Egypt investment bank gets brokerage licence

Egypt-based investment bank EFG-Hermes has been licensed to operate a stockbroker unit in Kenya with an eye on an investment bank permit, targeting institutional and high net-worth investors from the Middle East.

EFG had stated its intention to come into the Kenyan market earlier this year, later saying in June that its licence application with the Capital Markets Authority (CMA was at an advanced stage.

The firm is looking to use Kenya as a base for regional operations targeting neighbouring bourses of Tanzania, Uganda and Rwanda.

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“We have been granted a stockbroking license by the CMA. We hope to enhance this with an Investment Banking license in the future,” said EFG Hermes in an email response.

“We will focus on foreign institutional investors, domestic institutional and high net worth Investors. We will also look to work with strategic and corporate investors, especially from the Middle East who are looking to acquire assets in East Africa.”

EFG Hermes also operates in Jordan, Kuwait, Oman, Pakistan, Saudi Arabia UAE and the US. It plans to enter the West African market in the near future.

The licensing of EFG will bring the total number of authorised market intermediaries in Kenya to 25. There are already 14 investment banks and 10 stockbrokers operating in Kenya, who are differentiated by capital requirements.

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Ali Khalpey, the chief executive officer of EFG-Hermes frontier markets division, told Bloomberg last month that the Kenyan unit will initially have between 10 and 15 employees.

Stockbrokers with strong foreign desks have in the recent past outperformed their peers who rely mainly on local investor trades.

Last year, the top four stockbrokers by market share — Kestrel Capital, Renaissance Capital, SBG Securities and Equity Investment Bank – accounted for 64 per cent of total trades worth Sh294.4 billion at the #ticker:NSE.

International players have increasingly sought a foothold in Kenya as an entry point into the regional capital markets.

In 2014, Ecobank launched its investment banking unit in the country, while Exotix partners, a UK-based investment bank, entered into a partnership with Equity Investment Bank.

In November last year, the CMA granted Securities Kenya Ltd an investment banking licence.

The unit is a member of global financial services firm Altree Financial Group, which has presence in New York, London, Hong Kong, Johannesburg, Lagos and Bermuda.

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