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Nasdaq White Paper Highlights Opportunities for Carbon Markets in Middle East and North Africa

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Sahfy Sahfy
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Nasdaq White Paper Highlights Opportunities for Carbon Markets in Middle East and North Africa
Nasdaq White Paper Highlights Opportunities for Carbon Markets in Middle East and North Africa

A new white paper published by Nasdaq today explores the challenges and opportunities for developing carbon markets in the Middle East and North Africa (MENA) region.

The report, titled “The Carbon Market Opportunity in Middle East & North Africa,” notes that the MENA region is particularly vulnerable to the impacts of climate change, making it an ideal place to grow and mature carbon markets.

The report also highlights the region’s strong capital markets, which have evolved greatly over the past 20 years and are now well-positioned to support decarbonization efforts.

“The development and growth of sophisticated capital markets in MENA over the past 20 years means that the region is well-placed to support decarbonization through channeling capital to carbon projects/initiatives,” the report states.

“Establishing voluntary carbon markets (VCMs) could further help incentivize businesses to think long term and embrace the transition to a net-zero economy.”

The report identifies several challenges that need to be overcome in order to develop carbon markets in MENA, including:

Inconsistency in how credits are defined, measured and supplied
A lack of cohesive trading and post-trade infrastructure
Regulatory uncertainty
The report also outlines a number of steps that need to be taken to address these challenges, including:

Building awareness and understanding of carbon markets
Standardizing carbon credit definitions and measurement methods
Developing a strong trading and post-trade infrastructure
Creating a clear regulatory framework
“Entities across the MENA capital markets spectrum must tackle the lack of awareness, standardization, transparency and regulatory alignment before they can open the door to capital flows and meaningful climate change mitigation,” the report states.

“Building a strong infrastructure for developing, verifying, trading, registering and retiring these assets will be essential to those efforts and the realization of benefits by countries, participants and populaces.”

The report concludes by highlighting the potential benefits of developing carbon markets in MENA, including:

Increased investment in low-carbon projects
Job creation
Improved air quality
Reduced greenhouse gas emissions
“The development of carbon markets in MENA has the potential to deliver significant benefits to the region,” the report states. “By overcoming the challenges and taking the necessary steps, MENA can become a leader in the global fight against climate change.”

Sadu Capital’s VC fund picks Apex Group services

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Sahfy Sahfy
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Apex Group Ltd. (“Apex Group” or “The Group”), a global financial services provider, today announces its appointment by Sadu Capital (“Sadu”) to provide Fund Administration and AML solutions.

 Sadu Capital is a venture capital firm that invests in private technology startups through equity ownership. Sadu’s latest fund currently focuses on investing in early-stage startups (pre-seed, seed and Series A) that are based in the Middle East & North Africa region (“MENA”).

The drive for economic diversification and state-backed initiatives continue to fuel the growth of Middle East’s venture capital industry. Despite a global economic slowdown, recent MAGNiTT data shows that MENA-based startups continued to significant interest from investors in the first half of 2023 as funding levels reached $1,075m across 193 deals in the MENA region.

Apex Group will support Sadu Capital’s Cayman domiciled fund with technology-enabled Fund Administration and AML Officer services. Fund Administration is at the core of Apex Group’s single-source solution, delivering timely, accurate and independent services, underpinned by market leading technology platforms.

In addition, Apex Group’s comprehensive AML services and outsourced officers coordinate proactive solutions to enable clients to understand and mitigate AML risks, as well as identifying early opportunities that arise from evolving regulation and new market trends.

This appointment, by a reputable VC firm such as Sadu, demonstrates the application of Apex Group’s single-source solution, delivering timely, accurate and independent services to meet client needs, streamline their vendor relationships and deliver time and cost economies. According to a Total Economic Impact (TEI) report by Forrester Consulting, clients of Apex Group’s single-source solution achieve, on average, cost benefits of $5.39m, with a net present value of $2.75m over a three-year period.

Salem Washeely, Managing Director, Sadu Capital adds: “As a leading venture capital firm in the MENA region, Sadu is pleased to appoint Apex Group to provide Fund Administration and AML solutions to our early-stage VC fund. Sadu, from its inception, planned to build an outstanding relationship with its investors and LPs including transparent reporting and seamless onboarding process among many other exceptional experiences. To achieve that, Sadu looked for a capable firm with global presence to rely on and Apex Group was the clear choice. Their single-source solution stood out for us, as it enables us to access all of the services we need across multiple jurisdictions, via one convenient relationship, therefore removing the complexity and inefficiency of multiple service provider relationships. We have been particularly impressed by the knowledge and responsiveness of Apex Group’s experienced local team.”

 Naveed Zamir, Country Head, Dubai at Apex Group comments: “Global venture capital continues to be an attractive proposition for Middle East investors, with the local ecosystem going from strength to strength. We look forward to supporting Sadu Capital’s entrepreneurial team with our solutions which deliver significant operational, resource and cost efficiency, allowing them to focus on identifying and investing in, high growth businesses in the region.

CBE rejects media reports on United Bank sale

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Sahfy Sahfy
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In light of the media reports circulating the sale of the United Bank, the Central Bank of Egypt (CBE) strongly rejects the allegations about the start of due diligence process, saying the sale process is underway according to a predetermined schedule.

In a statement on Monday August 21, 2023, the CBE said the due diligence process for the United Bank with interested buyers will start by the end of September 2023.

The central bank confirms interest from a number of international financial institutions, and that it would continue to provide updates on the sale process in a timely manner.

The United Bank occupies a distinguished position among Egyptian banks for demonstrating sustainable growth, providing banking services through highly-qualified calibers, and its adherence to sound governance rules and international best practices in line with applicable rules and laws. With regard to the diversity of its products and its customer base, the United Bank provides banking services to its customers from various sectors, which include individuals, companies and small and medium enterprises, in addition to Islamic banking services and others.

The United Bank operates through a wide network of branches amounting to 68 branches in addition to its digital channels, 225 ATMs, and 1,723 employees.  In terms of financial solvency and its financial position data as of December 2022, the total assets of the United Bank amounted to 85 billion Egyptian pounds.

OMAN TAKES GREEN HYDROGEN GAMBLE

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Sahfy Sahfy
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Oman is dedicating an area the size of Slovakia to solar power projects to produce green hydrogen – gas produced entirely from renewable sources, according to a report by AGBI.

On June 1 Salim bin Nasser Al Aufi, minister of energy and minerals, signed $20 billion of contracts with partners including BP, Shell and the newly formed Hydrogen Oman (Hydrom) to produce 500,000 tonnes of green hydrogen each year.

By July 28 Hydrom announced that “solidified commitments” to initiatives in the sultanate had risen to $30 billion.

Production targets are 1 million tonnes by 2030, 3.75 million tonnes by 2040 and 8.5 million tonnes by 2050. This should make the sultanate the world’s sixth largest exporter of hydrogen by 2030.

By 2040, those exports are projected to be worth 80 percent of Oman’s current exports of liquefied natural gas (LNG), according to the International Energy Agency.

By 2050 they may be worth twice as much as the sultanate’s current overseas LNG sales.

Yet hydrogen is not without challenges. Technical issues limit long-distance transportation of the gas, while regulations and international markets are also still being worked out.

“There’s a lot to do before hydrogen will be up and running and delivering,” Charles Dolphin, a partner in Muscat law firm CMS, told AGBI.

This uncertainty is reflected in the wide range of approaches that have been taken to the gas in the Gulf.

“Other Gulf states are taking a more private sector approach,” said Dolphin. “The UAE and Saudi Arabia aren’t seeing so much government involvement, except for some gearing up of renewable energy projects to supply the electrolysers making the hydrogen.”

Oman’s decision to go for green is partly explained by the fact that it has some of the world’s leading renewable energy resources, according to S&P.

The sultanate enjoys high irradiance – the power per unit area received from the sun – a good wind profile and a strategic location, according to global energy transition reporter James Burgess.

Combined with large amounts of available and unused land, it is therefore perfect for green hydrogen production.

The relatively high price of the gas compared to the huge quantities of cheap renewable energy that are set to become available – plus Oman’s relatively small population and economy – means the bulk of the hydrogen generated will be for export.

This means getting to grips with the problem of transportation. Converting it into hydrogen-heavy ammonia for shipping on tankers is one possible solution. It is then converted back into hydrogen at its destination.

Yet, “while ammonia is definitely seen as the vector for transport at the moment, there are conversion losses at every step of this process,” said Burgess.

Plus, pricing on a global market scale is also still evolving.

“It could evolve like the early LNG market,” said Burgess. “You might see some surplus hydrogen volumes from the big hubs eventually developing into a spot market.”

Local demand may well be the shape of the industry in the immediate future. Many of the projects being announced – in Oman and elsewhere – also have seven-year timelines, up to 2030.

Dolphin said: “Maybe, by the time they come online, the market will have matured and the project’s time will have come.”

Bahrain Real Estate Market Review Q2 2023

By
Sahfy Sahfy
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Real estate transactions in Bahrain totalled 5,279 in Q2 2023, according to SLRB data. This marks an increase of 7.1% year-on-year, but a decrease of 16.7% compared to last quarter, which is likely due to Ramadan and both Eid holidays falling during Q2.

Looking at Bahrain’s residential sector, average quoted apartment rents increased by 2.1% in Q2 across governorates compared to Q1, while quoted apartment sales rates fell by 1.1%. The highest rates continue to be seen in the Capital Governorate, although the Muharraq Governorate is beginning to close the gap, with newly delivered quality assets achieving higher rates in the likes of Diyar Al Muharraq and Dilmunia. In terms of villas, there were marginal changes in rates in Q2, with quoted rents falling by 1.0% and sales increasing by 0.6% compared to Q1. Meanwhile, sales rates stayed relatively constant on an annual basis compared to Q2 2022, with apartments remaining unchanged and villa rates softening by 0.2%. Looking at rents, rates continued to trend upwards year-on-year, with apartment rents increasing 4.6% and villa rents by 7.3% in the year to Q2 2023.

In the office sector, we have seen an uptick in registered leases in CBRE’s managed properties in H1 2023. The Grade A & B commercial office market continues to serve two main demand drivers: government and quasi-government entities seeking larger floor plates, and international firms requiring small-to-medium-sized units. While rental rates remain relatively stable, vacancy rates have begun to fall for the first time in recent years, reaching their lowest rate since 2019, now estimated to be standing at 26.3%. There is however a significant pipeline of supply due to be introduced to the market in H2 2023 and into next year, which will likely impact the headline rate, particularly amid current occupier demand trends.

Within the hospitality sector, STR data shows that Manama’s average occupancy rate sits 11.2% higher year-on-year in the year to date to June 2023, increasing from 46.1% in 2022 to 51.3% in 2023. Over the same period, Manama’s ADR increased only marginally by 1.8%, while RevPAR increased by 13.1%. In June, Bahrain signed a Memorandum of Understanding with Saudi Arabia to promote the two countries as one regional and global tourist destination. The agreement establishes a framework to collaborate in efforts to market tourism programmes and activities in both countries. Moreover, Bahrain was included in the International Congress and Convention Association (ICCA) global rankings for the first time in five years, featuring in 89th place, due to events held at Exhibition World Bahrain. Exhibition World has hosted 23 events up to the end of Q2 2023 and welcomed over 250,000 visitors.

In the retail sector, CBRE Bahrain’s biannual retail occupancy survey recorded increases in the majority of the surveyed set of malls in H1 2023. Of the 20 malls surveyed, 70% recorded occupancy growth, with the most notable seen at Dana Mall in the Capital, which benefited from recent store openings and the launch of Epix Cinemas. Average occupancy across the set increased 3.6 percentage points compared to H2 2022, now sitting at 70%. The highest occupancy rates have been recorded at Dragon City, the Avenues, and City Centre. While the current occupancy level is at its highest level since the onset of the COVID-19 pandemic, the average occupancy rate still sits some 10 percentage points below its 2019 levels. Despite the gradual upward trend in average occupancy, average rental rates have seen a 4.0% decline across all retail categories in the year June 2023. This has largely been the result of surplus retail stock across Bahrain. We are seeing development activity continue across all market segments, including super-regional, regional, community and neighbourhood retail. This additional pipeline of supply is anticipated to further dilute the market, placing additional pressure on achievable rental levels.

Heather Longden, Director – Advisory & Transactions, at CBRE in Bahrain comments: “CBRE has recorded an uptick in registered leases within our managed office properties and a minor reduction in vacancy rates to 26.3%. All key performance indicators in the hospitality sector have shown signs of improvement year-on-year and according to the BTEA, Bahrain International Airport welcomed 4,098,582 passengers during the first six months of 2023, up 43.2% from the same period in 2022. While retail occupancy rates have improved marginally to reach 70%, average rental rates have dropped in the first half of 2023 as supply of shopping centre space continues to grow.”

Dubai Aerospace Industries acquires the largest commercial aircraft deal in its history

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Sahfy Sahfy
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Dubai Aerospace Enterprise (DAE) Ltd today announced that an affiliate had signed a definitive agreement to acquire the rights, interests, and obligations of a portfolio of 64 Boeing 737 MAX aircraft from a wholly-owned subsidiary of China Aircraft Leasing Group Holdings Limited (“CALC”). The portfolio includes 737-8, 737-9 and 737-10 variants. Delivery of the aircraft is scheduled to occur between 2023 and 2026. Terms of the transaction were not disclosed.

The 737 MAX airplane family delivers enhanced efficiency, improved environmental performance and increased passenger comfort to the single-aisle market. Powered by CFM International LEAP-1B engines and advanced technology winglets, the 737 MAX reduces fuel use and emissions by 20% compared to airplanes it replaces. The 737-10 is the largest model in the 737 MAX family and can seat up to 230 passengers in a single-class configuration, flying up to 3,300 miles. The fuel-efficient jet can cover 99% of single-aisle routes.

DAE’s Chief Executive Officer, Firoz Tarapore commented, “We are delighted to be able to conclude this transaction with CALC to acquire a unique portfolio of 100% new technology, fuel efficient single aisle aircraft.

On a pro forma basis, this transaction will increase the percentage of new technology, fuel efficient aircraft in our owned fleet to approximately 66% from 50%.

This transaction will add certainty to our growth trajectory. On a pro forma basis, this transaction will increase our fleet of owned, managed, committed, and mandated-to-manage aircraft to approximately 550 aircraft, valued at approximately US$20 billion.

This transaction will also allow us to further deepen our existing relationship with Boeing and CFM International. Since inception and including this transaction, DAE has acquired and is committed to acquire approximately 500 Boeing aircraft. We look forward to growing this relationship even further in the coming years.

Approximately 20% of the acquired portfolio is on lease to airline clients who are also existing clients of DAE and we look forward to expanding our relationship with them. The remainder of the acquired portfolio of assets will be placed directly by DAE in the coming quarters.”

The transaction is expected to be completed in the third quarter of 2023 and is expected to have no impact on any of the company’s capital adequacy, liquidity, and funding ratios.

 

Egypt and USAID Partner to Boost Development in Key Sectors

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Sahfy Sahfy
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Development cooperation relations with the USAID enhance development efforts in several sectors, including education, tourism, agriculture, stimulating the private sector, small projects and governance.

Al-Mashat: “We are keen to strengthen the partnership with the US Development Finance Corporation (DFC) to attract investments for private sector projects in Egypt.”

Al-Mashat: $2.1 billion in development funds have been allocated to the private sector since the beginning of 2023, in addition to $7.3 billion over the last 3 years.

The NWFE platform is a model for country platforms to stimulate climate finance and promote the transition to a green economy in light of the National Climate Change Strategy 2050.

H.E. Dr. Rania Al-Mashat, Minister of International Cooperation, met with a delegation of representatives US Congress Foreign Affairs Committee within the framework of their visit to Egypt, in the presence of Chargé d’Affaires of the US Ambassador to Cairo, John Deroche, and Margaret Sancho, Deputy Director of the USAID Mission in Egypt, Deputy Senior Chief Council at United States House Committee on Foreign Affairs, Aaron Jordan, Foreign Affairs Council in the U.S. House foreign affairs committee, Chris White and Chief Professional Officer for the U.S. House Foreign Affairs Committee, James Walsh.

During the meeting, Al-Mashat was keen to stress the importance of close relations at the level of development cooperation between the Arab Republic of Egypt and the United States of America through the USAID. The partnership has extended for decades of joint work to support sustainable development efforts and stimulate rapprochement between the two countries based on shared interests and the diverse opportunities available to strengthen joint relations, especially at the economic level, and strengthen partnership with the private sector in light of the efforts made by the state to enhance development efforts and preserve its gains in light of the challenges facing the global economy.

Al-Mashat referred to the various programs that are being implemented with the USAID through annual grants that are made available to achieve a number of goals, including supporting economic reforms, enhancing the competitiveness of the business community, stimulating trade and investment, developing the workforce and developing youth skills, as well as programs to develop education and vocational training sector, agriculture, health and tourism. The Ministry of International Cooperation and the USAID signed 7 grant agreements worth $160 million last March, and discussions are currently underway on a development grant program for the coming period to implement several priority projects between the two sides.

H.E. also affirmed the Government of Egypt’s keenness to advance development efforts by providing more opportunities for the private sector, referring in the same context to its numerous meetings with the Development Finance Corporation (DFC) to discuss increasing its investments in Egypt in priority areas. That is in line with Egypt’s modernization of its national contributions NDC, in line with what was announced at COP27 provides greater opportunities for climate investment, pointing to the efforts made through the framework of international cooperation and development financing to stimulate the participation of the private sector in development, as the concessional development funds obtained by the private sector from development partners since the beginning of 2023 amounted to about $ 2.1 billion, in addition to the financing of $ 7.3 billion during the last 3 years 2020-2022, whether in the form of investments, contributions, lines of credit or development financing, for companies of all kinds, large, medium and small, and startups.

Al-Mashat drew attention to many international institutions interested in financing the private sector, including the International Finance Corporation (IFC), the European Investment Bank (EIB), and the European Bank for Reconstruction and Development (EBRD), as well as bilateral partners, adding that the structural reforms implemented by the state since 2014 in many sectors, especially renewable energy, have reflected an increase in the interest of international financing institutions’ interest in financing the private sector resulting in many successful financing models, most notably the Benban solar power plant, which was funded by international financing institutions and attracted many local investors.

H.E. stressed the importance of partnerships being launched between the private sector and international financing institutions to stimulate development efforts in Egypt in line with the country’s vision, as in this context, funds were provided from the EBRD to the private sector, which is working on implementing the first dry port in the city of 6th of October, in addition to the financing of international financial institutions for the Norwegian company Scatec, which is implementing a green hydrogen project in the Suez Canal economic zone. It has obtained a guarantee from the MIGA financing from the EBRD and a grant from the Climate Investment Funds (CIF).

In the same context, Al-Mashat indicated the importance of climate action and the efforts made by the country over the past period and its presidency of COP27, explaining that climate action today is a top priority, with diverse projects in mitigation and adaptation.

H.E. noted the successive steps taken by the state in this regard, as it launched the National Strategy for Climate Change 2050 and the Nationally Determined Contributions (NDC), as they were recently updated and announced during the past month in the field of mitigation and adaptation.

H.E. added that the program seeks international support from international financing institutions and bilateral development partners, and that during COP27, the joint political declaration between Egypt, the US and Germany was issued on support for the energy pillar within the program.

Al-Mashat stated that the NWFE program was formulated in accordance with national visions and strategies to provide concessional development funds and blended funds that stimulate the private sector, technical support and expertise to implement green projects in the areas of adaptation and mitigation to curb the impact of climate change, noting the many ongoing efforts with development partners since the launch of the platform. During COP28, details and results of these efforts will be announced.

H.E. was keen to refer to the efforts of the governance of development cooperation by matching concessional development funds with the SDGs in the application of the standards of the Organization for Economic Cooperation and Development (OECD) and international standards to accurately identify the impact of these funds on advancing the SDGs and strengthening the future decision-making processes.

Al-Mashat reviewed the details of updating national strategies with development partners over the past period and preparing the Egypt – UN Sustainable Development Cooperation Framework, as well as preparing the partnership framework with the World Bank, the EBRD, the African Development Bank (AfDB) and other partners in accordance with national priorities and in accordance with national priorities. 15% of the current development cooperation portfolio is development grants aimed at enhancing technical support, conducting feasibility studies, supporting the process of capacity building and enhancing the skills of human cadres.

H.E. said that the concessional development funds also include funds to support the budget, but they are directed to projects that are at the core of the interest of the Egyptian citizen, on top of which are comprehensive health insurance, the social protection program, Takaful and Karama, and the strengthening of food security efforts, and other areas.

Al-Mashat also referred to the other efforts that were implemented during COP27, including the launch of an international competition for startups in the field of climate action technology, which witnessed the wide participation of startups from different countries of the world: ClimaTech Run.

Al-Mashat presented, to representatives of the Foreign Affairs Committee in the US Congress, a copy of the Ministry’s Annual Report for the year 2022, which includes an account of all development cooperation efforts that took place over the past year, as well as the Sharm El-Sheikh Guidebook for Just Financing, which was launched by the Ministry in cooperation with more than 100 international entities and development partners to stimulate equitable climate finance and enhance the ability of developing countries and emerging economies to attract climate finance.

The ongoing development cooperation efforts with the USAID include 11 ongoing projects for technical support in various sectors, and 41 projects and programs are being implemented in several fields, mainly education, economic development, health and governance, in cooperation with 14 ministries and agencies. The following projects are being implemented in light of the objectives of the national strategy for comprehensive economic development, promotion of social justice, support for economic reform, and improvement of governance in a way that supports efforts to achieve sustainable development in Egypt.

Gingo Partners, UAE-based firm, raises $350,000 to support community and investment

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Sahfy Sahfy
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an Investor Outreach Service and Startup Community, is thrilled to announce the successful completion of its fundraising campaign, securing $350k in capital from a group of business angels.

This investment will allow Gingo Partners to accelerate its vision of bringing inclusivity and diversity in venture capital and capitalize on untapped opportunities within the early-stage investment in emerging markets. Gingo Partners is focused to drive the community, expand market reach, and enhance its product offerings to meet the evolving needs of startups and investors.

Maria Ivanova, Founder and CEO of Gingo Partners, provided her insights. “Our focus lies on crafting a product that centers around the needs of founders. In an industry largely shaped by investors, it’s notable that the majority of fundraising solutions available have been designed by venture capitalists, for venture capitalists. Despite the digital age, personal networks continue to play a pivotal role in fundraising efforts. This poses a challenge for exceptionally talented founders from emerging markets, who often face hurdles in financing groundbreaking startups. We are building an affordable set of tools to help teams like ours to find resources for their ventures.”

The funds raised in this round will be strategically allocated to several key areas, including:

Investment : Gingo Partners will intensify its investment in launching its investment to support the best teams with their first investment.

Market Expansion: The funding will support Gingo Partners’ expansion into new markets and territories, such as the Middle East, Africa, and Asia.

The Community: The investment will be channeled into strategic community management and content creation to provide startups with the most essential fundraising tips.

Prices continue to soar in Dubai’s residential market in July 2023

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Sahfy Sahfy
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In July 2023, the total volume of residential transactions in Dubai reached 10,080, a year-on-year growth of 53.4%. This has been supported by a 78.4% increase in off-plan market sales and a 33.8% rise in secondary market sales. The total transaction volumes in the year to date to July 2023 reached 67,818. This is the highest total ever recorded over this period.

Dubai’s residential sales market continues to register strong levels of price growth, where in the year to July 2023, average prices increased by 18.1%, up from the 16.9% rate of growth recorded in June 2023. Over the same period, average apartment prices increased by 18.5%, reaching AED 1,320 per square foot, and average villa prices increased by 16.2%, reaching AED 1,552 per square foot. Average apartment sales rates still sit at 11.3% below the record levels witnessed in late 2014, although a number of core and prime submarkets have long outperformed their 2014 levels. Average villa prices are now above their 2014 comparable peak by 7.4%.

In both the apartment and villa segments of the market, Palm Jumeirah registered the highest price points, with average sales rates per square foot reaching AED 2,463 and AED 4,943, respectively.

The rental market continued to experience moderation for the sixth consecutive month, where Dubai’s average residential rents grew by 22.0% in the year through July 2023, down from the 22.8% increase registered in June 2023. Over this period, average apartment rents grew by 21.9%, and average villa rents rose by 22.6%. As of July 2023, the average yearly apartment and villa asking rents reached AED 105,691 and AED 319,994, respectively.

The highest average annual apartment and villa rents were found in Palm Jumeirah, where asking rents reached an average of AED 256,785, and in Al Barari, where asking rents stood at an average of AED 1,094,034.

Taimur Khan, Head of Research – MENA at CBRE in Dubai, comments:

“Activity levels remain elevated in Dubai’s residential market, notwithstanding the summer lull, where in July 2023, a total of 10,080 transactions were registered, marking a 53.4% increase compared to a year earlier. In the year to date to July 2023, the volume of transactions totalled 67,818. This is the highest level registered over this period, comfortably outperforming the previous 2022 record-high figure of 46,883. On the back of the prevailing fundamentals, we expect that the 2023 total transaction volumes will likely surpass the historic level registered in 2022.

This strong level of activity continues to underpin price growth, where average sales prices accelerated at the fastest pace since late 2014, increasing by 18.1% in the year to July 2023, up from the 16.9% rate registered a month earlier. Residential rents in Dubai registered a year-on-year increase of 22.0% in July 2023, down marginally from 22.8% in June 2023. Demand in the rental market has also increased further, where year-on-year in the year to date to July 2023, the total number of rental registrations has grown by 8.8%. Although, over this period, new rental contracts registered substantially dropped by 12.6%, renewed rental registrations increased by 29.0%. Given the current market backdrop, vis-à-vis the lack of supply and exacerbated demand levels, we expect that rents in Dubai will continue to increase moving forward, albeit at a slower pace.”

EFG Holding Posts 89% Y-o-Y Growth in Revenues and Net Profit in 1H23

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Sahfy Sahfy
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EFG Holding, the leading financial institution with a universal bank in Egypt and the leading investment bank franchise in Frontier and Emerging Markets (FEM), announced today its results for the second quarter of 2023. The Group booked a robust revenue increase of 51% Y-o-Y to EGP 3.1 billion on the back of broad-based growth across the Investment Bank (EFG Hermes), the commercial bank (aiBANK), and the Non-Bank Financial Institutions (NBFIs) platform (EFG Finance) in 2Q23. Moreover, despite a 53% Y-o-Y rise in Group operating expenses, EFG Holding’s operating profit booked an increase of 46% Y-o-Y to EGP 988 million, and net profit before tax grew by 37% Y-o-Y to EGP 842 million in 2Q23. At its bottom line, the Group recorded growth of 20% Y-o-Y to EGP 405 million in net profit after tax and minority interest in 2Q23.

EFG Holding’s Group CEO, Karim Awad, commented on the results: “I am delighted to report that the Group has closed out the first half of the year on a strong note and witnessed outstanding results across the board. Our performance for the period continues to reflect our commitment to operational excellence across the markets we operate in, which saw our divisions continue to deliver on our strategies on both the buy- and sell-side at EFG Hermes. Moreover, I am also thrilled with the performance of EFG Finance and aiBANK as they continue to reap the rewards of increased demand for their diverse suite of financial solutions and banking services. On this front, valU has continued to diversify its product offering and led our NBFIs platform with predominately higher revenues, and in parallel, aiBANK has seen remarkable double-digit revenue growth as it continues implementing the roll-out of its transformation strategy. This performance stands testament to the value creation possibilities from the Group’s comprehensive and diverse business model.

The Investment Bank ‘EFG Hermes’ continued to build on its success at the start of the year and successfully concluded two equity transactions and three debt transactions worth an aggregated value of USD 1.1 billion, further cementing its position as the advisory house of choice. EFG Hermes acted as joint book-runner on the IPO of ADNOC L&S on the Abu Dhabi Securities Exchange, and in parallel, acted as Joint Global Coordinator on the IPO of Al Ansari Financial Services on the Dubai Financial Market.

Regarding revenue performance, EFG Hermes recorded a significant 61% Y-o-Y increase to EGP 1.6 billion in 2Q23 compared to EGP 989 million in the same period last year. Revenue growth in 2Q23 was supported by a 13% Y-o-Y increase in sell-side revenue to EGP 797 million on the back of a 57% Y-o-Y rise in brokerage revenue to EGP 645 million during the period. Additionally, impressive revenue increases of 145% Y-o-Y and 61% Y-o-Y at the private equity and asset management divisions, respectively, drove a 77% Y-o-Y increase in buy-side revenue to EGP 262 million in 2Q23. Moreover, EFG Hermes’ revenue was further buoyed by a 286% Y-o-Y increase in Holding and Treasury Activities to EGP 530 million in 2Q23.

At ‘EFG Finance’, the NBFI platform continued to focus on introducing new and innovative financial service offerings, as well as partnering with various players in 2Q23. EFG Finance’s revenues booked growth of 23% Y-o-Y to EGP 620 million in 2Q23, mainly on the back of a stellar 193% Y-o-Y increase in revenue at valU, reaching EGP 207 million driven by securitization gains coupled with higher loans issued in 2Q23. Additionally, EFG Corp-Solutions’ factoring revenues booked a revenue increase of 90% Y-o-Y to EGP 27 million, and parallel to this, leasing revenues recorded an 11% Y-o-Y increase to EGP 66 million in 2Q23. Meanwhile, Tanmeyah’s revenues declined 17% Y-o-Y to EGP 297 million on lower sales.

Meanwhile, the commercial bank’s ‘aiBANK’ revenues climbed 58% Y-o-Y to EGP 888 million on the back of a 43% Y-o-Y increase in net interest income mainly driven by a rise in interest earnings assets. Additionally, aiBANK’s performance was further supported by a significant 181% Y-o-Y increase in net fees and commission income to EGP 187 million in 2Q23, as trade finance activities continue to pick up.

Awad concluded: “We have built a strong momentum in the first half of 2023, which highlights the strength of our extensive brand universe, and allows us to capitalize on the inherent synergies and attractive opportunities across our verticals. Moreover, our recent rebranding to EFG Holding reflects our evolution into a universal financial powerhouse and further underscores the breadth and depth of our portfolio of value-accretive financial solutions,leaving us better-positioned to serve our clients and expand our reach in today’s ever-evolving and dynamic world. As always, the commitment and expertise of our people remain the driving force behind EFG Holding’s success, and I would like to thank our shareholders for their ongoing trust in the Group’s ability to create sustainable value.”

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