HSBC and emerging markets - Strategic position in the Middle East's financial industry
Published: 2 June 2008
In a USD1.11 billion deal that connects Egypt, the United Arab Emirates (UAE) and Saudi Arabia, the Dubai Financial Group acquired 25 per cent ownership in EFG-Hermes, a major financial institution in the Middle East and North Africa region.
The landmark acquisition strengthens Dubai Financial's position as a key investor in the Gulf's financial sector, following its strategic 15 per cent buy into BankMuscat, Oman's largest bank, last year. Dubai Financial is the government of Dubai's financial sector investment arm.
HSBC was sole financial adviser to the Dubai Financial Group in both deals. The investments allow EFG-Hermes to deepen its stakes in Saudi Arabia where they recently started operations, and for BankMuscat to extend its services into the Gulf, Middle East, Africa, and South and East Asia.
The completion of both deals by HSBC's combined team of investment banking advisors and financing specialists demonstrates the bank's in-depth knowledge of the Middle East's financial sector and its ability to structure and execute complex, cross-border transactions.
"In the case of EFG, as well as with BankMuscat, it was the quality of investments and how strategic these were that primarily attracted our clients," said Haithem Katerji, Director of Global Banking Advisory, HSBC Financial Services (ME).
EFG is an influential regional investment bank and is listed on both the Cairo and Alexandria Stock Exchange and the London Stock Exchange. It is also the largest shareholder in Lebanon-based Bank Audi – one of the region's leading banks.
Katerji added that the investment in EFG was an important addition to Dubai Financial's portfolio of the region's top financial institutions, which include SHUAA Capital and Global Investment House.
"The acquisition by Dubai Financial of BankMuscat, meanwhile, was a very strategic move on the part of the governments of the UAE and Oman who own the two financial institutions, respectively," said Haithem. "Dubai is now the second largest investor in Oman's largest bank, after the Government of Oman. We expect the transaction to create new cross-border opportunities for the two Gulf neighbours."
HSBC has given full support to Dubai Financial's bid towards becoming a global financial services company not only through these deals that expand geographic coverage. In an unprecedented blitz that has reshaped the regional capital market, HSBC brokered and executed the award-winning acquisition of Scandinavian exchange OMX by Borse Dubai, another Dubai Financial Group associate. This was the highest profile transaction from the region in 2007.
HSBC continues to work with Dubai as a preferred partner and has further established itself as a true emerging markets bank, with proven expertise in Middle Eastern mergers and acquisitions.
Middle East builds for future after oil
As the Middle East looks towards a future independent of oil revenues, investors look to HSBC for support in the region's drive toward full economic development.
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