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Egypt’s benchmark stock index rose to the highest level in more than a month after EFG-Hermes Holding SAE (HRHO) and Qatar’s QInvest LLC said they plan to create an investment bank in Egypt.
EFG-Hermes shares were suspended by the bourse pending the release of more information. Talaat Moustafa Group Holding (TMGH), the country’s biggest publicly traded real estate developer, climbed 4.8 percent. Commercial International Bank Egypt SAE (COMI), also known as CIB, rose for the first time in three days. The EGX 30 Index (EGX30) gained 0.9 percent to 4,973.62 at the 2:30 p.m. close in Cairo, the highest level since March 29.
EFG-Hermes, the biggest publicly traded Arab investment bank, said May 4 it agreed to start an investment bank that will be 60 percent owned by the Qatari company. QInvest, a unit of Qatar Islamic Bank (QIBK), will invest $250 million in the venture. The bourse canceled all March 3 trades in EFG-Hermes, without giving a reason. The stock is up 31 percent this year, compared with a 37 percent gain for the EGX 30.
“The EFG-Hermes agreement is positive from the perspective of locals because it reaffirms, after the Mobinil deal with France Telecom, that foreigners are still interested in Egyptian companies,” said Teymour El-Derini, head of Middle East sales at Cairo-based Naeem Brokerage.
Egypt’s market regulator approved last month an offer by France Telecom SA (FTE) to raise its stake in Egyptian Co. for Mobile Services, the country’s second-biggest mobile network operator also known as Mobinil. The deal is valued at $2 billion.
Talaat Moustafa rose the most in two weeks to 4.16 pounds. CIB, Egypt’s biggest publicly traded lender, advanced 0.6 percent to 25.53 pounds.
EFG-Hermes’ agreement with QInvest is expected to be completed in the third quarter and the Cairo-based company will recommend paying an exceptional dividend of 4 Egyptian pounds a share once the transaction is finalized.
The deal, to some institutional investors, “may indicate the end of EFG, that sooner or later QInvest will swallow EFG- Hermes” El-Derini said.
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