QNB Group, the largest financial institution in the State of Qatar and the MENA region, has entered into a definitive agreement with Société Générale for the acquisition of its entire stake of 77.17% in National Société Générale Bank – Egypt (NSGB). Subject to receipt of required regulatory approvals, QNB Group will launch a mandatory tender offer (MTO) for 100% of the share capital of NSGB, to which Société Générale has committed to tender its shares.
This transaction is a significant milestone in QNB Group’s strategy of international expansion and it represents the largest acquisition in the bank’s 48-year history. With the addition of Egypt as a new home market and one of the leading Egyptian banks to its network, QNB Group, the pre-eminent bank in the Middle East and North Africa, further extends its presence in the Arab world and will be able to increasingly benefit from the rapid development of trade and the strengthening of economic ties in the Arab and North African region and between Qatar and Egypt in particular. This also reflects QNB Group’s confidence in the long-term prospects of the financial sector and economy in Egypt.
The acquisition is consistent with QNB Group’s strategy to expand its existing presence in high growth emerging markets with large under banked populations. The transaction is the largest banking transaction in the Middle East since the financial crisis, and one of the largest cross-border investments in Egypt over the last two years.
NSGB – Egypt is the 2ndlargest private (non-state owned) bank operating in the high growth Egyptian market through a network of c.160 branches across the country and more than 4,150 employees, with total assets as at 30 September 2012 reaching EGP63.3 billion (c.US$10.4 billion).
The offer for 100% of the share capital of NSGB amounts to US$2,558 million. The price to be offered to all shareholders will be converted into EGP at the time of the filing of the MTO with the Egyptian Financial Services Authority (EFSA).
QNB intends to fund the purchase through its own funds and will remain strongly capitalized after the acquisition with a core tier 1 capital ratio of around 15%. The transaction is expected to be immediately earnings accretive in 2013 and will further diversify the financial profile of QNB Group. NSGB will be representing 8% and 10% respectively of combined total loans and deposits and 10% of the combined net income.
Using prevailing exchange rates, the multiples for the transaction are 1.8x based on book value expected at closing.
“This transaction is in line with QNB Group’s international strategy, which has become an integral part of our growth and commitment to diversify revenue sources. The Egyptian financial sector represents a significant growth opportunity with its combination of growth potential, increased future penetration of banking services, young and dynamic population to be served and the core links of Egypt within the Middle East and North Africa. We look forward to the addition of NSGB into QNB Group’s global network,” QNB Group’s Chief Executive Officer Ali Shareef Al-Emadi said.