The board of directors of Orascom Financial Holding, whose main shareholder is Egyptian business tycoon Naguib Sawiris, has agreed to sell its 259.1 million shares in Beltone Financial Holding Company to the Emirati Chimera Investments a price of LE1.485 ($0.0527) per share, with a total transaction value of LE384.8 million ($20.3 million).
Analysts believe that the reason for Sawiris’ acceptance of the UAE offer is Beltone’s accumulated losses over the past years, and his lack of interest at the present time in the non-banking financial services sector.
Beltone Financial Holding received two acquisition offers during June; The first is from WM Consulting, in alliance with strategic investors, at an initial price of LE1.35 ($0.0712), and the second is from the UAE’s Chimera Investments, at an initial price of LE1.485 ($0.0527) per share.
The company agreed to the last offer, and notified the stock exchange management to issue a sale order for the shares.
Financial market expert and vice chairman of the a stockbroking company, Mutassim al-Shahidy, attributed the reasons for Sawiris’ sale of his stake in Beltone Financial Holding to the problems caused by the latter company during the offering of the Tharwa Capital Holding Company for financial investments, which forced him to buy a share in Tharwa Capital Holding Company due to irregularities during the offering process.
Shahidy added that Beltone had accumulated losses during the last two years that exceeded LE500 million ($26.4 million), which represents a large percentage compared to the company’s capital.
Beltone’s losses occurred at a time when the competing non-banking financial services companies achieved annual growth in profits during the past years.
In 2018, the Financial Supervisory Authority detected violations committed by Beltone during the IPO of the Tharwa Capital Holding Company, which prompted Sawiris to intervene through his company, Orascom Investment Holding, to purchase 216 million shares in Tharwa Capital Holding Company, with a total value of LE1.6 billion ($84.4 million), to redress the damages incurred by investors.
Sawiris favored the purchase offer from Chimera Investments due to the existence of previous dealings between him and the Emirati company, which facilitated the approval of the process of selling his stake in Beltone, said Shahidy said, in exclusive statements to CNN Arabic, expecting that the new buyer will inject huge investments to support Beltone’s capital, and apply more corporate governance, which will improve its performance.
Shahidy ruled out any impact of the deal on the performance of the Egyptian Stock Exchange, pointing out that Beltone’s share performance is weak compared to other non-banking financial services companies, while describing the deal as “good” compared to Beltone’s capabilities, although its value does not fit the rest of the non-banking services companies.
For his expectations of new acquisitions in the non-banking financial services sector in Egypt, Shahidy said that EFG Hermes which leads the non-banking financial services sector, received many acquisition requests, as did other companies, which indicates the high demand for the sector.
Shahidy did not expect though other acquisitions to take place in the coming period, adding there may be new offers during the next two years, provided that the performance of the Egyptian Stock Exchange improves.
First Abu Dhabi Bank submitted, in February 2022, an offer to acquire EFG Hermes, at an initial price of LE19 per share, before retracting two months later from the offer.
Shahidy said that individual investors in Beltone may not agree to the offer submitted by the Chimera Investments, which is 10 or 15 percent below the market price of the share, and may wait for the opportunity to sell at a price higher than the acquisition price.
The company’s share price at the end of trading on the Egyptian Stock Exchange on Tuesday reached LE1.670.
Orascom’s approval to sell its stake in Beltone was caused by a change in the company’s investment strategy, which has become focused on the mining, real estate and sports sectors and shifted its attention from the non-banking financial services sector, Chairman of the Board of Directors of the Egyptian Capital Market Association (ECMA), Mohamed Maher, said.
Maher added, in exclusive statements to CNN Arabic, that Chimera Investments will work to invest in Beltone’s capital, and diversify the portfolio of services it provides, especially since Chimera Investments is among the largest Emirati companies which will have a positive role in the non-banking services sector.
Maher expected that non-banking financial services companies would receive new purchase and acquisition offers during the coming period, in light of the low company stock prices and the low valuation, for all sectors and not only for non-banking financial services.
He pointed out that the deal represented a message of interest from foreign investors in the Egyptian market, adding that the performance of stock market is expected to react positively to the deal.
The main index of the Egyptian Stock Exchange rose by 1.22 percent on Tuesday to close at 9350 points, and the market capitalization gained LE5.5 billion ($290.1 million) to reach LE627.762 billion ($33.1 billion).