EFG-Hermes, the leading investment bank in the Arab world, sold 19 percent of stakes in Damas International Limited owned by its investment fund to the Qatari Mannai Corporation for US$150 million.
The exit realizes $65 million in capital gains to a fund that is directly managed by EFG Hermes and that achieves an internal rate of return up to 40 percent, which asserts the company's ability to maximize values for investors through continuous support and restructuring of companies.
The exit achieved a 40 percent return rate, which is 1.8 times the cash invested in Damas in May 2012, by virtue of an alliance with the Mannai Corporation to acquire 100 percent of the Damas shares for $445 million.
Damas is the leading luxury jeweler with more than 300 outlets in The United Arab Emirates, Bahrain, Qatar, Kuwait, Oman and Saudi Arabia. It is a world-class designer that also sells select global brands.
EFG Hermes CEO Karim Awad praised the team that made this deal and asserted the company's ability to continue to discover attractive investment opportunities that achieve a high return on investment depending on a distinguished team of experts and close regional and international ties.
“This deal will be the foundation of a new direct investment strategy that will be announced in the coming months, a main axis of the company's future growth plans,” he said.
Following the acquisition, Damas management has applied a restructuring program in accordance with the vision of the new shareholders. It has restructured the senior management team, refinanced debts amounting to 2.3 billion dinars at the time of the acquisition, developed activities that lacked mechanisms to achieve profitability, offered new and distinctive brands, and launched a new system for retail outlets to take advantage of future growth and expansion opportunities.
Karim Moussa, co-chair of the EFG Hermes direct investment sector and member of the Damas board of directors, said he was pleased to work with the Mannai Corporation on the restructuring program and the development of the company's business and financial position, which has doubled profits before interests, taxes, depreciation and amortization, and increased operating earnings nearly 10 times.
He added that the achievement of such growth in such a short period of time confirms the quality management model adopted by EFG Hermes, which is based on a continuous monitoring of investments.
“This consolidates the leading position we occupy among direct investment companies in the region,” he said, adding that Damas succeeded in building a cohesive business model that would achieve growth in the future under the leadership of the Mannai Corporation.
EFG Hermes had invested US$85 million to acquire a stake in Damas. It is one of five sponsors of the Inframid investment fund, the largest fund specializing in infrastructure projects in the South and East Mediterranean. It has acquired a unique experience since its formation 18 years ago through the diversity of its investments in various sectors, including tourism, real estate, financial services, building materials, industry, petroleum, natural gas, food and agricultural production, consumer goods, and retail. It has so far invested $652 million in 36 projects and implemented 26 exit deals with an internal rate of return of up to 20 percent.
The Investment Banking team acted as the exit deal’s financial advisor for the direct investment sector in EFG Hermes, while Freshfields was the legal adviser.
