GCC is key investment hub for regional, global investors: EFG Hermes

EFG Hermes Holding inaugurated the 17^th EFG Hermes One-on-One Conference at Atlantis, The Palm in Dubai on March 6.

Themed “Outplaying Challenges,” the conference hosted one-on-one meetings between executives representing regional and global institutional investors, allowing them to glean insights into key trends influencing frontier and emerging markets (FEM) to explore value-accretive investment prospects.

This year’s conference, which will run until March 9, features 179 companies from key sectors across 29 countries.

These companies will hold direct meetings with over 561 institutional investors and fund managers representing 247 international institutions during the conference.

This year, the conference’s main session kicked off with EFG Hermes Holding’s Group CEO Karim Awad’s keynote speech. “We are delighted to be hosting the 17^th iteration of our flagship EFG Hermes One-on-One Conference. The conference continues to act as a growth catalyst for capital market investment across FEM, opening direct communication channels between investors and the most promising listed companies.

“Leveraging decades of on-the-ground expertise in these markets, we provide investors with the tools, unique insights, and unfettered access they need to maximise returns — maintaining our position as a financial enabler of corporate success,” said Awad.

“This year, the UAE is also preparing to host COP 28, making it an optimal time for companies to inform the conversation on how investors can play a role in the journey toward net zero by weaving responsible investment practices and frameworks into their financial considerations to secure a better future that guarantees sustainable development for societies, economies, and the planet,” he added.

Tapping promising state assets

Speaking at the 17th annual EFG Hermes one-on-one conference, Ayman Soliman, the CEO of The Sovereign Fund of Egypt (TSFE) said the country is a ‘two-sided economy’ – one is composed of sectors that need to be reexamined for growth such as tourism. The other ONE feature sectors that Egypt can offer to the ‘modern world’ such as tech-driven solutions, renewables and the green economy.

TSFE seeks to create avenues for capital to flow into key sectors and since its inception, it has created growth opportunities in the country’s financial services, fintech and industrials.

Soliman said global equity markets are still challenging in terms of the wealth fund’s pre-IPO program for the state’s privatisation drive. Egypt created a ‘pre-IPO’ fund to restructure some state-owned assets and prepare them for stake sales.

Last month, Egypt unveiled a list of 32 state-held companies that the government plans to either newly list on the local bourse, offer additional stakes in or sell to strategic investors as it seeks to ease a foreign-currency crunch and lure back foreign investors.

Read: EFG Hermes’ Karim Awad shares the diversified strategy driving the company’s success

Market trends in the spotlight

Last year was one marked by volatility due to high inflation rates, a challenging interest environment driven by Fed-supersized rate hikes, and soaring commodity prices caused by the Russia-Ukraine crisis that dampened global capital market activity and investor sentiment.

Meanwhile, the first quarter of 2023 saw a slight reversal, with a slowdown in commodity price jumps as alternative supplies came on stream and China’s reversal of economically stifling zero-Covid policies spurring investors to pour into emerging market securities at a near-record rate.

The GCC in particular has demonstrated resilience against global turbulence, driven by a solid crude oil market and government initiatives that have collectively deepened the region’s capital markets.

The 17th Annual One on One #Conference started in #Dubai, Outplaying Challenges.#UAE #17thOneonOneConference #OutplayingChallenges pic.twitter.com/1LJnaZ9sBT

— EFG Hermes (@efghermes) March 6, 2023

EFG Hermes sees potential in GCC

Mohamed Ebeid, co-CEO of the Investment Bank at EFG Hermes Holding, commented: “Since the start of the year, the MSCI EM (emerging markets) equities index has been trading at 20 per cent or more above last year’s low, as emerging economies look set to grow faster than advanced ones this year, with EM GDPs expected to expand by 1.4 percentage points more than the rate in advanced economies.

“The GCC has, in recent months, proven to be a key investment hub for regional and global investors — a transformation we’ve been incredibly successful in capitalising on by capturing a large share of ECM and M&A deals, particularly in the UAE. As we look ahead, we are confident we can continue ramping up our equity, debt, and M&A transaction pipeline and unlock unmatched prospects for clients and investors alike.”

EFG Hermes Holding also announced that it expects the UAE and Saudi Arabia to lead the initial public offering (IPO) markets in the Middle East and North Africa (MENA) in 2023.

‘’The IPO markets in MENA have seen strong momentum last year led by GCC countries, especially UAE and Saudi Arabia,” stated Awad, according to the state news agency, WAM.

He said that his group is working on five diverse sectoral IPOs in the GCC market which will be launched between the second and fourth quarters of the year.

EFG Hermes concludes advisory on MNHD bond

In other news, on March 5, EFG Hermes’ investment banking division announced it had successfully closed an EGP805.5m securitised bond issuance for Egyptian real estate developer Madinet Nasr for Housing and Development (MNHD) — the second in an EGP3bn securitisation programme.

The bond is backed by a receivables portfolio of EGP1.2bn and comprises three fixed-interest tranches, with all tranches disbursed as “pass-through” proceeds of the portfolio.

Maged El Ayouti, managing director and deputy head of Investment Banking at EFG Hermes, commented: “We are delighted to have partnered once again with MNHD, and to have successfully delivered its largest capital market transaction, supporting management as they move forward with executing their ambitious expansion plans.

“Leveraging our team’s unrivaled placement and execution capacities, the issuance comes on the heels of a series of successful capital market issuances for our clients in the Egyptian market — a testament to our relentless efforts to continue supporting the growth of the capital markets in the prevailing environment.”

This transaction is the latest in a series of successful debt deals closed by EFG Hermes for MNHD, with the first being the real estate player’s debut securitised bond in 2019, followed by an EGP750m sale and leaseback agreement between EFG Hermes Corp-Solutions and MNHD in 2021.

Last year, the division successfully closed the first, EGP300m issuance as part of this wider EGP3bn programme.