CAIRO: "We are experiencing astronomical growth - in three digit numbers in some areas, Yasser El-Mallawany, chairman and CEO of EFG-Hermes told Daily News Egypt. "Today we have a market capitalization of $4.5 billion, we operate in multiple markets covering the whole spectrum of the Middle East, he added. "Our strategy has been to strengthen our position in the regional platform, El-Mallawany said. This plan will be easier to realize with the aid of Dubai Financial Group (DFG), a subsidiary of Dubai Holding, who bought a 24.62 percent stake in EFG-Hermes last month. The $1.1 billion deal was sealed after Dubai Holding bought two companies belonging to Dubai-based private equity firm Abraaj Capital. The Abraaj Capital companies - Abraaj Egypt Ltd and Abraaj SPV 26 Ltd - collectively owned a 24.62 percent stake in Cairo-based EFG-Hermes. "[The purchase] is a great vote of confidence. They are a great institution and a major value-added for EFG-Hermes, he said. Dubai Holding's decision provides further evidence of the booming Gulf nation's aim to diversify its portfolio of foreign investments. "They are into supporting us in expanding our business in the region, he said. "EFG is by far the largest investment bank in the region and the number one broker in Egypt and the UAE, he added. Founded in 1984, EFG-Hermes is the premier investment bank in the Middle East and North Africa (Mena) region and is recognized as the region's market leader in securities brokerage, asset management, investment banking, private equity and research. It serves a full range of clients from governments and companies to institutional and individual investors. "In terms of research we got the top-notch awards for research products and we are the largest performer in equity system markets, he said. EFG-Hermes first started pursuing the regional strategy because "Egypt was not an attractive market at that time, we started up for the wrong reasons but it eventually worked out for us, he said. "Since 2004, things have changed dramatically. The mindset in Egypt changed, integrating Egypt in the regional arena in terms of trade and investment. As a result, the "Egyptian component has contributed to our success, following the reforms implemented in the investment environment. "Egypt was not an attractive place to invest, particularly up until 2003, there was a lack of confidence, he explained. By applying economic reform through reconstructing the financial legislation and facilitating investment procedures, the Egyptian economy opened up to international investments. The success, he says, is very obvious in the level of foreign direct investments (FDI). "We have managed to switch the country to one that attracts FDI and the beauty of it is that it's not just coming from the liquidity available in the Gulf but from China and India too, in petrochemicals, call centers and creating value added in industrial zones, he said. The quality of FDIs has also improved and diversified. Historically, FDI was concentrated on oil exploration sectors, while now textiles, agriculture, telecommunications and real-estate investments are established. Egypt must face certain challenges to sustain the growth it is experiencing, namely, keeping the budget deficit under control, enhancing the infrastructure and empowering the workforce with the skills needed on the market. "Although the budget deficit is a challenge, you cannot forget that since 2004, revenues of the government have been increasing dramatically because of the restructure that took place, despite the 20 percent reduction in tax rate, we are in much better shape today in terms of production, he argues. While tax reforms are regarded as a positive change, the problem of subsidies is not well catered to. "Subsidies need to be targeted towards the people who need them the most. I would love to see the commodities priced at normal pricing and the subsidies converted to cash and given to whoever needs them, he said. If this is done, at least 40 percent of the waste will be reduced, he said. Addressing the issue of availability of skilled caliber, El-Mallawany calls on companies to create their own talent by upgrading their employees' standards. "We cannot wait for education because it is a 50-year process. There have to be some remedies to try and upscale the qualifications of the people, he said. Despite the market need, EFG-Hermes is not suffering from a lack of employees, at least on the junior level. "We are an employer of choice, on the junior level we are able to get the right fresh caliber and train them the way we like so that we can create [the right] culture, he said. "I think the major component of our success is that we manage to attract exquisite human talent whether Arab-speaking or foreign, which has helped us to expand, he said. With the entire region - as well as Egypt - booming and intra-regional trade and investment growing, "there is a sustainable inflow within the region to keep it moving, regardless of what is happening outside of it, he said. The market capitalization of the Mena region today is double that of emerging Europe and equal to Asia. The Saudi Arabian capital market is double that of Russia, he said. "Liquidity is soaring in the oil-producing countries and other countries are positioning themselves and reforming to be able to place themselves as players, he said.
