By Cynthia Johnston
UPDATE 4: Stake purchase sees private equity group emerge as largest investor.
Private equity firm Actis has agreed to pay $244 million for a 9.3 percent stake in Commercial International Bank, Egypt's largest bank by market value, Actis said on Wednesday.Actis, which invests in emerging markets, said it would buy 27.3 million CIB global depositary receipts for $8.93 each, just above Tuesday's closing price of $8.68. It said it believed CIB had "excellent growth potential".
CIB said it welcomed the move as the bank accelerated its growth in consumer banking.
Radwa El-Swaify, senior banking analyst for Beltone Financial, said the deal was "close to the market price and to analysts' valuations, which we think is a fair deal".
Actis said the acquisition - which is for 50 percent of a stake held by a consortium led by US group Ripplewood Holdings - would make it the largest single investor in CIB.
"Within Egypt, CIB is the market's leading bank, perfectly positioned to achieve significant growth by extending its services into the retail banking sector," Actis Senior Partner Paul Fletcher said in a statement.
EFG-Hermes Investment Banking, which acted as financial adviser to Actis on the deal, said it was the largest merger and acquisition transaction in Egypt this year.
Rick Phillips, an Actis partner based in Egypt, said Actis would use its expertise in emerging markets, especially with banks in India and Nigeria, to introduce new systems for SME and consumer lending and savings products. It would have one seat on CIB's board of directors.
"CIB invited us in with a clear mandate. It wishes to use us as an active investor," Phillips said. "We will be tightly involved with the management team."
Ripplewood linked CIB to major Western financial centres, whereas Actis will focus on emerging markets, Phillips added.
CIB's board currently has two executive and six non-executive members, two of whom represent the Ripplewood consortium.
Separately, Belgian holding firm RHJ International will sell part of its 3.2 percent stake in CIB, an RHJ spokesman said.
RHJ's entire 3.2 percent stake in CIB is worth about 430 million Egyptian pounds ($77 million) based on CIB's current share price of roughly 46 pounds. RHJ is run by the founder of Ripplewood. (Reuters)