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In October 2019, 27 Investment Professionals from EFG Hermes’ business lines (Asset Management, Investment Banking, Research and Private Equity) in Cairo and Dubai attended a two-day Advanced ESG Training workshop. The aim of the workshop was to provide in-depth training on Responsible Investment mechanisms and highlight the different approaches available to incorporate ESG considerations into traditional investment analysis. The workshop generated a highly fruitful discussion on the unique challenges facing each business line for ESG integration and yielded useful criteria for increasing the level of ESG analysis, particularly in the social and environmental fields which typically receive less focus than good governance, a cornerstone of EFG Strategy since its founding. The discussion also served to highlight the prominence of ESG issues for global investors and underlined the fact that, going forward, ESG integration needs to be prioritized in order to access funds that increasingly look for responsible investment in all areas. EFG Hermes’ adherence to the UN PRI was considered a key regional advantage for the Firm in demonstrating commitment to ESG issues and creating investment opportunities.

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Key Takeaways

  • ESG integration has become a priority for institutional investors at the global level.
  • Responsible Investment involves making informed choices and setting priorities based on sound research.
  • Neglecting ESG issues opens up the Firm to considerable risk.
  • A key challenge is the lack of reliable data on ESG issues.
  • A second challenge is that ESG issues are still not prioritised in FEMs making it necessary to tailor interventions to local circumstances while still adhering to global standards and expectations.
  • In the short-term, RI may be challenging in terms of returns; however, there is no other choice if long-term value creation is the overall objective.
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“The ESG due diligence process has to start early when we evaluate investment opportunities for our clients. Frequently, there are problems that can completely derail the process if we discover them too late „

Omar El Shafey

Vice President
Investment Banking

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“When we try to attract Foreign Direct Investment (FDI), we showcase our achievements on ESG, particularly the UN PRI. Our portfolio is mainly in Europe so we can’t ignore these issues. „

Ahmed Al-Ariki

Director
Private Equity

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“Exclusions are only the first step; it is the dedication to ESG integration which makes the difference. „

Mohammed Ali Hussain

Head of Research
FIM Partners


Vortex: A Clean-Energy Future

Managed by EFG Hermes’ Private Equity, the Vortex Renewable Energy platform, one of the largest renewable energy-focused investment managers in Europe, is currently expanding into global markets, with an aim to geographically diversify its clean energy footprint.

Vortex has successfully executed transactions worth ca. EUR 2.4 billion in the European renewables market since 2014. Vortex was able to close three investments, one divestment and three debt re-financings since inspection. Vortex acquired 457 MW of wind assets from EDP Renováveis SA across four Western European jurisdictions and acquired 365 MW of solar assets from TerraForm Power in the United Kingdom, and recently, divested its wind portfolio in 2019 to J.P. Morgan Asset Management.

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€ 2.4 Billion

EXECUTED TRANSACTIONS

€500 Million

EQUITY INVESTED

822 MW

MEGAWATTS OF NET CAPACITY

Solar & Wind

TECHNOLOGIES

The Solar PV transaction was valued at an Enterprise Value of ca. GBP 470 million and comprises 24 operational assets, representing one of the largest portfolios of solar PV in the United Kingdom. Vortex has continued to outperform investment targets in terms of electricity generation and financial performance across the years, demonstrating the attractive financial returns possible on sustainable and responsible investment.

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Financial Inclusion: Financing a Brighter Tomorrow

Financial inclusion aims to help people access financial services that meet their needs at affordable prices. EFG Hermes has developed a series of products and initiatives that aim to realize financial inclusion at different levels through a variety of mechanisms including microlending, leasing, mortgage financing and Fintech solutions.

Microfinance

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Tanmeyah Microfinance, one of the country’s largest micro lenders, celebrated its 10th anniversary in 2019. With 271 branches and new products such as group lending, designed specifically to help women, Tanmeyah’s efforts to promote financial inclusion are highly effective

SME Leasing

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EFG Hermes Leasing has created an EGP 225 million grant facility for SMEs in conjunction with the Saudi Development Fund of which 37.5 million is directed to SMEs located in remote governorates and another 37.5% is directed to the agricultural sector. This brings the SME component of the Total portfolio to 16% of a total of EGP 3.5 billion in 2019.

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FinTech

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A landmark partnership with the Saudi Development Fund and the Ministry of Investment and International Cooperation saw the award-winning Fintech solution finance cars for Uber drivers with Swvl to follow in 2020.

Mortgage Finance

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A mortgage finance joint venture with TMG and GB Capital to offer unrivalled mortgages with fast turnaround time and improve access to affordable housing.

Health & Education: Foundations of Sustainability

FFG Hermes Private Equity manages two ground-breaking funds, the Egypt Education Fund and Rx Healthcare Management, designed to address critical gaps in the areas of education and healthcare, both of which are vital to the fulfilment of the SDGs.

Rx Heathcare Management

Rx Healthcare  Management (RxHM) is a private equity investment management firm set up to address the growing demand for high-quality, affordable healthcare products and services across Egypt, MENA and Africa. In 2019, RxHM acquired leading Egyptian medical solutions provider United Pharma with the aim of helping to expand the company’s product offering to cover generic categories in underserved therapeutic areas and ramp up production for IV products

Egypt Education Fund

In 2018, EFG Hermes Private Equity entered into an exclusive partnership with Global Education Management Systems (GEMS), one of the world’s leading providers of private English-language education for students from kindergarten to twelfth grade (K-12), to jointly establish a new USD 300 million platform focused on Egypt’s underserved K-12 education sector. The partnership aims to provide high-quality education choices for Egyptian families by building Egypt’s largest institutional education service provider, upgrading education facilities and providing safe and effective learning environments. In 2019, the Fund acquired a majority stake in the leading transport provider, Option Travel to provide a high quality and competitive student transportation service to c. 6k students c u r r e n t l y enrolled in GEMS schools in Egypt.