2018 ANNUAL REPORT A Mosaic of New Ideas, Products & Markets 2018 Annual Report 3 CONTENTS 04 EFG Hermes at a Glance 10 Chairperson’s Foreword 14 A Note from Our Group CEO 18 Management Discussion & Analysis 28 Sell-Side Platform 32 Frontier 36 Investment Banking Diversity 42 Securities Brokerage 50 Research 54 Buy-Side Platform Cultural diversity in the workplace is a way of appreciating individuals, whether 58 Asset Management they’re from different regions, different countries, or different backgrounds 64 Private Equity — and individuals are the threads that keep our entire institution together. 68 NBFI Platform Bringing in talents from across the globe allows us to weave the fabric of 72 Leasing the Firm with different life experiences, different ideas, and different visions. 76 Tanmeyah As EFG Hermes works to expand its product portfolio, solution offerings, and 80 valU geographic footprint, we’re proud to have built an organization that benefits 84 EFG Hermes Factoring from knowledge across an ever-expanding footprint, solidifying our position as 88 Corporate Governance a full-fledged financial services corporation. 96 Risk and Compliance 102 Our People 108 Board of Directors 116 Executive Committee 124 Corporate Social Responsibility 132 Financial Statements 4 2018 Annual Report 2018 Annual Report 5 EFG HERMES AT A GLANCE EGYPT 6 2018 Annual Report 2018 Annual Report 7 The Leading Financial Services Corporation in FEM Leveraging its 30-year track record of success operating across the Arab world, EFG Hermes has expanded its geographical footprint and diversified its product offering to bring a constantly evolving portfolio of products to clients in some of 75 the world’s most rapidly growing markets in the MENA region, Sub-Saharan Africa, FEMs Covered by EFG and Southeast Asia Hermes Brokerage in 2018 What We Do The Investment Bank EFG Hermes is a leading financial ser- Securities Brokerage erates while simultaneously expanding multaneous transactions. The division vices provider across frontier emerg- As the leading brokerage house in the its geographical footprint, with the di- has become the institution of choice ing markets, offering a constantly region, EFG Hermes Securities Broker- vision opening offices in both Nigeria for clients, driven by the team’s ex- evolving array of financial services to age offers a unique range of products and Bangladesh. As of year-end 2018, ceptional domestic and international both institutional investors and retail and services and an unparalleled cov- the division was ranked first for share execution capabilities in the M&A EFG Hermes has transformed clients. In 2018, the Firm continued erage of over 75 frontier emerging of market execution on the Egyptian sphere, extensive experience in a from a pure play investment its geographic expansion strategy, markets. Today, the division has on- Stock Exchange (EGX), on both the broad range of industries, jurisdic- bank operating across the MENA inaugurating new offices in Bangla- the-ground presence in Egypt, Kuwait, Abu Dhabi and Dubai Exchanges (ADX tions, and products, and its ability to region into a leading financial desh and Nigeria. the UAE, Saudi Arabia, Oman, Jordan, and DFM), and Boursa Kuwait. The respond with market judgments and services corporation with a Pakistan, Kenya, Nigeria, Bangladesh, division is looking to expand its cover- ingenuity to clients’ needs for capital. diverse product range and a EFG Hermes was founded as an and offices in the UK and the US. EFG age further, with plans to leverage our EFG Hermes Investment Banking built strong footprint in FEMs across Egyptian advisory firm in 1980, and Hermes Securities Brokerage serves a award-winning emerging and frontier on an already extremely successful both Sub-Saharan Africa and through both organic growth and a diverse client base ranging from indi- market research offerings and deploy 2017 to report another record-break- Southeast Asia. series of strategic mergers, the Firm vidual retail investors to some of the new on-the-ground teams of talented ing year, booking USD 2.5 billion in expanded to become a full-fledged most prominent institutional inves- brokers to cover equities in promising transactions in 2018. During the year, investment bank by 1996. tors and high-net-worth-individuals. emerging markets beyond MENA. the division managed to go beyond The division’s exceptional portfolio plain vanilla advisory work in its home Since 2016 and via a lateral busi- of products and services is backed Investment Banking market, strengthening its product of- ness strategy, EFG Hermes has by our award-winning Research divi- The EFG Hermes Investment Banking ferings and expanding its execution transformed itself once again from sion, which provides clients with the Division is a leader in M&A advisory, capabilities across a wider geographi- a pure play investment bank operat- most up-to-date and reliable market equity capital market (ECM) execu- cal footprint despite a geopolitical ing across the MENA region into a intelligence available, and our online tions, and debt capital market (DCM) climate in constant flux. leading financial services corporation multi-asset trading platform, which capabilities. Throughout the years, it with a more diverse product range, allows for seamless multi-market has continued to execute a steadily Asset Management encompassing both traditional in- access from desktops, laptops, and expanding stream of landmark With over USD 2.1 billion in total vestment banking services as well mobile phones. transactions, not only in the MENA assets under management (AUMs) as non-bank financial services, and region but throughout the Firm’s regionally and EGP 13 billion in the a strong footprint in frontier emerg- In 2018, EFG Hermes Securities Bro- ever-evolving footprint by leveraging Egyptian market as of 31 December ing markets (FEM) across both Sub- kerage continued to strengthen its unique deal-sourcing efforts and an 2018, EFG Hermes Asset Manage- Saharan Africa and Southeast Asia. market share in countries where it op- ability manage and place multiple si- ment remains the MENA region’s 8 2018 Annual Report EFG Hermes at a Glance 2018 Annual Report 9 largest asset manager with a product Asset Management to sell its 49% stake The Non-Bank Financial banking sector. The company provides offering encompassing mutual funds in a 998 MW operational wind power Institution a comprehensive suite of microfinance and discretionary portfolios with both portfolio managed and co-owned by EFG Hermes Leasing solutions to help clients achieve social country-specific and regional man- EDPR. It also successfully completed the EFG Hermes Leasing was launched in mobility and find a path out of poverty Covering more than 263 equities dates. Although the division already first close of the Egypt Education Fund, 2015 to provide comprehensive finan- by giving them capital to grow their across 24 markets as of year- serves a diverse client base, with a which will concentrate on Egypt’s prom- cial leasing solutions and value-added businesses. Today, Tanmeyah’s nearly end 2018, EFG Hermes’ Research special focus on long-term and institu- ising K-12 private education sector. The advisory services that help corporations 4,000 employees serve more than Division continues to lead the tional clients, it continues to work on division will now focus on reinvesting meet their business goals. By leverag- 290,000 active borrowers out of the region in quality and breadth of capturing a wider network of clients as the proceeds from the sale of Vortex ing an extensive network of vendor company’s 248 branch offices. coverage. it expands along with the Firm in terms assets to seek out new opportunities partners and a deep understanding of product offering and geographical in the renewable energy realm, with a of all aspects of the industry, we serve EFG Hermes Factoring reach. In 2018, the division received focus on the US and Canada. corporations and SMEs in a variety of EFG Hermes Factoring was launched in multiple awards for its successful and sectors including, but not limited to, 2018 and is the latest addition to the trend-setting work in the industry, Research turnkey solutions for building owners, non-bank financial services product including Best Asset Manager in Egypt Covering more than 263 equities construction, energy systems, industrial offering. EFG Hermes Factoring gives at the EMEA Finance African Banking across 24 markets as of year-end equipment, and waste management. businesses access to financing options Awards, the Outstanding Performance 2018, EFG Hermes Research contin- EFG Hermes Leasing has been able to beyond conventional bank borrow- in Asset Management Award at the ues to lead the region in quality and address a gap in the market that has ing, in turn helping them to enhance Business Today Top 100 Awards, and breadth of coverage. EFG Hermes’ left smaller companies lacking access their working capital, reinvest in their the Best Asset Management Solutions world-class team of analysts offers in- to viable credit facilities by creating a production process, pay suppliers Award from The European. vestors the broadest coverage of FEMs dedicated, comprehensive platform promptly and improve their overall on the market and has both deepened through which companies and entre- cash position through increased li- Private Equity and broadened its macroeconomic, preneurs can explore tailored financing quidity. Our highly experienced team EFG Hermes Private Equity leverages industry, and equity coverage of mar- options best suited for their specific of professionals assist businesses both its group-wide accrued insight and dis- kets in the MENA region and beyond. needs. In doing so, EFG Hermes Leasing domestically and globally, helping tribution platform to manage funds This year the division added equities quickly climbed the ranks to become them grow sustainably without dilut- that invest across a diverse spectrum in Georgia, Bangladesh, Rwanda, Egypt’s fourth largest player by market ing equity or incurring further debt, of sectors ranging from clean energy and Botswana to its coverage port- share of contracts booked (by asset while also reducing exposure to risk.