Pioneers Holding agreed to buy rival Egyptian securities firm Beltone Financial in a share swap, gaining asset-management expertise as it aims to create the Middle East’s biggest investment bank - Bloomberg is reporting.
Pioneers said it will issue 100 million shares to Beltone’s owners, who will have about 17 percent of the companies’ combined capital. The premium for those new shares hasn’t yet been determined, Beltone said. In terms of the operations, both companies will be managed independently.
Their full press release follows:
Beltone Financial and Pioneers Holding merge to form one of the largest investment banking distribution networks in the Middle East.
Beltone Financial Holding and Pioneers Holding boards agreed on Saturday 7th November to a term sheet for a full merger. The merger will take place through a capital increase in Pioneers Holding and through a share swap. In terms of the operations, both companies will be managed independently. Under the new arrangement, Mr. Aladdin Saba will remain CEO of Beltone Financial and Mr. Waleed Zaki CEO of Pioneers Holding.
The Pioneers capital increase of nearly 100 million shares, at a premium that is yet to be determined, will reflect the valuation of Beltone Financial and its subsidiaries in this transaction. This valuation constitutes approximately 17% of Pioneers’ capital following the completion of the merger.
This step comes as both companies are looking to form a union realized through a strong investment bank covering the MENA region and leveraging the different strengths of Beltone and Pioneers.
The merger is pending the completion of a due diligence process and obtaining the related approvals.
Aladdin Saba, CEO of Beltone Financial, said that the merger will form the largest investment banking entity in the region, while Beltone also possesses a large client network of high net worth individuals and strong relations with leading institutions both regionally and globally, boosting its institutional brokerage business. Beltone, in addition, contributes strong investment banking and asset management operations, the latter with assets under management of approximately 26 billion pounds.
Dr.Mansour Al Gammal, Pioneers’ vice Chairman, added that his company controls the largest retail brokerage client base in Egypt, of around 90,000 investors served through a network of 30 branches covering Egypt, UAE, Saudi Arabia and Syria. Pioneers also ranks 5th in brokerage operations in Saudi Arabia (following the Saudi banks) and in the UAE. Pioneers also has offices in Syria and Bahrain.
Al Gammal confirmed that this new partnership will benefit both companies, given that Pioneers’ client base forms a strong distribution network for Beltone’s asset management products, in addition to its investment banking services. The merger will ultimately help both companies leverage each other’s strengths and in doing so better serve their clientele.
Beltone Financial’s equity research division will further strengthen and deepen the union through the provision of its world class product which will now help guide the investment decisions of clients from both companies.
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