Cover story: Shining the spotlight on EFG Holding’s rebranding and growth journey

EFG Holding has earned a coveted spot among global financial heavyweights, having participated in 10 initial public offerings (IPOs) worth a whopping $12.7bn in 2022. More recently, the group took another significant step, successfully unveiling a new brand identity from EFG Hermes to EFG Holding.

The transformation is another strategic move to cement its influence across the frontier and emerging markets (FEM). Today, the company has established three verticals: EFG Hermes, the investment bank; EFG Finance, the non-bank financial institutions (NBFI) platform and aiBANK, the commercial bank.

“It’s the optimal time to transform our brand to capture the breadth and magnitude of our product and service universe as well as reflect the resilience of our growth strategy,” Karim Awad, group CEO of EFG Holding, said at the time of rebranding in May.

Awad is the man setting the tone for the company’s transformation journey. Since taking the helm in 2013, EFG Holding has evolved into a trailblazing financial institution with a universal bank in Egypt and the leading investment bank franchise in FEM.

The company has grown substantially across four decades, driven by organic growth, innovation, mergers and acquisitions, and market dominance.

With a footprint spanning 12 countries across four continents and a capital base of $0.8bn (EGP25.1bn), Awad’s vision for the group is to be the preferred financial services partner for its clients, consistently offering them the best-in-class, end-to-end financial services.

“This is something that we will hopefully start within our core market and then expand to the other markets we are currently present in,” Awad reveals.

Though the group has faced its fair share of challenges in its core market over the years, Awad is highly bullish about Egypt’s medium-to-long-term prospects, whether in capital markets or non-bank financial services.

“We invested EGP2.55bn of our capital in a commercial bank in Egypt in 2021 because we believed in the country’s future prospects even in challenging times after Covid-19.”

Consolidating a legacy

EFG Holding has grown from strength to strength under Awad’s stewardship, having started as a pure-play investment bank, providing corporate advisory services, securities brokerage, research, asset management and private equity in Egypt, and then moved into other markets while expanding its product and service offering to include non-banking financial services and a commercial bank.

The group stepped up the gears nearly two years after Awad assumed the reins. It launched its NBFI platform in 2015 and acquired its microfinance player, Tanmeyah, a year later.

“The group started taking a slightly different strategy in 2015 when we established our NBFI platform and then towards the end of 2021 when we partially acquired the commercial bank,” says Awad. “So, with the massive changes the group has gone through, we have outgrown beyond an investment bank model.”

To spearhead its transformation and re-direct resources towards this goal, EFG Holding decided to exit non-core assets, including divesting its majority stake in the Lebanese bank, Crédit Libanais, in 2016 – a move that marked a significant pivot in its business and operations.

In December 2017, the group founded valU, which started as a buy now, pay later (BNPL) fintech platform and grew over the years to become a holistic lifestyle-enabling solution, the Middle East region’s first platform of its kind, offering convenient payment options to a wide network of retail, e-commerce and small-to-medium enterprises across a diverse array of categories, including home appliances, electronics, healthcare and education.

Furthermore, the group acquired a 51 per cent stake in aiBANK in November 2021, marking a strategic entry into Egypt’s dynamic commercial banking sector and transforming into a universal bank with a FEM-focused investment bank, commercial bank and successful NBFI platform.

Owning a commercial bank in its home market means EFG Holding has created a business model that can provide its Egyptian clients with a comprehensive platform for financial services and withstand the volatility in the capital markets EFG Holding operates in.

Aiming for more

While headquartered in Egypt, EFG Holding’s new slogan, ‘Realize More’ reflects the company’s growth strategy into a future-forward financial institution that serves people of all income levels and companies of all sizes through the expertise of its more than 7,100 employees and diverse offerings.

“The investment bank will continue to be core to our operations and will take a lot of our focus and bandwidth going forward,” reveals Awad. “But we also felt that our other businesses and their additions, and the synergies they have created for the company need to be showcased more clearly to the market,” he says, explaining the rationale behind the rebranding and new slogan.

True to his word, EFG Holding’s business model has significantly evolved over the years and the goal is to offer a full suite of financial services across the group’s diversified client base while creating value for the shareholders.

At home, the group is driving financial inclusion and digital transformation strategy. It offers its clients lifestyle-enabling fintech solution (valU), microfinance (Tanmeyah), leasing and factoring (EFG Corp-Solutions), insurance (Kaf Insurance), e-payments (PayTabs Egypt) and mortgage finance (Bedaya).

“To give you an idea of our portfolio in Egypt, we provide investment banking, asset management, private equity, research securities brokerage services and clients can trade through our online trading platform, EFG Hermes One. You can get a mortgage with Bedaya, access insurance services through Kaf Insurance, make purchases and pay for them later over time, save, invest, get instant cash redemptions with valU and utilise commercial banking services of aiBANK,” says Awad.

As he continues full steam ahead with his expansion plans, Awad says the group will be on the constant lookout for new value-added products and services to diversify its offerings. “SME lending in Egypt is an interesting field for us, and we are currently studying other interesting securities brokerage products,” he reveals.

There is a structured products desk that the group added several years ago, and it is currently offering the group’s client base new products to invest in, in addition to pure equities, he adds.
Geographically, Awad says: “EFG Hermes is looking to boost its operations and presence in the UAE and Saudi Arabia, which are markets that continue to be of extreme focus for us going forward.”

“Saudi Arabia is a market we intend to double down on, whether in terms of further investments or moving more human resources over there,” he adds. Awad believes in the long-term prospects of the Saudi market and he feels that EFG Hermes is well-positioned to leverage the country’s economic transformation under Vision 2030.

Awad adds: “The UAE has performed super well over the years and we believe that the country’s leadership continues to provide opportunities for capital markets to grow, whether in Abu Dhabi or Dubai.”

EFG Hermes is one of the first foreign-licensed banks to participate in the Emirates’ capital markets, having set up operations in Dubai in 2002. It was licensed by the Dubai Financial Services Authority as an authorised firm in the Dubai International Financial Centre in 2005.

A strong footing

Over the years, EFG Holding has made the headlines for all good reasons, as Awad is ushering the group on a transformational journey like no other.

The group’s investment bank (EFG Hermes) entered 2023 on a stronger footing, having closed four historical IPOs, including the $2.5bn IPO of ADNOC Gas, the $244m public offering of Oman’s Abraj Energy services on Muscat Stock Exchange, Al Ansari Exchange’s $210.5m offering on the Dubai Financial Market and the $769m listing of ADNOC L&S last month.

“We pride ourselves on being our clients’ preferred partner; when we perform business for a client, they usually come back to us again on future deals,” Awad notes while stressing that this is evident in a variety of transactions that EFG Hermes has closed in the region involving recurring clients.

The year 2023 continues to have a promising IPO pipeline, thanks to several capital markets initiatives implemented across the region and the group CEO believes the best is yet to come.
“Whether it is on IPOs, mergers and acquisitions or debt capital markets, the idea is we stay very close to our core clients going forward,” he pledges.

On the other side of the business, EFG Hermes concluded advisory on Premium International for Credit Services’ EGP193.7m securitised bond offering in March and Hermes Securities Brokerage’s EGP250m senior unsecured short-term note in April.

The company defied growing inflationary pressures and currency devaluation in Egypt, more than doubling its bottom line in Q1 2023. Its revenues surged by 129 per cent year-on-year (YoY) amounting to EGP4.5bn, driven by the investment bank and commercial bank verticals as well as growth in treasury operations.

EFG Holding’s net profit after tax and minority interest soared 157 per cent YoY amounting to EGP885m during the same period under review while net operating profit rose by 99 per cent to reach EGP 1.5bn.

Despite an impressive first quarter, Awad says EFG Holding continues to be bullish about business prospects and its profitability to boost shareholder value. The group seeks to position itself among the top five players in the markets it operates in and the products and services universe it offers.

Awad says the group plans to expand into other markets to grow the business’s profit responsibly, “which is our core belief and something that we take very seriously”. Hence, EFG Hermes is the first Egyptian financial services corporation that signed the United Nations Principles for Responsible Investment.

Championing financial inclusion

In today’s digital-first world, institutions should be remodelling their approaches to succeed. EFG Holding has allocated substantial capital expenditures towards innovating its digital offerings to quickly bring new products to the market.

“We are continuously focusing on improving our tech capabilities across our entire portfolio and offering intuitive and seamless products and services to our clients,” Awad reveals.

EFG Holding is significantly investing in valU, a leading lifestyle-enabling fintech platform, while incorporating more value-added services into its microfinance business. The company’s BNPL platform offers convenient and customisable financing solutions for up to 60 months, via 5,000 points of sale and over 700 websites and apps, and has financed 568,000 customers and completed over one million transactions through the app during FY2022. “valU is one of the brands that EFG Holding created over the past few years and we are pleased with its development, having started as a small idea in 2017,” observes Awad.

The platform has forged a series of partnerships with prominent players including Amazon, Samsung, IKEA Majid Al Futtaim, Carrefour, Azadea, Noon, and Jumia, as well as multi-brand automotive dealer ELTarek Automotive as well as.

In January, valU also unveiled its direct selling and delivery service through WhatsApp to enhance the customer experience and simplify the customers’ digital journey by providing seamless access to all information at their fingertips.

The lifestyle-enabling fintech platform has done exceptionally well in Egypt, paving the way for other fintech startups that were founded after its launch. Awad believes that valU is ready to expand into other markets. However, the timing is something that will be considered.

“Today, valU has grown exponentially as a lifestyle-enabling fintech powerhouse with access to industry-leading retailers in the Egyptian market. The platform has expanded its products and services portfolio to offer investment products, an instant cash redemption program, and savings solutions through the AZ valU fund, Sha2labaz, and Akeed, respectively,” says Awad.

On the brokerage front, EFG Hermes has partnered with Microsoft to launch its Direct Market Access platform on Azure. The platform enables clients to capitalize on compelling trading prospects swiftly and seamlessly by streamlining the process of taking bids.

Powered with the new transformation strategy, EFG Holding seeks to ‘Realize More’ of its goal to build an ecosystem of businesses that work seamlessly together to provide clients with end-to-end financial solutions while positively impacting societies, economies, and the environment.

Read: EFG Hermes Holding rebrands as EFG Holding