Regional investment bank EFG Hermes expects that recovering Gulf stock markets coupled with rising merger and acquisition activity, particularly with regard to opportunities in Sub-Saharan Africa, will play a prominent role in the group’s upcoming revenues and profits.
Hisham Halbouny, director of investment banking, told Gulf News: “Liquidity is once again abundant in the GCC. Stock valuations have recovered substantially backed by strong economic growth and corporate earnings. The valuation recovery is working as a strong incentive for many company managements to consider initial public offerings.”
EFG Hermes is currently in the process of concluding its advisory role in Al-Futtaim Group’s $86m acquisition of CMC Holdings, a company that holds a third of the largest automotive distributor in Kenya, as well as other automotive interests across East Africa.
The public tender offer closed during the first quarter with a 91% acceptance rate, and the transaction just came to a conclusion, although Al Futtaim has declared to exercise its right in proceeding with a compulsory acquisition of all of the remaining issued ordinary shares.
EFG Hermes sees Sub-Saharan Africa as a new frontier of opportunities with its 7% average annual gross domestic product (GDP) growth across the region, as the rising affluence of its middle-class populations drive demand in key sectors such as utilities, hospitality and retail.
While the Al-Futtaim transaction represents a first for EFG Hermes, the increasing attraction of this region and its growth sectors are drawing increasing numbers of multinationals and private equity players, and this trend is boosting the flow of investment into these markets.
Overall EFG Hermes has raised $2bn in the last six months, in the UAE was also the joint-advisor of an IPO worth $291m for Emirates REIT, a Sharia-compliant investment trust, and responsible for raising $40m through a private placement for Abu Dhabi’s National Holding.
The company’s first quarter profits soared three-fold to $16.7m, while total operating revenues surged to $79.2m. The investment bank’s operating revenue has increased by 27% year-on-year to $34.4m, with its advisory activities generating 46% of revenue regionally.