Washington D.C., April 6, 2006—The
International Finance Corporation, the private sector arm of the World
Bank Group, has agreed to purchase an approximately $23 million stake in
Commercial International Bank of Egypt.
Under the terms of the agreement, IFC will purchase approximately 2 percent
of Commercial International Bank’s capital out of a total of 18.7 percent
that was sold in February by National Bank of Egypt to a consortium of
investors, led by Ripplewood Holdings, LLC, a U.S.-based private equity
IFC’s participation in the consortium directly supports the Egyptian government’s
policy of divesting from joint ventures in the financial sector and privatizing
banks. The 18.7 percent share was the government’s remaining stake
in Commercial International Bank.
"Michael Essex, IFC’s acting director for the Middle East and North
Africa, said, “We are pleased to support the government's privatization
initiative in the banking sector. We expect
the Commercial International Bank
transaction to signal the attractiveness of the Egyptian banking sector
for foreign direct investment, which in turn should
improve banking services throughout
Headquartered in Cairo, Commercial International Bank is the first-largest
private Commercial Bank in Egypt with a wide and diversified shareholding.
As of December 2005, the value of the bank’s assets and equity amounted
to $5.3 billion and $475 million, respectively. Commercial International
Bank is Egypt’s most profitable bank with EGP 610 million (US$ 106 million)
in net profit after tax in 2005, a 21 percent growth over previous year.
Jyrki Koskelo, IFC’s director for Global Financial Markets, said, “Commercial
International Bank is an anchor partner for IFC in Egypt and the region.
With the bank’s committed management and proven record of innovation
and delivery, we are eager to support its efforts to expand services to
retail and smaller businesses while strengthening environmental training
The transaction is Ripplewood’s first in an emerging market, signaling
to international investors that the investment climate is improving in
Egypt. The selection of the Ripplewood consortium was based on its
reputation, experience, and strategy to transform the bank from a premier
corporate financial institution to a provider of financial services in
the retail, small and medium enterprise, and mortgage sectors.
Hisham Ezz Al-Arab, chairman and managing director of Commercial International
Bank, said, “The consortium is a strong strategic partner with the foreign
and domestic expertise that can help us expand our commercial and investment
banking business. Although the new partners’ share is not a controlling
stake, as investors they are excited about the Bank’s local expansion
through large acquisitions or aggressive organic growth.”
Tim Collins, chief executive officer of Ripplewood Holdings L.L.C., said,
“We believe Commercial International Bank is Egypt’s premier financial
institution. The Investor Group has been studying this market and this
business for some time and we believe that the bank has excellent growth
opportunities in a country where the banking environment is changing positively.
We feel Egypt and the region represent a significant investment opportunity
and that now is the right time to invest.”
The International Finance Corporation is the private sector arm of the
World Bank Group and is headquartered in Washington, D.C. IFC coordinates
its activities with the institutions of the World Bank Group but is legally
and financially independent. Its 178 member countries provide its share
capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment
in developing and transition countries, helping to reduce poverty and improve
people’s lives. IFC finances private sector investments, helps clients
improve social and environmental sustainability, and provides technical
assistance and advice to governments and businesses. From its founding
in 1956 through FY05, IFC has committed more than $49 billion of its funds
and arranged $24 billion in syndications for 3,319 companies in 140 developing
countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion
for its own account and $5.3 billion held for participants in loan syndications.
For more information, visit www.ifc.org.