'We are going through a period of rapid and organic growth, and we are looking to expand into regional markets,' says Yasser Mallawani, EFG-Hermes' chief executive officer and chairman. 'Banque Audi offers good potential. The banks complement each other. Audi is present in five countries already and looking at Egypt and Algeria. The bank also has a very good management and has asset management in Geneva and France.'

Investment bank EFG-Hermes will finance the acquisition through an injection of fresh capital to be raised through a $300 million private placement and a $150 million rights issue. According to Mallawani, both transactions will be closed at the end of the first week of February. EFG-Hermes will use the $450 million to purchase 7.5 million new shares to be issued by Banque Audi at a price of $60 each and equivalent to 20 per cent of Audi's capital. The deal will make EFG-Hermes the largest single shareholder in the Lebanese bank.

In addition, Banque Audi will offer a second tranche of 2.5 million shares to boost its shareholders equity by another $150 million, either through an initial public offering (IPO) at the Beirut Stock Exchange (BSE) or through a private placement. The capital increase will make Audi the largest bank in Lebanon.

EFG-Hermes also plans to apply for an investment banking licence in Saudi Arabia, possibly later in 2006, Mallawani says.