DUBAI: Egypt’s EFG Hermes wants to enter Nigeria through an acquisition and expects to get regulatory approval to start a brokerage business in Kenya this year as part of a big push into frontier markets, a senior executive told Reuters Monday.
The investment bank also plans to boost its research team to between 12 and 15 from eight over the next 12 months as interest among institutional investors grows in smaller, fast-growing economies in the Middle East, Asia and Africa, EFG Hermes’ Frontier market unit CEO Ali Khalpey said in an interview.
EFG took a controlling stake in Karachi-based Invest and Finance Securities Limited last year, which now operates as EFG Hermes Pakistan Limited, with a staff of 60 people.
As well as Nigeria, Kenya and Pakistan, EFG is also eyeing expansion into Bangladesh and Vietnam, said Khalpey, who joined EFG from frontier-focused investment bank Exotix Africa LLP.
“We have chosen those five markets as we like the macro-environment and want to be on the ground to benefit from the growth story,” he said.
Once it gets the regulatory approval in Kenya, EFG hopes to have an office with 10 to 15 people to serve as a base for Tanzania, Rwanda and Uganda, he said.
“We like to look at illiquid, non-transparent markets where being on the ground gives incredible competitive advantage over everybody else.”
Khalpey said he was quite excited about long-term prospects for Pakistan, where the economy has been growing at a good pace and the stock market has performed well, until a recent correction.
In May, index provider MSCI reclassified Pakistan as an emerging market from frontier market status. Economic growth is projected at 5.35 this fiscal year – short of the government’s 5.7% target but the fastest since 2007.
Despite the spate of positive news, Pakistani stocks have been hurt by political uncertainty as Prime Minister Nawaz Sharif faces an investigation into corruption allegations linked to the so-called Panama Papers leak. He has denied any wrongdoing.
“It is an unfair environment to judge Pakistan long-term. Short-term there are clearly some challenges,” Khalpey said. “We are there for the long-term and we see a very long term growth trajectory for Pakistan.”
Published in The Express Tribune, June 13th, 2017.