It is my honor and privilege to present to you our annual report for 2018. I have been fortunate enough to take part in EFG Hermes’ growth story for more than 10 years now; it is a remarkable journey that has largely taken place against a backdrop of unrelenting global and regional turbulence. Instead of standing by and waiting for stability to return, the EFG Hermes team quickly adapted to new norms and accordingly adopted a clearly-articulated, bullet-proof mindset that has allowed us to turn challenges into opportunities. Three years into that strategy we have expanded to new markets, launched new products, and added an NBFI vertical to our business that has made a significant contribution to our growth and given us the stability that we need to offset the cyclical nature of our traditional investment banking activities.
As a result, we have remained profitable throughout and grown significantly from being the Arab world’s leading investment bank to a diversified financial services corporation with a footprint in frontier emerging markets spanning four continents. The key to our success, and our ability to stay ahead of global headwinds and our competition has been ‘diversity’ in all of its manifestations; products, services, geographies and most importantly, people.
In 2018 we continued with our expansion into Asian and African markets. We now have on the ground presence in 12 markets including offices in Pakistan and Kenya that launched in 2017, and two new offices in Bangladesh and Nigeria, Africa’s largest consumer market. Despite a very challenging year for MENA capital markets, we continue to receive the lion’s share of the foreign institutional business and eventually closed the year as the number one brokers in 5 key MENA markets including Egypt, Dubai, Nasdaq Dubai, Abu Dhabi, and Kuwait.
As we grow, we have been keen to hire and retain top talent in each of our markets, we now stand at more than 4,400 people representing 20 different nationalities. While embracing the diversity in backgrounds and experiences of our people, we have carefully assimilated brilliant, new mindsets into our thriving corporate culture across EFG Hermes’ global footprint in order to maintain a standardized level of excellence throughout.
Our diverse and very able management teams are setting new precedents every day. They have not only taken charge of our successful expansion but they also continue to execute landmark deals across business lines and geographies. In addition to the standard roster of investment banking and brokerage milestones that have been the hallmark of EFG Hermes’ success, we had a few groundbreaking achievements this past year that I would like to shed the spotlight on as they achieve one of our key business goals; integrating sustainability targets into the company’s core business.
Ensuring equality of opportunity, including quality education, is one of the UN Sustainable Development Goals (SDGs) and a cause that I have personally championed for many years, which is why it gives me great pride to note that EFG Hermes has entered into an exclusive partnership with the Dubai-based GEMS Education, one of the world’s oldest and largest private education providers, to build Egypt’s largest K-12 education platform by investing in schools that cater to multiple segments of the society. The first close of EFG Hermes’ Egypt Education Fund took place successfully in May 2018. The DIFC-based fund was oversubscribed with total commitments of USD 119 million — well above the USD 50-100 million initial target. The platform has already completed its first EGP 1 billion investment in Egypt, acquiring four national and British schools in the Rehab and Madinaty suburbs of Cairo. We look forward to continuing the build out of this important platform as it aims to make a positive impact on Egypt’s education sector.
Climate change is now an issue that is at the forefront of global business agendas. It is now up to every nation, business and individual to do their part in order to help combat the negative effects of global warming. At EFG Hermes, our private equity arm has been successfully investing in and managing Vortex Energy, a leading European renewable energy platform, for the past 4 years. In December 2018 Vortex divested a 49% stake in a 998 MW operational wind power portfolio with assets including 56 operational wind farms in Spain, France, Portugal and Belgium. This successful exit is indicative of our ability to acquire, manage and exit alternative energy investments on a global scale. The transaction is by no means our exit from this vital sector. In addition to seeking new renewable energy investments, we will retain Vortex’s solar assets in the UK and remain highly committed to pursuing green investments and promoting sustainability within every aspect of our business.
Also worth noting is EFG Hermes’ first investment banking foray in frontier markets that came in the form of an advisory mandate for international microfinance lender ASA International (ASAI) on its GBP 125 million IPO on the London Stock Exchange (LSE). ASAI is one of the world’s largest private-sector microfinance institutions with c. 1.9 million clients across a 12-country footprint spanning Asia and Africa. Microfinance is a sector that we value and are directly invested in through our subsidiary Tanmeyah Micro Enterprise Services, Egypt’s number one private sector provider of micro credit and a main contributor to the increase in revenues from our NBFI business.
Our efforts on public responsibility, whether it is through our core business or through our CSR initiatives and Foundation, have not gone unrecognized. I am extremely pleased and proud that this year the Chief Executive Officer of the EFG Hermes Foundation and Head of CSR, Hanaa Helmy, was recognized by the UN Global Compact as one of 10 Sustainable Development Goal (SDG) pioneers for her work in investing in social development and advancing sustainability in Egypt. Hanaa has been instrumental in cultivating our holistic approach to sustainable development, which is fully supported by the EFG Hermes board, executive management and employees.
In addition to being one of the first Egyptian companies to join the UN Global Compact as far back as 2011, EFG Hermes is also a founding member of the UNGC Network Egypt, the local arm of the international organization and in 2018 we became the first Egyptian financial services company to sign the United Nations’ Principles for Responsible Investment (UNPRI), an investor initiative in partnership with the United Nations Environment Program– Finance Initiative and the UN Global Compact.
The EFG Hermes Foundation continues to pursue meaningful partnerships with like-minded organizations and civil society players who can help it advance its mission and achieve its goals. In 2018, the Foundation along with our longstanding partner the Sawiris Foundation for Social Development joined forces with Orascom Construction on the Naga’ El Fawal and El Deir Village integrated development project in the Luxor governorate to improve the quality of life for 60,000 inhabitants. Orascom Construction has contributed EGP 15 million bringing the total budget of the project executed in partnership with the Kuwaiti Initiative for the Support of the Egyptian People up to EGP 70 million. This important project aims to rehabilitate the villages by providing educational and job opportunities, upgrading community infrastructure, and rebuilding 90% of its existing homes.
I would like to thank our esteemed board of directors for all of the support that they have provided throughout the year and with great pleasure I would like to welcome our two newest board members, Mr. Timothy Collins and Ms. Elizabeth Crichley, both representing RA MENA Holdings LLC and RA Holdings I LLC, one of our major shareholders. Elizabeth and Tim are both veterans of the global finance industry and we are honored to have them join our board. I am sure that they will provide invaluable insight and guidance to the board reflective of their years of expertise in the industry. We would also like to thank our outgoing board member Mr. Simon Eedle, the Senior Country Manager for Natixis Dubai, for his valuable contribution throughout his board membership.
I am confident that we now have one of the strongest and most diversified boards in the region with non-executive members representing prestigious global organizations. We also have multiple nationalities and countries represented including the UAE, Pakistan, U.S.A, France, Greece and Egypt. Our board members bring with them expertise from diverse sectors including multinational investment banking, private equity, asset management, commercial banking, law and microfinance.
With the appointment of Elizabeth, our second female board member, we are actively working to improve the gender balance on the board and throughout the firm. Gender equality is a goal that we take very seriously at EFG Hermes. Women represent more than 27% of our total workforce, while 82% of EFG Hermes Holding’s female employees occupy key managerial roles (98% in Tanmeyah), and 31% of them are at the level of directors, executive directors & MDs (14% in Tanmeyah). Of course there is always room for improvement but given the low percentage of women in the finance industry globally, these are definitely numbers that we can be proud of.
Finally, I would like to thank each and every member of the EFG Hermes team. We are highly encouraged by and proud of all that you have achieved in 2018, and we look forward to the possibilities of the year ahead with hope and determination to serve the best interests of our shareholders.
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