermes will transfer the "EFG Hermes" trademark definitively to EFG Hermes Qatar, effective within a year of the transfer of ownership of the subsidiaries to EFG Hermes Qatar. Shareholders approved in principle the amendment of the firm's name to become "Egyptian Financial Group" in this case.

Shareholders have further approved a "put" option giving EFG Hermes Holding the right to sell to QInvest the remaining 40% interest owned by EFG Hermes in EFG Hermes Qatar for a consideration of EGP1bn. Similarly, QInvest will have a "call" option giving it the right to acquire the remaining 40% interest held by EFG Hermes in EFG Hermes Qatar at a floor price of $165m or the fair value at the time of execution, with such fair value being subject to a ceiling price.