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Qalaa to sell Tanmeyah to EFG Hermes

Africa Global Funds
Feb. 26, 2016, midnight
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Word count: 476

Qalaa Holdings’ Finance Unlimited subsidiary has announced plans to divest its 70% ownership stake in Tanmeyah Microenterprise Services, a private-sector provider of microfinance solutions in the Egyptian market, to EFG Hermes.

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Qalaa Holdings’ Finance Unlimited subsidiary has announced plans to divest its 70% ownership stake in Tanmeyah Microenterprise Services, a private-sector provider of microfinance solutions in the Egyptian market, to EFG Hermes.

In addition to a 70% stake owned by Finance Unlimited, EFG Hermes will acquire a portion of the shares held by Tanmeyah’s management, representing an additional 6.7% of the company.

The transaction, which is subject to regulatory approval, customary terms and the satisfaction of conditions precedent, values 100% of Tanmeyah at EGP 450m.

The divestment of Tanmeyah is in line with Qalaa’s strategy, key elements of which include deleveraging at the holding and subsidiary company levels; acquisition of additional stakes in selective investments within its existing portfolio; and share buybacks.

Ahmed Heikal, Qalaa Holdings Chairman and Founder, said: "Since our inception more than a decade ago, Qalaa has been about the building of businesses. We took an interest in Tanmeyah early on, backed its management team, and played an active role in helping the team build it into the private-sector leader in its industry.”

Established in 2009, Tanmeyah provides financial services to Egypt’s large underserved micro- and very-small-enterprise tiers.

Tanmeyah had EGP 509m in loans outstanding to 108,000 active borrowers at the end of 2015.

The company has more than 1,500 employees today at 114 branches across Egypt and has served more than 365,000 clients since inception.

Tanmeyah is the latest in a series of divestments for Qalaa that also includes Misr Glass Manufacturing (MGM), Rashidi El-Mizan and ASEC Minya.

The acquisition of Tanmeyah comes less than a year after the firm’s launch of EFG Hermes Leasing, which since its establishment in May 2015 has grown to become a top-ranked provider of lease finance in Egypt.

It also cements the firm’s strategic drive into the finance sector and comes at a potential inflection point for the market as a whole, amidst strong commitment from the Egyptian government to expand lending to this vital segment of the Egyptian economy.

Karim Awad, EFG Hermes Group CEO, said: “The acquisition comes as the first of a number of strategic moves that EFG Hermes intends to undertake during the coming 12 months and that will put in place the foundation for the firm’s growth over the coming five years.”

Upon completion of the transaction, Wael Ziada will be appointed CEO of EFG Hermes Finance with a mandate to grow both the leasing business and Tanmeyah in addition to spearheading our future expansion into other, complementary fields.

“Wael will be responsible for streamlining operations and ensuring the creation of synergies between Tanmeyah and our future expansion into new finance product lines,” Awad said.

Ziada added that Tanmeyah is a unique opportunity for EFG Hermes given its national-scale branch network, well-established procedures and systems, and track record of lending in a highly under-penetrated market.

"The acquisition of a majority stake in Tanmeyah fits perfectly with EFG Hermes’ well-publicized strategy of growing our finance platform,” he said.

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Africa Global Funds (AGF) is a monthly magazine for asset management professionals and institutional investors worldwide interested in the African continent. AGF was created as a relevant and engaging resource that can provide readers with an insight of what is going on in the African asset management space. Drawing on an intense dialogue with a constantly expanding group of key decision-makers in the industry, we cover traditional and alternative asset classes of African asset management. From this dialogue we work hard to produce a compelling blend of hard news, incisive commentary, detailed sector and regional reports, exclusive interviews and proprietary data.

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