Egyptian financial services group EFG Holding has secured a $40 million, a four-year loan from the European Bank for Reconstruction and Development (EBRD).
This is to expand financing for micro, small and medium-sized enterprises (MSMEs) across Egypt, particularly businesses operating in underserved regions.
The facility is the first EBRD financing provided directly to EFG Holding at the holding-company level, marking a new phase in the relationship between both institutions.
EFG said the funding will be channelled through eligible subsidiaries with MSME financing operations to support businesses with liquidity and working-capital needs, as well as investments and expansion.
According to EFG Group Chief Finance and Operations Officer Mohamed AbdelKhabir, the facility will provide “stable, medium-term funding” that will enable the group’s non-bank financial subsidiaries to expand their MSME portfolios across different customer segments and geographies.
How the facility will support Egyptian businesses
The financing is expected to strengthen EFG Holding’s ability to provide capital to smaller businesses that require additional funding to maintain operations, purchase equipment, expand their activities or meet working-capital requirements.
Rather than distributing the $40 million directly to individual businesses, EFG Holding will channel the facility through eligible subsidiaries involved in financing MSMEs.
This structure allows the funding to reach businesses through financial institutions that already operate in different customer segments and geographical areas.
The approach is particularly relevant to smaller companies that may face difficulties accessing sufficient financing through conventional channels.
EFG said the facility is intended to help businesses “invest, scale, create jobs, and contribute to more inclusive and sustainable economic growth across Egypt.”
The financing will also support EFG’s efforts to expand its MSME portfolio, allowing its eligible non-bank financial subsidiaries to increase their activities while reaching businesses in areas that have traditionally had more limited access to finance.
Why the EBRD loan is significant for EFG Holding
The transaction represents a change in the level at which EBRD is financing EFG Holding. The two institutions have maintained a longstanding relationship, with EBRD previously providing facilities to several EFG subsidiaries, including Bank NXT, Tanmeyah and Valu.
However, those earlier facilities were provided to subsidiaries rather than directly to the parent company. The latest transaction therefore marks the first time EBRD has extended a facility directly to EFG Holding itself.
EFG described the transaction as a “significant milestone” in its relationship with the development bank. AbdelKhabir said the new arrangement “opens a new chapter in our partnership as the first facility extended directly to EFG Holding.”
For EFG, the direct financing also provides additional flexibility in supporting its wider MSME financing strategy, while allowing the group to deploy funding through eligible subsidiaries according to the needs of different markets and customer segments.
Four-year funding provides medium-term financing support
The $40 million facility has a four-year tenor and includes a one-year grace period, giving EFG Holding access to medium-term funding to support the planned expansion of its MSME financing activities.
The four-year structure is significant because financing businesses requires capital that can remain available beyond short-term funding cycles.
According to EFG, the tenor will support the “disciplined growth” of its MSME portfolio and give its eligible subsidiaries a more stable funding base from which to expand their operations.
The company also said the facility will contribute to the diversification of its sources of funding.
Hesham Elbosaty, Group Treasurer at EFG Holding, described the transaction as “a valuable addition to EFG Holding’s funding base” and said it supports the group’s strategy of diversifying its sources of capital.
For EFG, therefore, the transaction serves two purposes, increasing the resources available for MSME financing while strengthening the group’s broader funding structure.
EBRD deepens its support for Egypt’s private sector
The facility also reflects EBRD’s wider focus on improving access to finance for private businesses in Egypt.
Small and medium-sized enterprises are an important part of economic activity because they employ workers, provide goods and services, and create opportunities for entrepreneurship and investment.
Francis Malige, EBRD Managing Director for Financial Institutions, said expanding economic opportunities for MSMEs is “central to Egypt’s long-term economic growth.”
He added that the transaction would help ensure that more local private businesses, “especially those outside major cities,” gain access to resources needed to invest and innovate.
The emphasis on businesses outside major cities is particularly important because access to financial services can vary across geographical locations.
By working through EFG’s existing financial subsidiaries, EBRD expects its funding to reach a broader range of businesses and customer segments.
The initiative is consequently positioned not only as a financing arrangement between two financial institutions, but also as an effort to strengthen access to capital for businesses that can contribute to employment, investment and broader economic activity.
EFG and EBRD’s broader financial partnership
The new facility builds on a relationship that has already involved EBRD financing several companies within the EFG group.
Bank NXT, Tanmeyah and Valu have previously benefited from EBRD facilities, demonstrating an established connection between the development bank and EFG’s financial-services ecosystem.
The latest agreement, however, takes that relationship to the group level by providing financing directly to EFG Holding.
EFG said EBRD’s successive facilities across the group, culminating in the direct holding-company facility, demonstrate the development bank’s confidence in its financial position and institutional standing.
The agreement was signed on the sidelines of EFG Hermes’ 12th Annual London Investor Conference, an event that brings together global institutional investors, listed companies and capital-market participants to discuss investment opportunities across the Middle East and North Africa.
Through the new $40 million facility, EFG Holding intends to expand MSME financing, diversify its funding base and extend financial support to businesses across different segments and geographical areas of Egypt.
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