Cairo – Mubasher: Pharos Research upgraded the fair value of EFG Hermes to EGP 35.13 from EGP 25.00 with higher upside potential within the investment bank, a research note revealed on Monday.

The research agency further maintained an ‘Overweight’ recommendation on the stock, the research note added, attributing the real growth potential to within the turnaround in investment banking operations in 2017, the new ventures, and the planned expansion within frontier markets.

“With higher foreign participation and improved EGX market turnover post floatation of the local currency, EFG-Hermes stands as the primary beneficiary of such turnaround, with a brokerage market share north of 35%, and a solid pipeline of potential IPOs over 2017”, according to the report.

Moreover, the research firm noted that sale proceeds and the remaining stake is still US-dollar denominated, expecting the investment to take five steps.

The company is anticipated to recapitalize all existing business lines under the umbrella of the investment bank, whether a brokerage, an asset management or a private equity.

The investment bank is to further capitalize and grow EFG Hermes Leasing, along with establishing a new consumer finance business underneath EFG Hermes Finance, while focusing on further expanding the potential of Tanmeyah.

An expansion of activity is further forecasted to include a merchant banking model, attempting to acquire frontier market operations within Africa or Asia, “with the objective to transform EFG from a regional into a frontier house”, Pharos said.