Abu Dhabi bank FAB withdraws offer for Egypt’s EFG Hermes

First Abu Dhabi Bank (FAB) has withdrawn its offer for a controlling stake in Egyptian investment bank EFG Hermes, citing global market uncertainty.

FAB’s non-binding offer in February to buy at least 51 percent of EFG Hermes, valuing Egypt’s biggest investment bank at nearly $1.2 billion, could have secured access to EFG’s strong franchise in the Middle East and North Africa region.

“After careful consideration and in the context of ongoing global market uncertainty and volatile macroeconomic conditions, First Abu Dhabi Bank has decided to withdraw its non-binding offer submitted on 9 February 2022,” FAB said in a statement. Shares in FAB fell by almost 2 percent in early trade, while EFG Hermes slumped by almost a fifth.

EFG was trading at 15.46 Egyptian pounds ($0.8420), compared with FAB’s offer of 19 pounds per share. Egypt has been on the hunt for foreign exchange since Russia’s invasion of Ukraine prompted investors to pull billions of dollars out of its treasury markets, leading the central bank to devalue the currency by 14 percent on March 21.

FAB already owns banking licences in Egypt – its own subsidiary and the Egyptian unit of Lebanon’s Bank Audi, which it acquired last year. Industry players had said before the currency devaluation and Russia-Ukraine conflict that FAB may have to raise its bid, given EFG’s outsized influence over Egypt’s financial markets and supercharged growth of its fintech businesses.

“FAB may return at a later date and at a revised valuation,” said Hasnain Malik, head of equity research at Tellimer. The process also dragged because the deal required approval from different regulatory bodies, two sources close to the matter said, adding that FAB had not started due diligence. FAB declined to comment beyond its initial statement.