Three companies, EFG Hermes Finance (the NBFI arm of EFG Hermes Holding), GB Capital (NBFI arm of GB Auto) and Talaat Moustafa (TMG), entered into an agreement to create a mortgage finance joint venture (JV). The new venture will offer mortgage finance solutions to consumers looking to buy move-in homes across TMG’s existing projects and potential developments over 10-year tenures at competitive interest rates, as well as introduce new variable-rate financing solutions to increase affordability and better align housing supply with Egypt’s large, growing population of homebuyers. The JV’s aim is to fund a portfolio of units worth EGP450mn in the first 12 months of operations. The JV will take place at the level of an existing mortgage finance company currently owned by TMG, whereby the parties will increase the company’s capital to allow each to have one-third ownership. The JV targets an initial paid-in capital of EGP150mn (expected to increase to EGP250mn as the business grows). The partners will appoint a CEO to lead the new venture, which will be staffed by an independent management team. EFG Hermes Investment Banking is acting as the sole financial adviser on the transaction, which is subject to the Financial Regulatory Authority’s (FRA) and other regulators’ approvals. (Company disclosures)
 
GB Auto: EGP4.58 as of 17 Apr. 2019, Rating: Buy, TP: EGP7.50/share, MCap: USD291mn, AUTO EY/AUTO.CA
 
TMG Holding: EGP11.70 as of 17 Apr. 2019, Rating: Buy, TP: EGP18.00/share, MCap: USD1,404mn, TMGH EY/TMGH.CA