Shares in Egypt’s largest investment bank EFG Hermes rose 1.9 percent on the Egypt Exchange on Thursday after it acquired 51 percent of state-owned Arab Investment Bank (AIB).
The Sovereign Fund of Egypt also acquired a 25 percent stake, while the current owner, state-owned National Investment Bank (NIB), retained 24 percent, the fund and EFG Hermes said in a joint statement on Thursday.
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It was Egypt’s first bank privatization in more than a decade.
Under the transaction, new shares were issued to raise AIB’s capital to 5 billion Egyptian pounds ($319.9 million). EFG Hermes subscribed to new shares worth 2.55 billion pounds and the sovereign fund to shares worth 1.25 billion pounds, the statement said.
“AIB’s strategy will focus on serving small and medium enterprises as a driver for inclusion,” the sovereign fund’s CEO Ayman Soliman said in the joint statement.
“By upgrading its technological infrastructure, the bank will be better able to serve more customers, especially after the capital increase to meet the new banking law requirements.”
The AIB transaction is the first of many to come in the near future under a cooperation protocol that the fund signed with NIB, Soliman added.
NIB was established in 1980 to finance government projects. Egypt last year told the International Monetary Fund it would restructure NIB’s balance sheet through sales and swaps of assets, land, or shares in public companies to settle overdue debts.