EFG Hermes Concludes Advisory on Bedaya Mortgage Finance’s First Securitization Issuance

EFG Hermes, the leading investment bank franchise in Frontier Emerging Markets (FEM), announced that its Investment Banking division successfully closed the first issuance worth EGP 651.2 million of the EGP 3 billion securitization program for Bedaya Mortgage Finance, Egypt’s first non-bank online mortgage provider. The bond is mortgage backed portfolio of around EGP 1.02 billion, assigned to EFG Hermes, the issuance’s special purpose vehicle (SPV). This transaction marks the first ever securitization for a real estate mortgage company in Egypt.

The bond is comprised of eight tranches with both fixed and variable yields, with the structure as follows: a first tranche of EGP 22.22 million with a 13-month bond tenor and a variable yield; a second tranche of EGP 22.22 million, with a 24-month tenor and a variable yield; a third tranche of EGP 88.9 million, with a 36-month bond tenor and a variable yield; a fourth tranche of EGP 226.69 million, with a 84-month tenor and a variable yield; a fifth tranche of EGP 84.45 million, with a 115-month bond tenor and a variable yield; a sixth tranche of EGP 20.67 million, with a 12-month tenor and a fixed yield; a seventh tranche of EGP 102.32 million, with a 36-month tenor and a fixed yield; and an eighth tranche of EGP 83.71 million, with an 84-month tenor and a fixed yield.

Commenting on the issuance, Maie Hamdy, Managing Director – Debt Capital Markets at EFG Hermes said, “We are proud to have advised on the first real estate mortgage securitization transaction in the Egyptian market, which has been met with extensive interest from investors, bearing in mind the almost 10-year tenor notwithstanding the current market uncertainty. Taking this step with Bedaya – a joint venture between EFG Hermes Holding, Talaat Mostafa Group, and GB Capital – comes as part of our broader strategy to capitalize on our cross-selling synergies and product diversification that are an essential pillar of our business model and progression. We are very proud of the success of this issuance and attribute it to our team’s unwavering commitment to consistent value creation and forward-looking approach.”

According to the Financial Regulatory Authority (FRA)’s report for March 2022, Bedaya ranked number four in the full year 2021, number three in the first quarter of 2022, and number two during March 2022. Last year, Bedaya launched Egypt’s first non-bank mortgage finance mobile application and online platform, which helped users gain convenient access to numerous mortgage finance offerings seamlessly and rapidly. Bedaya has the fastest turnaround time in the industry and, with a mortgage market that is currently both underserved and under-penetrated, the Firm acts as a conduit expanding accessibility to mortgage financing, which is often a long and cumbersome process. The transaction was done with the combined efforts of Bedaya’s in-house securitization team, comprised of Bedaya’s Heads of Finance, Operations, Credit Risk, and Legal, led by Gina Selim, the General Manager of Bedaya. As the mortgage law came out in 2001 and the first mortgage company was launched in 2003, for the first mortgage bond to come out in 2022 is considered not only a milestone for Bedaya, but also for the entire real estate mortgage industry.

Tarek Abou-Gendia, CEO and Managing Director of Bedaya, said, “As a company, we pride ourselves on the sort of consistent innovation that can propel our industry forward, which is why we are very excited to become the first real estate mortgage company in the country to issue a securitization issuance. This transaction will capitalize on the capabilities and cross-selling power of EFG Hermes to move us closer to our long-term expansion plans through broader, more sustainable financial solutions so that we can continue on our mission to extend accessibility to a wider customer base across Egypt’s mortgage market.”

EFG Hermes acted as the sole financial advisor, sole transaction manager, book-runner, underwriter, and arranger on the issuance. National Bank of Egypt (NBE), alongside Banque du Caire (BDC), acted as underwriters and Baraka Bank acted as the subscription bank. The legal advisor for the issuance was Dreny and Partners and the auditor was KPMG. Middle East Ratings and Investor Services (MERIS) acted as the credit rating agency.

This issuance comes on the heels of the Firm’s successful conclusions of an EGP 627.5 million securitization issuance for Pioneers Properties for Urban Development, the first issuance in Misr Italia Properties’ securitization program worth EGP 794 million in December 2021, and most recently the bond issuance for EFG Hermes Corp-Solutions, valued at EGP 500 million, in June 2022. The transaction also follows the Firm’s successful advisory on Premium International for Credit Services’ sixth issuance, valued at EGP 170 million in January 2022, in addition to the first issuance of EGP 300 million in Madinet Nasr Housing and Development’s (MNHD)’s securitization program.