Six months have passed since Beltone Financial Holding submitted a note of intent to take over 100% of Commercial International Bank (CIB) shares in CI Capital for EGP 900m. The Egyptian Financial Supervisory Authority (EFSA) put up conditions for the deal to continue. Some thought these conditions were impossible to be met. Sawiris’ influence caused all shares in the companies associated with the transaction to increase since their advertisement.
On Thursday, Beltone announced it was unable to reach an agreement with CIB to extend the deadline for the acquisition offer, which was delayed due to the lack of an EFSA approval to continue with the deal. Beltone noted it will be willing to reopen the deal once all conflicts are removed.
CIB said that the delay of the Orascom Telecom Media and Technology Holding (OTOMT) offer and the lack of an EFSA approval prompted it to not extend the contract and refund the advance to Beltone.
Legal adviser for Beltone on the deal, Ashraf El-Ebrashy, said that the acquisition has faced many challenges since it was announced, highlighting a competing offer from Al-Ahly Capital—owned by the National Bank of Egypt (NBE)—followed by EFSA, stipulating the deal to a ruling in the case of CI Capital employees on their shares that have not been considered in the deal in 2008. This is in addition to violations on the main contributor in the main company with a controlling stake in Beltone.
Sawiris accused Tarek Amer, the governor of the Central Bank of Egypt (CBE), in one article of encouraging the head of NBE to make the competing offer. Moreover, Sawiris said security authorities were behind hindering the deal through interfering with the documents examination, on the back of a CBE decision that prevented Sawiris from obtaining a loan of EGP 1bn to finance the deal.
The evolution of events did not end at that point. The court approved the cassation made by CIB and ruled in its favour for removing the first violation. Beltone paid a fine for delaying financial statements. And the reconciliation on the ownership transfer that Sawiris carried out following the division of OTMT in 2012 was still unannounced by EFSA.
The businessman condemned stopping the deal and told Daily News Egypt that “we should focus on salty fish and herring—this country is in a bad shape” when asked about the deal on the sidelines of the El Gouna International Squash Championship during Sham El Nessim.
Dreams of Beltone did not stop at CI Capital. Over the past few months, Beltone acquired the Micro Finance Enterprise Services Company, Reefy, and the American Auerbach Grayson, which is considered the main gateway for foreign investors in Egypt and the Middle East.
CI Capital CEO Mahmoud Atallah had earlier told Daily News Egypt that there is a consensus between Sawiris and CI Capital in the regional and global expansion, noting that Sawiris has bigger projects for the company’s expansion.
Following the failure of the deal, Atallah said that CI Capital will not be impacted by the failure, pointing out that CI Capital has been operating as normal since the announcement.
He added that that CI Capital is currently awaiting the bank’s directions on the possibility of another sale, as well as the company’s strategy in the coming phase.
Ahmed Salem, head of brokerage at Beltone, said that the board of directors will meet soon to consider the possibility of acquiring another investment bank in Egypt.
EFSA published a statement on a violation concerning pledges made to the authority by the shareholder controlling 51.7% of OTMT, which controls 95.29% of Beltone. The violations were pledges requested by EFSA, as well as exempting OTMO from submitting a compulsory purchase offer for restructuring within the same group, according to the provisions of Article 356 of Part XII of the bylaws of law 95 of 1992.
Beltone, however, has obtained a preliminary approval to increase its capital, which will accelerate its steps towards further expansion and focus on diverse of activities, including microfinance through Reefy.
By Mahmoud El-Kassas, Hussein Sobhy, Shaimaa Turky and Mahmoud Hashem