Two UAE investment companies have emerged as key players in a tie-up between Qatar's QInvest and EFG-Hermes.
Their role was revealed as a rival bid worth more than US$1 billion (Dh3.67bn) from a consortium of Arab investors sought to block the deal and prevent a break-up of one of the Middle East's biggest investment banks.
EFG-Hermes claimed in a statement that Dubai Financial Group and the Abu Dhabi Investment Authority both voted at the bank's extraordinary general meeting in favour of a proposal tabled by QInvest to create a joint venture called EFG-Hermes Qatar.
Both UAE funds declined to comment on the matter.
Together, the two own about a quarter of EFG-Hermes shares, with Dubai Financial Group the largest single shareholder.
But a group of Arab investors has sought to derail the offer by forwarding an ultimatum to EFG-Hermes seeking to block the transaction.
Planet Investment Banking said it was prepared to pay a minimum of 13.5 Egyptian pounds per share for the entirety of the company's shares.
"If EFG-Hermes is serious about entertaining a tender offer from Planet IB, it must immediately postpone the execution of the alternative transaction," the company said.
"Planet IB is prepared to extend a public tender offer immediately after the completion of customary due diligence. Planet IB therefore calls upon the board of directors of EFG-Hermes Holding to immediately open its books to due diligence."
Planet IB is a consortium including the telecommunications tycoon Naguib Sawiris and a member of Sharjah's ruling family.
Their bid, which represents a 22.6 per cent premium on the shares' closing price yesterday, values the investment bank at $1.06bn.
EFG-Hermes' Cairo-listed shares rose 0.3 per cent to 11.01 pounds in trading yesterday.
"The market was disappointed by the deal with QInvest, and the counter-offer with Planet IB has emerged as a hope for retail investors," said Waleed El Bendary, the head of buy-side research at Rasmala Egypt Asset Management.
"The holders of the stock right now are hoping for a tender offer above 13.5 Egyptian pounds [per share] ... but I believe they have to know more about the financial commitments of Planet IB."
QInvest is seeking to create a joint venture with EFG-Hermes and inject $250 million.
The proposed company, EFG-Hermes Qatar, will be 60 per cent controlled by QInvest, with options to acquire the remaining 40 per cent stake for $165m, which can be exercised a year after their "strategic partnership" is approved.
The deal excludes EFG-Hermes' private equity business and its stake in the Lebanese lender Credit Libanais. Planet IB says QInvest's bid will cherry-pick the best of EFG-Hermes' assets and leave the rest to "wither".
Shahzad Shahbaz, the chief executive of QInvest, declined to comment.
At the bank's extraordinary general meeting on Saturday, EFG-Hermes shareholders voted to approve the QInvest deal, saying Planet IB's offer lacked legal commitments and no proof of financing to complete the deal.
A spokesman for Planet IB said the group would appeal the decision with the Egyptian Financial Supervisory Authority.
Dubai Financial Group, an arm of a holding company owned by Dubai's ruler, is the biggest single shareholder in EFG-Hermes with an indirect holding of 18 per cent. Representatives for Dubai Financial Group declined to comment.
A spokesman for the Abu Dhabi Investment Authority (Adia) declined to comment. Adia owns about 8 per cent of the company's shares, and Sanjeev Doshi, the fund's head of equity opportunities, is an independent director on EFG-Hermes' board.
A vote on the Planet IB bid was not tabled at the meeting because of lack of clarity over legal commitments and the source of the bid's financing.
"No proof to availability of funds has been presented to the company nor any information about the identity of the investors who will provide the necessary funds for the tender offer," said Mona Zulficar, EFG-Hermes' chairwoman.
Planet IB is seeking to buy out EFG-Hermes amid a mire of accusations of graft, which saw the bank's co-chief executives and a former chief executive charged last week with illicit profiteering from the bank's 2007 sale of Al Watany Bank to National Bank of Kuwait.
ghunter@thenational.ae
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Cultural fiesta
What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421, Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day.
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
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2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
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