EFG-Hermes takes stake in Kuwaiti firm

Investment bank EFG-Hermes yesterday said it has entered the Kuwait market through a strategic partnership with Kuwait Invest Holding Company, whereby it has acquired an equity interest in Offset Holding for approximately KWD33.42 million (Dh458m).

Offset Holding owns a 90 per cent stake in Gulf Financial Brokerage Company, a top-ranked broker on the Kuwait Stock Exchange, which has a 26 per cent market share in Kuwait and offers local and regional institutions both traditional and online operations.

Gulf Financial Brokerage Company had net profit of KWD2.9m during the first half of 2008, reflecting a PE of 12.6 times based on annualised half-year 2008 earnings.

EFG-Hermes will assume management and operation of Offset Holding and Gulf Financial, which is slated to operate under the brand name EFG-Hermes IFA.

"We're delighted to announce EFG-Hermes now has presence in Kuwait," EFG-Hermes CEO Hassan Heikal said in a statement. "Kuwait is the second-largest stock market in the region after Saudi Arabia with some $600m in trading every day.

"With no new brokerage licenses being offered for sale in Kuwait on the Kuwaiti market and no foreseeable change to the regulatory environment, there is substantial scarcity value in acquiring interests in a Kuwaiti brokerage firm. The deal gives us direct presence there and will allow us to directly execute transactions on behalf of our clients and grow our market share under the EFG-Hermes brand name."

Kuwait Invest, a subsidiary of IFA Group, has many investments including brokerage investments in Kuwait, Saudi, the UAE and Jordan.

"Kuwait Invest is pleased to be in business with EFG-Hermes," said Chairman and Managing Director Anas Al Saleh. "The mix of our unrivaled local insight and dominant market position along with EFG-Hermes' regional reach will create new opportunities for Kuwaiti, regional and global investors alike."

According to EFG-Hermes COO Yasser El-Mallawany, this latest acquisition falls in line with the company's regional expansion strategy. "EFG-Hermes forms strategic relationships with only the best local players.

"We currently account for substantial equity trading flows into the Kuwaiti market, largely on behalf of institutional investors.

"Through the Gulf Financial deal, EFG-Hermes will now execute directly for its clients, who are attracted to the Kuwaiti market and its strong fundamentals, diverse offerings and the absence of foreign ownership restrictions," he said.

The move into Kuwait is EFG-Hermes' second acquisition in the Gulf this year. In April 2008, the firm purchased a 51 per cent interest in Vision Securities, a leading Omani broker, in a deal worth $15.3m.

EFG-Hermes now has operations in the GCC including the UAE, Egypt, Saudi Arabia, Qatar, Lebanon, Oman and Kuwait.


Bank also buys 9% of Panmure gordon

EFG-Hermes yesterday agreed to subscribe for 9.97 per cent of the share capital of UK stockbroker Panmure Gordon through the placing of 6,732,675 million new shares for cash by Panmure Gordon to EFG-Hermes at a price of 47p per share.

Following the completion of the capital increase EFG-Hermes Holding will hold an interest of 9.06 per cent in the voting rights in Panmure Gordon.

Tony Caplin, Chairman of Panmure Gordon, said: "The markets we operate in are becoming more international and the opportunities available through a business relationship with EFG-Hermes are compelling. The ability to access EFG-Hermes' clients for our UK and US research and investment banking products is exciting and will give us a major competitive advantage.

"We see considerable business opportunities in providing reciprocal access for EFG-Hermes to our client base in the UK, Europe and the US. We also believe there are opportunities to develop more new business streams."