For the factoring and leasing solutions provide the bond issuance will provide key financing for the company’s expansion plans in the year ahead
EFG Hermes, the leading investment bank franchise in Frontier Emerging Markets (FEM), announced today that its Investment Banking division successfully closed an EGP 500 million bond issuance for EFG Hermes Holding subsidiary EFG Hermes Corp-Solutions. The transaction is part of a wider EGP 3 billion bond program for the leasing and factoring player.
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The bond, which received a credit rating of “A-” from Middle East Ratings and Investor Services (MERIS), is comprised of two tranches – with tranche A valued at EGP 450 million with a tenor of 24 months and Tranche B valued at EGP 50 million with a tenor of 24 months.
Commenting on the issuance, Maie Hamdy, Managing Director of Debt Capital Markets at EFG Hermes said: “We are delighted to have advised EFG Hermes Corp-Solutions on its first bond issuance. With the CBE hiking interest rates to curb inflationary pressures, the need for alternative corporate financing solutions continues to grow in tandem in our home market. At the same time, bonds in every corner of the global debt market are recovering as investors turn toward fixed-income assets once again. As we deepen our DCM service offering, we pride ourselves on our ability to respond to market shifts with deft and agility, providing our ever-growing roster of clients with carefully honed advisory and bespoke solutions tailored to their needs and risk appetites as well as market dynamics.”
“This transaction marks yet another major milestone for EFG Hermes Corp-Solutions as we continue to garner significant traction from investors due to the strength of our operations and the soundness of our blueprint for growth,” said CEO of EFG Hermes Corp-Solutions, Talal El Ayat, “This issuance is part and parcel of our strategy to deepen our presence in the market, allowing us to finance our operational growth targets and execute on plans to expand and diversify both our leasing and factoring service offerings to reach a wider segment clients looking for sources of alternative corporate financing.”
The issuance falls in line with EFG Hermes Corp-Solutions’ strategy to broaden its client base across its operational footprint. At present, EFG Hermes-Corp Solutions enjoys a healthy and diverse client mix of 20% SMEs and 80% mid-cap to large corporations. The company’s clientele operates across an expansive range of industries, including real estate development, logistics and maritime, printing and packaging, education, and healthcare. On the factoring side, the majority of Corp-Solutions’ SME clients operate in the Trading and Distribution industry, followed by Transportation and Logistics. On the leasing side, the education and real estate industries have the lion’s share, with the healthcare sector coming in at third place. This year and for the years to come, the company aims to focus on adding on more SMEs to its roster of clients.
By the end of March 2022, EFG Hermes Corp-Solutions’ leasing business ranked second YTD in the Egyptian market, with a market share of 12.04% and a total value of contracts amounting to EGP 2.6 billion. On the factoring front, the company ranked second YTD in the market, boasting a market share of 15.33% and a total value of bookings amounting to EGP 1.015 billion – according to the latest FRA report.
In December 2021, EFG Hermes Corp-Solutions closed on the first, EGP 790 million issuance of its securitized bond program backed by a receivables portfolio of c. EGP 815.1 million. The issuance was also highly rated by MERIS and garnered significant interest, a testament to the company’s solid financial standing, proven track record in the market despite being a relative newcomer in the leasing space, and robust financial and strategic support at the group level that has allowed the company to benefit from the synergies inherent in the business model.
This deal follows the Firm’s successful conclusion of the first securitization issuance worth EGP 651.2 million for Bedaya Mortgage Finance, the successful advisory on Premium International for Credit Services’ sixth issuance, valued at EGP 170 million in January 2022, and the first issuance of EGP 300 million in Madinet Nasr Housing and Development’s (MNHD)’s securitization program. The transaction also follows the EGP 627.5 million securitization issuance for Pioneers Properties for Urban Development, and the first issuance in Misr Italia Properties’ securitization program, worth EGP 794 million in December 2021.
EFG Hermes acted as the sole financial advisor, sole transaction manager, book-runner, underwriter, and arranger on the bond issuance. Dreny acted as legal advisor for the issuance while KPMG audited the deal. Commercial International Bank (CIB) acted as the subscription bank in the issuance.
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