CAIRO: The Capital Market Authority of the Kingdom of Saudi Arabia (KSA) granted EFG-Hermes a license to operate as an Investment Bank in the Saudi Stock Exchange on Monday.
The license, which they applied for in January 2006, will allow EFG-Hermes to act as a brokerage house in KSA, to practice asset management activities and provide financial services.
“The Saudi market is by far the largest financial market in the region, Nermeen Ameen, head of investor relations at EFG-Hermes, tells The Daily Star Egypt. “We wouldn’t have held water in the regional market without Saudi.
According to Ameen, the Saudi market makes a turnover of approximately $8-$10 billion dollars a day, compared to the $300 million in turnover made in Egypt and most of the EU on an average day.
“So it’s a huge market. We are talking about billions of dollars in a single day, says Ameen.
This is a significant milestone for EFG-Hermes in our journey to create the first truly regional and full service Investment Bank based in the Middle East. Through our very successful businesses in Egypt and the UAE, we currently address around 16 percent of the region s fee wallet and the addition of Saudi Arabia will increase our footprint to over 85 percent said Yasser El-Mallawany, chairman and CEO of EFG-Hermes, in a company statement.
In fact, the Saudi financial market represents around 70 percent of Egypt, Levant and the GCC region s Investment Banking fee wallet (including brokerage and asset management).
Thanks to the oil boom that hit the Saudi market over the past three or four years, the growth of the stock market and the amendment of a law that now permits foreign financial institutions to operate in the Kingdom, a lot of additional wealth has been floating in the Saudi market, where liquidity was never a problem. Coupled with the establishment of an Economic City, a $26 billion economic project that includes a financial island to house financial institutions, FDI’s are now flocking to Saudi courtesy of the government, which has invited investors to come in and invest in the nation.
“The reforms made by the Saudi government have made it possible for foreign financial institutions to operate there. We were one of the first institutions to obtain a license, in fact, adds Ameen. According to her, with the reforms set in motion, IPO’s are expected to hit the market in a big way. All of which will be of benefit to EFG-Hermes as they cash in on commissions from such transactions.
“The plan is well-documented and has been thought out, says Ameen in regard to their plans to operate in the country. “Saudi has been on our radar screen for a while, and we will start operating as soon as possible, now that we have obtained the license.
The Saudi license is the most important addition to our regional expansion strategy and we are very excited about the opportunity it represents. The roll out plan for our operations in the Kingdom is well thought through and documented and we are now ready for the execution phase, said Hassan Heikal, co-chairman and CEO, in a company statement.
Saudi Arabia is the most current operation the company has launched as part of its regional expansion plans. In December 2005, EFG Hermes started operating in Dubai and in March of last year, they established a presence in Abu Dhabi.
The company also has plans to establish a presence in Lebanon and Jordan soon, according to Ameen.
“Our vision is to become the leading financial institution in the entire Middle Eastern region, says Ameen.
In related news, CASE’s Listing Committee has approved the listing of EFG-Hermes’ capital increase shares on the official schedule effective yesterday. The company has raised its paid-in capital by LE 970.7 million distributed over 194.1 million shares at the stock’s par value of LE 5, bringing its paid-in capital to LE1.456 million, up from LE 485.4 million.
