EFG-Hermes, Egypt's largest finance company, has announced the termination of its joint venture agreement with Qatari investment bank QInvest due to its failure to obtain the approval of the Egyptian Financial Supervisory Authority (EFSA) before the long-stop date for the year-old agreement.
"The parties received the approval of necessary financial services in all other markets in which the joint venture was initially to operate, including Qatar, the United Arab Emirates, Saudi Arabia and Jordan, among others," EFG-Hermes stated in a Wednesday press release.
"EFG-Hermes and QInvest co-operated fully with all regulators, met all their requirements and exercised the utmost diligence in addressing any regulatory requests in a timely and comprehensive manner," the press release added.
The merger between the two giants, according to which QInvest would have acquired a controlling 60-percent stake in the Cairo-based investment bank, had been trumpeted by the latter as having attracted $300 million in foreign direct investment to Egypt's faltering economy.
Early last month, EFG-Hermes told Reuters that the deal was not likely to be renewed if the EFSA failed to approve it on time, "in light of changing economic conditions and the increased price of the dollar, in addition to the loss of confidence in obtaining the EFSA's approval."
According to Tuesday's statement, both EFG-Hermes and QInvest "look forward to separately creating value for their shareholders and hope to capitalise on their complementary strengths to together pursue suitable business opportunities in a less-structured framework."
It is widely believed that the deal had political implications, as leading EFG-Hermes officials Hassan Heikal and Yasser El-Mallawany are both currently on trial – alongside former presidential scions Gamal and Alaa Mubarak – for alleged stock market manipulation regarding the 2007 sale of Al-Watani Bank.