EFG Hermes plans pre-IPO fund

07 March 2017

The investment bank hopes to achieve the first $100m close of fund next year

EFG Hermes, one of the top investment banks in the region, is launching a pre-initial public offering (pre-IPO) fund to target Egyptian and GCC equities markets.

The bank, which has merged its asset management and private equity departments to create a broader client-focused platform, is targeting the first close of $100m of the planned fund in next 12 months, Karim Moussa, the co-head of investment banking and the head of asset management business told MEED on the sidelines of EFG’s annual One-on-One investment conference.

The three-year closed-ended fund will have investment horizon of two years and Moussa expects that within the next two years there will be a much bigger pipeline of public share sales in the Egypt.

“Equities in Egypt will do really well,” he said, adding that despite primary focus on Egyptian IPOs, the fund would look at investment opportunities in other GCC markets.

IPO markets in the GCC have stalled after a fall in oil prices from a mid-2014 peak of $115 a barrel to current $55 a barrel level has negatively affected investor sentiment.

However, the pipeline for equities capital market deals remain strong in Egypt. The government in January 2016 announced that it planned to sell shares of “successful” state-owned firms and banks to the public, the first such move since 2005, when it offered shares in Telecom Egypt, Sidi Kerir Petrochemicals and Alexandria Mineral Oils Company (AMOC).

Egyptian press has since reported that Cairo is lining up 17 or 18 state-owned companies for IPOs, which are thought to include banks as well as petroleum, petrochemicals and electricity firms. National Investment Bank subsidiary NI Capital is helping in the preparation of possible share sales.

EFG and the UK’s HSBC are already engaged for as consultants for the planned public listing of state-owned Banque Du Caire, sources aware of the matter told MEED in November. It is understood the state is looking to list 20 per cent of the third-largest government-owned bank and the share sale is expected to take place in the first half of this year.

EFG, which is in the process of launching a $200m private equity Africa healthcare-focused fund, is expecting the first $100m close of the investment vehicle by the first quarter of next year, Moussa said.

The African Development Bank has already made a $20m commit for The Rx Healthcare Fund, which will invest in countries including Egypt, Tunisia and Morocco and later move into Ethiopia, Kenya, Nigeria and Sudan. It aims to provide growth capital to the companies in diagnostics, hospitals and pharmaceutical.

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