Head: EFG eyes Jordan, hopes for Saudi license in 2006
DUBAI: Egypt s EFG-Hermes Holdings is looking at Jordan as the next step in its regional expansion drive and hopes to win a Saudi investment banking license this year, a senior company official said. The Cairo-based investment bank already has operations in the Gulf Arab region and in January bought a 20 percent stake in Lebanon s Bank Audi, which has a presence in Syria and Jordan. Mustafa Abdel-Wadood, chief executive of EFG s operations in the United Arab Emirates, said the stake in Audi made Jordan a logical choice for expansion. We are definitely looking at other markets whether that is through acquisition or organic growth, Abdel-Wadood told Reuters in an interview earlier this week. Because of the relationship with Audi Bank, Jordan is a natural market for us to look at also, he said. EFG s expansion plans have been driving its stock price in recent weeks, particularly expectations that it would win a license to operate in Saudi Arabia, the world s biggest oil exporter. Foreign banks are rushing to enter the Saudi market, hoping to cash in on the country s biggest economic boom in decades. EFG has said it hoped to learn the outcome of its application in the second quarter. Abdel-Wadood declined to be more specific. We ve stated before that this is something we hope to be doing at some point in 06 and that s still where we remain, he said. There are variables along the way. All I will say is that it is a big priority for us at this stage. He said the Saudi unit would likely offer all aspects of EFG s operations from asset management and investment banking to brokerage services, a key source of revenue for banks in Saudi Arabia, home to the largest bourse in the Arab world. I think the model is to replicate these business lines everywhere we go, said Abdel-Wadood. We have to be careful that we don t stretch our resources. Not financial resources. It s making sure you have the right human capital. Because that s … a big part of what dictates how fast we grow our business, he said. The prospect of a Saudi license helped lift EFG shares last week. On Thursday they closed at LE 72.12, up 5.2 percent. Abdel-Wadood declined to comment on EFG s first quarter performance, but said the group was confident of the outlook for 2006 despite a sharp downturn in stock markets across the region this year. Bourses in Egypt and Gulf Arab states, some of the world s best performing stock markets last year, sank in the middle of March as a crisis of confidence gripped investors across the region. Although most markets are recovering, Abdel-Wadood said the downturn could have weakened appetite for initial public offerings in the Gulf, where most new issues encounter staggering demand. Definitely the markets are softer here than what they were. And in a healthy way, I think, given that these markets are highly dependent on retail investors and retail investors tend to shy away the moment they start losing money, he said. Gulf IPOs were on average 70 times over subscribed over the last two years and shares rose an average of 300 percent on debut, because regulations don t allow a process of book building that would let demand set the price. EFG was lead manager for the March IPO of Emirates Integrated Telecommunications Co., the UAE s second telecoms firm, which was 167 times over subscribed. That and a simultaneous IPO from mortgage lender Tamweel raised more than $180 billion in bids, 90 percent of which was borrowed money, according one bank s estimate. There is a vested interest for banks and financial institutions to lend, obviously because of the fees they make off that, said Abdel-Wadood. Reuters
