Washington D.C., April 6, 2006
—The International Finance Corporation, the private sector arm of the World Bank Group, has agreed to purchase an approximately $23 million stake in Commercial International Bank of Egypt.
Under the terms of the agreement, IFC will purchase approximately 2 percent of Commercial International Bank’s capital out of a total of 18.7 percent that was sold in February by National Bank of Egypt to a consortium of investors, led by Ripplewood Holdings, LLC, a U.S.-based private equity firm.
IFC’s participation in the consortium directly supports the Egyptian government’s policy of divesting from joint ventures in the financial sector and privatizing banks. The 18.7 percent share was the government’s remaining stake in Commercial International Bank.
"Michael Essex, IFC’s acting director for the Middle East and North Africa, said, “We are pleased to support the government's privatization initiative in the banking sector. We expect
the Commercial International Bank transaction to signal the attractiveness of the Egyptian banking sector for foreign direct investment, which in turn should
improve banking services throughout the country.”
Headquartered in Cairo, Commercial International Bank is the first-largest private Commercial Bank in Egypt with a wide and diversified shareholding. As of December 2005, the value of the bank’s assets and equity amounted to $5.3 billion and $475 million, respectively. Commercial International Bank is Egypt’s most profitable bank with EGP 610 million (US$ 106 million) in net profit after tax in 2005, a 21 percent growth over previous year.
Jyrki Koskelo, IFC’s director for Global Financial Markets, said, “Commercial International Bank is an anchor partner for IFC in Egypt and the region. With the bank’s committed management and proven record of innovation and delivery, we are eager to support its efforts to expand services to retail and smaller businesses while strengthening environmental training programs.”
The transaction is Ripplewood’s first in an emerging market, signaling to international investors that the investment climate is improving in Egypt. The selection of the Ripplewood consortium was based on its reputation, experience, and strategy to transform the bank from a premier corporate financial institution to a provider of financial services in the retail, small and medium enterprise, and mortgage sectors.
Hisham Ezz Al-Arab, chairman and managing director of Commercial International Bank, said, “The consortium is a strong strategic partner with the foreign and domestic expertise that can help us expand our commercial and investment banking business. Although the new partners’ share is not a controlling stake, as investors they are excited about the Bank’s local expansion through large acquisitions or aggressive organic growth.”
Tim Collins, chief executive officer of Ripplewood Holdings L.L.C., said, “We believe Commercial International Bank is Egypt’s premier financial institution. The Investor Group has been studying this market and this business for some time and we believe that the bank has excellent growth opportunities in a country where the banking environment is changing positively. We feel Egypt and the region represent a significant investment opportunity and that now is the right time to invest.”
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
