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Sales Deal.. Unprecedented Success

Since its establishment in 1957, Alex Bank, being one of the four major commercial state-owned banks, has always occupied a distinguished status in the Egyptian market.

Against this background, the Bank was chosen to be the first public sector bank to be privatized. Hence, the state was keen on bringing such privatization to success. To reach this goal, the Bank experienced a number of significant phases:

The Bank’s Restructuring:

The Bank’s restructuring reform implied applying the international technological standards, developing the Bank’s Corporate ID, re-engineering the banking operations, establishing specialized departments, embarking on new activities, rendering new services, applying international governance principles in addition to human resources development.
In 17/10/2006 privatization took place through selling 80% of the bank's shares to Intesa SanPaolo group which is considered one of the most successful deals with excellent conditions and parameters in Egypt.
Bolstering the Bank’s financial position and cleaning out its loan portfolio via rescheduling the debts of both the public and private sectors. This resulted in the recovery of EGP6.9bn of the public sector debts owed to the Bank, in addition to the sales of the Bank’s participations in joint-venture banks and companies; thus realizing huge capital gains.
The Bank implemented a pioneering four-year structural reform plan through subsequent integrated phases. Experts and observers were astonished by the Bank’s experience in structural reform. The Bank has, thus, won the title of “Successful Banking Reform Model”. Having been an attractive and profitable opportunity for investors either at home or abroad, the Bank was quite prepared for privatization.

Examining & Valuation Phase:

During this phase, the Bank resorted to local and international specialized consultancies in order to make a comprehensive examination of the Bank’s financial, technical and legal affairs. This was in addition to preparing financial statements according to international accounting standards. Moreover, a full examination of the human resources was made and a distinguished voluntary early retirement scheme was offered.
A major international institution “Citigroup” was chosen as the financial advisor of the sale deal, as it is considered the first international institution in managing acquisitions and valuations in the banking system. Citigroup prepared a comprehensive information memorandum on the Bank, the banking system and the Egyptian economy. This was in addition to making the necessary recommendations regarding the policy of offering the Bank’s shares for sale and managing.

BA’s Privatization Plan Announced:

The Ministry of Investment announced on 28 February 2006 that around 75% - 80% of the Bank's shares were to be sold to a strategic investor, 5% to the Bank’s staff on easy terms, while the remaining shares were to be offered for public subscription.
Expressions of interest in acquiring the Bank were invited and certain conditions were set for selecting the strategic investor. The most important of such conditions was that it must be a reputable and strong financial institution.

Receiving Investment Bids:

Thirteen of the biggest financial institutions in Europe, Asia and Egypt competed severely against one another. This was reflected in their unexpectedly high initial offer prices.
AlexBank was allowed to be subject to a due diligence review by six financial institutions. This was done in preparation for presenting final financial and technical bids.
In the meantime, the valuation price of the Bank’s shares was set by the sale advisor. Then, the price was approved by a specialized technical committee to be a base of the sale deal and the final negotiations with the institutions which expressed their interest in acquiring the bank.

Announcement of the Winner:

17/10/2006 was the crucial date to decide among the final offers. The Italian Gruppo Sanpaolo IMI won the bid to acquire an 80% stake in AlexBank for more than EGP9bn. The transaction was concluded at a healthy 5.5 times book value; which was considered a remarkable achievement.
Gruppo Sanpaolo IMI decided to keep the Bank’s name, its trademark and current management to go on leading such esteemed institution and realizing the Italian group’s ambitious goals.
It is noteworthy that Intesa Sanpaolo, which was created via the merger of Banca Intesa and Sanpaolo IMI in early 2007, won the majority stake in AlexBank.