EFG Hermes, the leading investment bank in the Arab world, has entered into a binding agreement to acquire 76.7% of Tanmeyah Microenterprise Services S.A.E. (“Tanmeyah”), a fast-growing provider of comprehensive microfinance solutions to business owners across Egypt.
The EGP 345 million transaction will see EFG Hermes acquire a 70% stake owned by Qalaa Holdings’ Finance Unlimited subsidiary in addition to acquiring a portion of the shares held by Tanmeyah’s management, representing an additional 6.7% of the company.
Following the acquisition of this 76.7% stake, the closure of the transaction is subject to regulatory approvals including the consent of the Egyptian Financial Supervisory Authority (“EFSA”) as well as the satisfaction of certain conditions precedent.
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.
EFG Hermes Group Chief Executive Officer Karim Awad commented on the transaction: “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 chief executive officer 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,” Awad said. “Wael will be responsible for streamlining operations and ensuring the creation of synergies between Tanmeyah and our future expansion into new finance product lines.”
Wael Ziada, Chief Executive Officer of EFG Hermes Finance, stated, “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.”
Tanmeyah’s management team is led by its co-founders Executive Chairman and Co-CEO Amro Abouesh and Vice Chairman and Co-CEO Amr Abo Elazm. Both have committed to continue managing the company following the execution of the transaction. “The management team at Tanmeyah offers unique expertise in this highly specialized market and is a great asset that can be leveraged for future growth across the entire EFG Hermes Finance platform,” Ziada said. “They have not only founded this unique company and built it from scratch, but more importantly they have acquired in the process experience that is almost impossible to replicate going forward.”
An entity licensed by EFSA, the fast-growing financial services provider has a dedicated focus on small businesses; serving them from a nationwide network of 114 branches. Tanmeyah serves a vast, growing and essentially untapped market within Egypt that provides ample room to grow the business.
The company has more than 1,500 employees today & since inception in 2009, it has issued loans totalling EGP 3.0 billion to more than 356,000 clients. The company recorded a 46% year-on-year surge in revenues to EGP 133 million in FY2015, while net profit advanced 29% to EGP 42 million during the same period.
Tanmeyah offers financial services and promotes financial inclusion through micro-enterprise lending and very small enterprise lending as well as payment solutions available through its extensive branch network. The company’s microenterprise lending service provides working capital finance to both formal and informal small businesses (in the range of EGP 4,000 to EGP 30,000 per loan).
Its very small enterprise offering provides an immediate liquidity solution for the cash-flow needs of existing formal businesses (in the range of EGP 30,000 to EGP 100,000 per transaction).
EFG Hermes Investment Banking acted as Sole Financial Advisor on the transaction; KPMG acted as tax and financial aspects advisor; and Arab Legal Consultants (ALC) was legal advisor to EFG Hermes.