Tuesday 03, January 2017 by Sarah Spendiff

EFG Hermes expands frontier markets division

The rollout will be modelled on firm’s successful push into GCC and will focus on securities brokerage, investment banking and research

EFG Hermes, the Middle East and North Africa (MENA) region’s financial services corporation, plans to expand its frontier markets drive. With seven of the world’s 10 fastest-growing economies now frontier markets, the expansion drive will create new value for EFG Hermes shareholders across a wider geographic footprint it announced today.

EFG Hermes plans to continue its transformation into a premier frontier finance house with a footprint that spans some of the world’s most compelling emerging and frontier markets. It will be headed by Ali Khalpey, a veteran of frontier and emerging markets with a proven track record spanning from London and New York to Johannesburg.

“As we accelerate our growth into frontier markets, we will model our expansion on the very successful strategy the firm used to grow its presence in the Gulf Cooperation Council countries,” said Khalpey. “We will use local professionals with local knowledge to build on-the-ground presences that will serve our global institutional client base with the insights and robust governance frameworks they have come to expect of EFG Hermes.”

Mohamed Ebeid, Co-Head of Securities Brokerage at EFG Hermes said that the drive into frontier markets will be no less significant to the firm’s future than their expansion out of Egypt to become the leading investment bank in the MENA region in the early 2000s was. “With the acquisition of an on-the-ground presence in Pakistan now in its final stages, our aim in 2017 is to accelerate the rollout of the platform as we open new markets and businesses on the ground,” he said.

Having already obtained regulatory approval, EFG Hermes has announced a tender offer on the Pakistan Stock Exchange for Karachi-based Invest and Finance Securities Limited. Meanwhile, the firm is pursuing a license in another frontier market and is “carefully studying the potential to make other opportunistic expansions across frontier markets as part of our 2017 plans.

“With growth in developed and many emerging markets still slow, an increasing number of international institutional investors are making allocations to frontier markets. Seven of the ten fastest growing markets in the world are frontier,” said Ebeid. “There’s a natural fit between continuous capital flows into emerging markets as investors seek growth—on the one hand—and a large and growing universe of companies in the frontier space that are seeking capital, on the other. We are the natural conduit linking the two, whether on the advisory front or with brokerage franchises backed by one of the most robust research offerings in global emerging and frontier markets.”

EFG Hermes Research aims to increase its coverage universe to more than 200 stocks from 155 today, with a significant portion of the expansion set to come from initiation of coverage on the ground in frontier markets. The research division initiated coverage of Pakistan earlier this year. The firm is developing a broad corporate access program for frontier markets, a process that began earlier this year with the invitation of frontier-based companies to the EFG Hermes London and One on One conferences, the firm’s flagship investor events.

The expansion of EFG Hermes Frontier comes just weeks after the firm announced it is seeking regulatory approval to open EFG Hermes USA to directly serve US-based institutional clients seeking exposure to MENA and frontier markets. 

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