Top UAE Lender First Abu Dhabi Bank Offers to Buy EFG Hermes

(Bloomberg) -- First Abu Dhabi Bank PJSC made an offer to buy a majority stake in EFG Hermes, in what’s likely to be the biggest acquisition yet in Egypt by the UAE’s largest lender.

EFG Hermes, Egypt’s biggest investment bank, said it received a non-binding offer from First Abu Dhabi Bank for a stake of no less than 51%, according to a statement, confirming an earlier Bloomberg News report. FAB, as the UAE bank is known, offered 19 Egyptian pounds ($1.21) per share, a premium of about 21% to where EFG was trading before it was suspended on Wednesday.

The deal’s completion and final purchase price are conditional upon due diligence and regulatory approvals, EFG said. Under Egyptian market rules, a tender offer for 100% of shares is mandatory if the prospective buyer is seeking a stake of over one-third of the target company.

EFG’s stock has rebounded almost 40% since last year’s low in August, giving the bank a market value of $924 million, according to data compiled by Bloomberg.

The acquisition would be the boldest move yet for Hana Al Rostamani, who took over as group chief executive officer for First Abu Dhabi Bank a year ago. It also gives FAB a larger presence in the Arab world’s most populous country and a foothold in several emerging markets including Kenya, Nigeria and Bangladesh. 

FAB has also embarked on a broad management overhaul that’s led to the departures of several executives in the private bank and investment banking division, Bloomberg News previously reported.

EFG is a major adviser on initial public offerings at home across the Middle East and North Africa. It has operations in 13 countries on four continents, according to its website.

In November, EFG finalized an acquisition of a 51% stake in Arab Investment Bank, marking its entry into Egypt’s commercial banking sector.

Banks in the Arab world’s second-biggest economy have increasingly been turning overseas to sustain growth, with First Abu Dhabi Bank last year expanding into Egypt by buying Bank Audi’s local unit. Emirates NBD completed its acquisition of Turkey’s Denizbank AS in 2019.

©2022 Bloomberg L.P.