Qatar Islamic Bank (QIB) has exited the race to acquire United Bank, a state-owned Egyptian entity under the Central Bank of Egypt’s (CBE) control. Talks between the two parties reportedly reached an impasse due to a disagreement on valuation.
According to a source cited by Shourouk News and reported by the Egyptian news website Enterprise, QIB’s offer fell short of the CBE’s expectations, failing to reach the $400 million mark. This development comes after both QIB and Kuwait Finance House (KFH) concluded their due diligence on United Bank in February 2024. While KFH has yet to submit a formal bid, the CBE remains committed to selling United Bank as part of the government’s privatization program.
The potential acquisition of United Bank presented an attractive opportunity for QIB to gain a foothold in the Egyptian market. The bank’s established presence and expertise in Islamic banking could have proven valuable in navigating the Egyptian financial landscape. However, the reported valuation discrepancy proved insurmountable, leading QIB to step away from the negotiations.
The CBE now has a few options to consider. It could potentially revisit negotiations with KFH, hoping for a more agreeable valuation. Alternatively, the bank might explore an initial public offering (IPO) on the Egyptian Exchange (EGX), allowing a wider pool of investors to participate in United Bank’s ownership.
This turn of events underscores the complexities involved in bank acquisitions, particularly when valuations become a sticking point. It also highlights the strategic importance the CBE places on finding the right buyer for United Bank, aiming to maximize the return on the government’s asset.
The fate of United Bank remains to be seen. With QIB out of the picture, the focus shifts to KFH’s potential offer and the possibility of an IPO. The privatization process is likely to continue, with the CBE carefully evaluating its options to ensure a successful transaction that aligns with the government’s financial goals.
