EFG Holding group CEO and chairman of the executive committee Karim Awad reveals the thought process behind Valu’s listing on the Egyptian Exchange and what this means for financial inclusion and the financial industry’s digital transformation in Africa.
EFG Holding’s board has approved listing Valu on the Egyptian Exchange, with plans to offer up to 25 percent of its share capital. What factors influenced the decision to pursue a partial offering rather than a full IPO? What inspired the approach to distribute Valu shares as dividends rather than cash, and what outcomes are you aiming to achieve for EFG Holding shareholders?
It is important to clarify that our approach will achieve a full IPO through the partial offering of the shares that EFG Holding currently holds in Valu. While the methodology utilized in this case might be a bit unconventional, the end result of the shares being listed and traded is the same. In a fully marketed IPO, EFG Holding would have sold a stake in Valu to third-party investors.
Here we chose to distribute the same stake to the shareholders of our company as of a record date, with those shareholders being free to trade those shares to any third parties starting the listing date. Our pursuit of an IPO through a partial spin-off was driven by our desire to share the significant upside that Valu holds with our shareholders while distributing an extraordinary dividend as listed shares that can potentially accrete in value once traded.
Read: EFG Holding posts record revenue of $482 million with strong growth across verticals
Why is now the right time to take Valu public, and how does this fit into the broader fintech landscape in Egypt and MENA?
Valu has been an integral part of the EFG Holding family of brands for over 8 years. It has grown from a small startup to a household name while revolutionizing the consumer finance industry in Egypt. Today, Valu has an active subscriber base, management team, systems, and profitability, which makes us comfortable that this is the right time for the company to go public.
With so many innovative fintech startups that Egypt has today, I hope that this will pave the way for more of them to follow our lead and list on the EGX.
How does this align with EFG Holding’s long-term strategy for Valu, in terms of enhancing Valu’s competitiveness and brand positioning in the fintech space, both locally and regionally?
This move aligns well with our company’s long-term strategy. We have been preparing for this moment for a number of years by decreasing the company’s level of dependence on EFG Holding and ensuring that Valu, on a stand-alone basis, would offer an exciting equity story that appeals to investors not just in the region but internationally as well.
While the company enjoys a very strong competitive position in the market and its brand is among the most recognized in Egypt, I hope that this will be further strengthened by the offering especially as long-term stakeholders of the company (clients, merchants, vendors, etc.) will finally have the chance to become shareholders as well.
Valu commands around 24 percent of Egypt’s consumer finance market. What are the key growth drivers behind this success, and how do you envision Valu evolving as a listed entity?
A core pillar for the EFG Holding strategy is hiring the best and brightest people and Valu is no exception. I believe the key driver behind the company’s success is its great team many of whom have been around since inception and have seen the company evolve through its different phases of growth.
With a core team of innovative professionals that cover everything from product innovation, marketing, technology and risk among many others, the team makes me highly confident that Valu will continue its very strong growth trajectory once it becomes public.
With EFG retaining a majority indirect stake post-listing, how will you balance independence for Valu with ongoing strategic oversight?
As explained earlier, we have been preparing for this move for a number of years during which we have gradually increased the independence of Valu from its parent company. Accordingly, following the listing with Valu will continue to act independently but with the need to manage the interests of an enlarged shareholders’ base in the same great manner they have been managing the interests of EFG Holding and other minority investors since inception.
For the avoidance of doubt though, as its largest shareholder by far, our unwavering support for Valu as a core subsidiary of the group will remain the same as will our role as a highly active shareholder and member of the board of directors, allowing us the same level of strategic oversight that we enjoy today.
Looking beyond the listing, what role do you see Valu playing in Egypt’s financial inclusion and digital transformation landscape?
Valu has been a game-changer in the evolution of Fintech in Egypt, driving remarkable growth and significantly fostering financial inclusion. With over 700,000 active clients relying on Valu for their everyday financial needs, we have become a cornerstone of Egypt’s ambition to democratize access to financial services.
Our innovative solutions have empowered individuals and businesses alike, breaking down barriers that once hindered financial participation. By expanding our product offerings and continuously enhancing our services, Valu not only meets the diverse needs of our clients but also paves the way for a more inclusive financial landscape.
As we look to the future, our commitment to this vital mission remains unwavering. Valu is not just a key player in Egypt’s Fintech revolution; we are poised to extend our impact to other regional markets, amplifying our role in transforming lives through financial empowerment.
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