Briefs

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The never-ending Omar Effendi sale saga

AS LAST Saturday's deadline came and went, Riyadh-based Egyptian businessman Said El-Hanash failed to submit a letter of guarantee showing the seriousness of his offer to buy the Omar Effendi retail chain. El-Hanash had been given a two-month grace period to secure the guarantee.

As a result, the retail chain's mother company, the Holding Company for Trade (HTC), has decided to present the other competing offer -- from the Saudi Arabian Anwal group -- to both the ministerial group for economic policies and HTC's general assembly for approval. The ministerial group include the ministers of investment, economic development, manpower, trade and industry, as well as the central bank governor.

While HTC Chairman Hadi Fahmi stopped short of saying that Anwal would become Omar Effendi's new owner, he did hint that the HTC would back Anwal's offer. "Anwal's Omar Effendi bid attracted a lot of publicity, and was judged even before it took place," he said.

Six months of negotiations with Anwal resulted in an offer to buy 90 per cent of the nation's most famous retail chain, with HTC retaining the remaining 10 per cent. The suggested purchase price was LE589 million. The deal, however, also eventually included Anwal's agreeing to pump an additional LE200 million worth of investments into the company, as well as another LE50 million for the early retirement of around 1,200 of the company's employees. Anwal will also repay all the company's liabilities and back taxes -- around LE155 million -- in addition to the estimated LE200-300 million needed for the renovation of some branches.

Anwal's offer created a public uproar after a member of the HTC committee assigned to evaluate the retail chain's worth accused the investment minister of selling the company short. Whereas the committee put Omar Effendi's value at LE1.1 million, the Saudi Arabian group's initial offer was just half that.

Businessman El-Hanash stepped in soon thereafter, offering to buy Omar Effendi for a whopping LE2 billion. He even promised to provide an LE40 million letter of credit, double what the government required to gauge the seriousness of the offer.

But the only letter El-Hanash ended up providing was one from a Belgium- based bank saying he could pay $100 million. Banking experts said the letter did not qualify as a letter of guarantee since it doesn't even mention Omar Effendi.

Interviewed on TV early this week, El-Hanash said he was worried about forfeiting the value of his letter of credit if the HTC and the government went for Anwal's offer instead of his. Fahmi called that excuse groundless; the only way an investor loses the value of the letter of credit, he said, is when he withdraws from the deal after he wins the bid.

According to Fahmi, "El-Hanash's virtual offer has [only] delayed the [Anwal] deal, and prevented the local economy from reaping its benefits." He said he was filing a complaint against El-Hanash with the prosecutor-general.

Sources at the Investment Ministry, meanwhile, said they never had much confidence in El-Hanash. Moreover, investigations by a committee affiliated to Egypt's Commercial Representation office in Saudi Arabia revealed that El-Hanash is not that well known as a big businessman in the Saudi market because his economic activities do not exceed the five million riyals range.

New banking group is born

THE EGYPTIAN American Bank (EAB) completed its merger into Crédit Agricole this week, thus forming what is now known as Crédit Agricole Egypt. In January 2006, Crédit Agricole Group, along with its Egyptian partner Mansour and Maghraby Investment & Development, acquired the majority stake in EAB in a deal worth $505 million.

Yassin Mansour, chairman of the new entity, said the bank's presence underscores the Egyptian economy's ability to attract foreign direct investment; the fact that large financial institutions operate in Egypt reflects the world's trust in the growth of the local economy, he said.

"We plan to target small and medium enterprises (SMEs) in our retail banking operations," said Jean-Frédéric de Leusse, International Retail Banking and Private Equity Director of Crédit Agricole Group. De Leusse said the bank already had some SME clients, but now want to define a proactive strategy for those that only use the bank to handle their current accounts.

Crédit Agricole, one of the top five financial institutions in the world, is engaged in a wide range of financial activities, from Corporate and Investment Banking, to Retail Banking, Asset Management and Insurance.

De Leusee confirmed the Egyptian market's attractiveness for multi-national institutions. He described the market as a particularly interesting venue -- with high-level demands, as well as a population with different needs -- all of which represents a serious potential benefit for Egyptian bankers and clients, as well as the overall economy and the community.