Demonstrating considerable evolution over a 12 month period, EFG-Hermes, the region’s leading full-service investment bank, delivered outstanding full year results for 2004 with a 41.7% increase in total revenues compared to FY 2003. According to its recently published annual report, the firm’s gross profit increased 48.2% compared to FY 2003 to reach EGP113.1 million (equivalent to USD18.4 million or AED68.1 million), with net profit swinging substantially from a loss of EGP96.3 million (USD15.7 million / AED58.0 million) in FY 2003 to a gain of EGP52.1 million (USD8.5 million / AED31.4 million) by year-end 2004.
This performance was partly reflected in a 131.5% rise in the share price over 2004, ending the year at EGP13.87 (equivalent to USD2.3 or AED8.4) per share. The share price has continued its ascent, closing Sunday (10 April 2005) at EGP25.20 (USD4.3 / AED15.9), representing a 52-week increase of 217%.
Commenting on the substantial growth, Hassan Heikal, Co-CEO of the EFG-Hermes Group and Head of Regional said, “Restructuring efforts and balance sheet consolidation in 2003 enabled us to begin 2004 more streamlined and cohesive as a firm, with the focus being on core fee-based investment banking functions, rather than on proprietary investments, resulting in marked increases in both revenue and bottom line figures across all lines of the business. The year also saw our regional expansion plans making significant headway, thus bolstering our future outlook.”
With a seven-year track record that includes raising USD4.15 billion in equity transactions and advising on almost USD11.0 billion in M&A transactions, EFG-Hermes has executed more investment banking deals over the years than any other investment bank in the region.
In 2004, the firm solidified its regional expansion plans by formally establishing a presence in Dubai and Abu Dhabi across brokerage, licensed by the Emirates Securities and Commodities Authority (ESCA) for trading on both the Dubai and Abu Dhabi stock exchanges, and research. The representative office in Dubai remains the temporary vehicle through which the firm is developing its investment banking business regionally.
The year also witnessed EFG-Hermes securing landmark regional investment banking deals, most notably, advising the Saudi Communications and Information Technology Commission, as part of a consortium, on the liberalization of the mobile market in the Kingdom and the award of its second GSM and first 3G licenses. The transaction was one of the largest to come out of emerging markets in 2004, at USD3.5 billion, and is considered the world’s most valuable 2G mobile license at USD149 per capita.
Laying strong roots for brokerage and investment banking initiatives, EFG-Hermes extended research coverage over the course of 2004 to include banks in the UAE and Oman; investment companies in Kuwait; cement companies in Saudi Arabia; and telecoms in Bahrain and Qatar; in addition to maintaining full coverage of stocks previously under coverage in Egypt, Saudi Arabia, Jordan and Lebanon. Additionally, economic coverage of Saudi Arabia and the UAE was initiated, as well as building on previous coverage of Egypt and Jordan.
Mustafa Abdel-Wadood, CEO of EFG-Hermes UAE said: “We hope within the next two years to further extend our business regionally, and leverage our extensive experience to grow our operations across the region. Increased brand awareness, successful positioning of investment banking, aggressive fund marketing to increase assets under management, and further strengthening of our distribution network are of paramount importance. Based on how much we have accomplished so far, and given the success of our Egypt model, we anticipate regional business accounting for a significant portion of our over all revenues over the coming two to five years.”
With additional expansions already taking place in 2005, the firm plans to add asset management to the regional compendium of services, aggressively targeting an increase in funds under management in the region over the next two to five years, as well as the launching two new regional funds, one of which is to be an Islamic fund.
Among its most recent awards, EFG-Hermes is the recipient of the Euromoney Awards for Excellence 2004 for Best M&A House in Egypt, as well as Best Equities House.
