|EFG-Hermes acquires stake in Banque Audi
|Deal biggest in Lebanon by egyptian financial firm
Cairo based EFG-Hermes acquired a 20 percent stake in Lebanon's Banque Audi and the latter disclosed plans to raise its capital up to $1.5 billion.
The announcement came during a news conference held by the two parties at Banque Audi's headquarters Thursday. This is the biggest investment by the Egyptian financial firm in Lebanon in an attempt to establish a foothold in the local market.
Audi also said that its board of directors pledged to increase the bank's shareholder equity to $1.5 billion, expressing a desire to use this money for expansion in the Mideast and North Africa.
Audi officials said the capital increase will be done through the issuance of 10 million common shares with an estimated value of $600 million.
"We are confident that strong strategic partner cooperation will develop between the two institutions in the context of their respective regional development strategies," said the chairman and general manager of Audi Bank.
Audi is already operating in Lebanon, Syria and Jordan and intends to acquire a medium sized bank in Egypt.
The bank has obtained a license to operate in Iraq and hopes to open a branch in north of the country in the near future.
Audi will raise the capital through two types of tranches.
A first tranche of approximately 7.5 million shares at a price of $60 per share, representing a subscription price of approximately $450 million, will be allocated to EGF-Hermes Holding, pursuant to the terms of a memorandum of understanding and an investment agreement entered into between Bank Audi and EFG-Hermes.
The second tranche of approximately 2.5 million shares is expected to be sold pursuant to a private placement and/or a public offering.
The new capital will make Audi by far the leading bank in Lebanon in terms of shareholder equity.
Audi also promised to set up an employee stock option plan pursuant to which a maximum of five million common shares will be issued at part value, to be awarded to management and employees. This will be determined in due course by the bank's board of directors.
The chairman of Audi said the increase in the shareholders' equity will further strengthen the bank's financial standing and will significantly assist and accelerate its expansion policy.
The Central Bank has already approved the participation of EFG-Hermes in Bank Audi's capital.
The advisor to the chairman of Audi Bank Freddi Baz said Lebanese banks need to considerably increase their paid up capital to compete in the region.
He added that the capital of one leading Saudi bank is far more than the capital of the entire Lebanese banking sector.
The Central Bank is encouraging Lebanese banks to merge and consolidate their operations to cut the number of operating banks and improve liquidity.
The Central Bank managed to sell its entire stake in BLC bank to Qatar for $236 million.
Audi became one of the two leading banks in the country after it acquired Banque Saradar in a deal worth more than $150 million.
As in the case of many listed banks and companies on Beirut Stock Exchange, Audi stocks rose sharply in recent months.
Audi's GDR closed at $68.75 per share Thursday trading, an increase of 10 percent.
An official at EFG-Hermes sounded very upbeat about the future of Beirut's capital market, saying the volume of trading will reach more than $150 million a day in the future.
The Daily Star