EFG Hermes Succeeds in Securitization Issue for CIRA Worth EGP 800 Million
EFG Hermes, the leading investment bank franchise in Frontier and Emerging Markets (FEM), announced today that it successfully closed Egypt’s first issuance of a future flow securitized bond for CIRA Education, the largest integrated provider of educational services in the Egyptian private sector. The transaction, worth EGP 800 million, is the first issuance of an approved EGP 2.0 billion bond program.
The securitization bond is comprised of three tranches with credit rating A from Middle East Ratings and Investor Services (MERIS), where tranche A is valued at EGP 96 million, with a tenor of 3 years, Tranche B is valued at EGP 304 million, with a tenor of 5 years, and the final tranche, tranche C, is valued at EGP 400 million, with a tenor of 7 years.
Commenting on the issuance, Moustafa Gad, Co-Head of Investment Banking at EFG Hermes, said, “This is another historic moment for us at EFG Hermes as we close this landmark transaction, further solidifying our position as the leading provider of disruptive financial solutions in the Egyptian market. I also want to commend the Egyptian Financial Regulatory Authority (FRA) for its ongoing efforts and commitment to enriching the market with new financial tools and mechanisms that support economic growth. Our capital markets have witnessed unprecedented innovation in the last few years with new instruments that unlock value for critical sectors, attract foreign investors, and generate significant liquidity in the market. We’re proud to be at the forefront of these changes acting as the first financial advisor to execute future flow securitization bonds, leveraging our decades of financial experience and outstanding team of professionals. We look forward to working on more innovative transactions in the future that deliver on our clients’ diverse needs.”
The innovative structuring of future flow securitized bonds allows borrowers to obtain financing at low-interest costs and for a longer duration, in addition to attracting a broad class of investors given their positive investment grade rating. The bond is backed by expected future cashflows instead of collateral in the form of receivables and offers public and private sector companies such as sports clubs, utility providers, healthcare and educational institutions a new way of accessing liquidity.
“We’re honored to contribute to Egypt’s education sector, a pillar in the foundation of the country’s advancement and development, by supporting a key player like CIRA Education as we strive to provide financial products that are a force for good and deliver a long-term impact for both businesses and people alike. As we continue introducing new, disruptive financial solutions to the market, we are driven by our goal to unlock opportunities that achieve sustainable growth for all stakeholders. The bond’s positive rating is a testament to the strength of the investment, but what makes it even more significant is its power to impact inclusive economic growth by driving quality education,” said Maie Hamdy, MD, Debt Capital Markets (DCM) at EFG Hermes.
Zulficar acted as the transaction legal advisor, aiBANK, the Firm’s recently acquired commercial bank, subscribed to the issuance, whereas Banque du Caire, QNB AlAhli, and Ahli United Bank acted as the underwriting banks, with the latter also serving as the transaction custodian.
EFG Hermes successfully introduced the first Sukuk deal, the first short-term note, and the first future flow of securitized bonds in the Egyptian market. This issuance follows the Firm’s conclusion of a series of securitization transactions in 2022, including advisory on Pioneers Properties for Urban Development’s second securitization issuance, first mortgage finance securitization in the market for Bedaya Mortgage Finance, a securitization issuance for MNHD, the sixth issuance for Premium International for Credit Services, valU’s second securitization issuance, and Corp-Solutions second securitization issuance.
