Commercial International Bank
Date of original investment: 2009
Deal type: Replacement
Deal size: US$244m
Funds: Actis Africa 3, Actis Emerging Markets 3
From an exploratory meeting to investment in six weeks
Our US$244m investment in Egypt’s largest privately owned bank, Commercial International Bank (CIB), was not only one of our biggest investments; it was also one of our fastest.
Knowledge of the market and confidence in it
CIB was a highly profitable blue chip private sector bank in an under-penetrated, growing and resilient market. At a time when the world was paralysed by the global financial crisis our local team in Egypt and our sector team knew that the time was right to invest and had the confidence to do so.
A spotlight on Egypt
By March 2009, the Financial Services team at Actis had already completed a global benchmarking exercise to evaluate opportunities in different emerging markets. Their plan? To identify the best regulatory regimes, and the best potential investments which were strong, good value, and well-positioned for growth. Their research pointed towards Egypt as a region with particularly attractive growth characteristics. It has a high growth economy, a rising population of 76 million, and a banking market which is conservatively managed and administered by a well-regarded regulator. There is also the potential for growing retail demand from consumers, driven by the fact that less than 20% of the population has a bank account.
An excellent management team and an excellent brand
“We tracked the business for three years,” says Mark Richards, Head of the Financial Services team at Actis. “So when the opportunity came up, we knew the bank, the banking sector and the economy were in far better shape than markets realised”. At the same time, our team in Egypt led by Rick Phillips had concluded a top-down review of all large businesses in Egypt. “CIB was our top target investment for 2009. It has excellent management and an excellent brand”, said Rick.
Results so far
More than a year on from the initial investment CIB is delivering results in line with our expectations. We had shaped a plan which would deliver added value, which is beginning to bear fruit. With our support, CIB’s retail banking growth has accelerated, and new business practices have been introduced in their small and medium-sized enterprise (SME) banking services. Meanwhile, we have helped to introduce a global cash management capacity for the first time, and have strengthened risk and governance reporting. Finally, the investment team has worked closely with the bank to refine its Investor Relations strategy, introducing new investors to the bank. In February 2010, Actis Senior Partner Paul Fletcher joined the CIB Board.
The CIB investment joins a stable of Actis banking investments, including India’s UTI Bank (now exited), and the Banque Commerciale du Rwanda, Diamond Bank in Nigeria and DFCU in Uganda.