CAIRO: Private equity firm Actis said Wednesday that it has purchased a 9.3 percent stake in Commercial International Bank (CIB), making it the largest single investor in CIB.
For a total of $244 million, Actis acquired 50 percent of the stake held by a consortium led by US group Ripplewood Holdings, the firm said in a press statement.
The firm said it would buy 27.3 million CIB global depositary receipts for $8.93 each, just above Tuesday s closing price of $8.68, Reuters reported.
Actis specializes in the emerging markets, and the investment in CIB is part of the Actis Emerging Markets 3 fund, which is valued at $2.9 billion.
“Actis is committed to the financial services sector as one of our core investment strategies within emerging markets where Egypt stands out for its excellent growth potential, Actis Senior Partner Paul Fletcher said in the statement.
The Emerging Markets 3 fund takes advantage of the firm’s expertise in emerging markets, which it engages with office around the developing world.
The fund invests primarily in four sectors: financial institutions, consumer businesses, industry and business services.
“We’ve been considering investing in the banking sector, Hossam Abou Moussa, Investment Principle at Actis, said, calling the sector “highly regulated, fairly liquid, and highly standing out among the sectors we watch.
From Actis’ point of view, it brings a different set of tools and talents to the table than Ripplewood.
“Ripplewood did a great job moving the bank from its old legacy to where it is today, said Abou Moussa, adding that Actis will bring an expertise in emerging markets to the table as CIB plots its future.
One area in which Actis could make a different is in CIB’s consumer bank, which it hopes will take off in the next couple of years.
“Within Egypt, CIB is the market leading bank, positioned to achieve significant growth by extending its services into the retail banking sector, said Fletcher.
“With its 60-year legacy of investing in emerging markets, its deep experience in scaling financial institutions in other high growth markets, particularly in retail, and its network of emerging markets contacts, we believe Actis will be an extremely valuable partner as we accelerate our growth in consumer banking, Hisham Ezz Al-Arab, chairman of CIB, said in the statement.
The Emerging Markets 3 fund was launched in December of last year.
Actis has nine 9 offices worldwide and manages around $8.4 billion in investments.
CIB came about in 1975 as part of a partnership between the National Bank of Egypt and Chase Manhattan Bank. CIB took its current name in 1987.
Actis said its primary means by which to help shape the bank will be in its representation on CIB’s board, which it intends to gain after authorities approve the Actis-CIB deal.
EFG-Hermes Investment Banking, which acted as financial adviser to Actis on the deal, said it was the largest merger and acquisition transaction in Egypt this year, reported Reuters.
Shares in CIB dropped 5.1 percent Wednesday and, according to a Reuters report, the purchase might have sent the impression that this is the fair value of the bank and caused people to sell to take profits, said Radwa El Swaify of Beltone Financial.
