FAB withdraws offer for Egypt’s EFG Hermes

First Abu Dhabi Bank (FAB) on Thursday announced that the bank has withdrawn its offer for a controlling stake in EFG Hermes due to uncertain global market.

In a statement, the Abu Dhabi-based banking giant said it withdrew the non-binding offer submitted in February to buy at least 51 per cent of Egyptian investment bank.

“After careful consideration and in the context of ongoing global market uncertainty and volatile macroeconomic conditions, FAB has decided to withdraw its non-binding offer submitted on 9 February 2022,” according to the statement.

FAB’s offer valued Egypt’s biggest investment bank at nearly $1.2 billion.

Shares in FAB closed 3.25 per cent down at Dh22.64 with 224.79 million shares changing hands on Abu Dhabi Securities Exchange, which fell 1.4 per cent to 9,947.74 points.

EFG Hermes shares also slumped by almost a fifth and was trading at 15.46 Egyptian pounds ($0.8420) in early trade compared to FAB’s offer of 19 pounds per share.

“Egypt remains a strategically important market for FAB, where the bank will continue to support its customers and employees and continue to invest in the growth of its well-established partnerships and operations in Egypt,” FAB statement said.

FAB already owns banking licences in Egypt — its own subsidiary and the Egyptian unit of Lebanon’s Bank Audi, which it acquired last year.

FAB withdrew its offer for EFG Hermes a day after when ADQ announced that it executed several transactions in public-listed Egyptian companies in key sectors such as banks, logistics, fertiliser and chemical industries. Abu Dhabi’s state holding company has bought shares worth $1.85 billion in five publicly traded Egyptian companies, helping Egypt after the Ukraine crisis prompted foreign investors to flee, according to Reuters.

Egypt has been on the hunt for foreign exchange since Russia’s invasion of Ukraine prompted investors to pull billions of dollars out of its treasury markets, leading the central bank to devalue the currency by 14 per cent on March 21.

Industry players had said before the currency devaluation and Russia-Ukraine conflict that FAB may have to raise its bid, given EFG’s outsized influence over Egypt’s financial markets and supercharged growth of its fintech businesses.

“FAB may return at a later date and at a revised valuation,” said Hasnain Malik, head of equity research at Tellimer.

The process also dragged because the deal required approval from different regulatory bodies, two sources close to the matter said, adding that FAB had not started due diligence.

FAB declined to comment beyond its initial statement.

— With inputs from Reuters