EFG Hermes Corp-Solutions

Overview

EFG Hermes Corp-Solutions is a leading provider of leasing and factoring solutions, in addition to value-added advisory services to a range of clients including large corporations and SMEs alike. The Firm’s leasing arm was established in 2015 under EFG Hermes Leasing, offering its clients a range of tailored solutions with the fastest turnaround time in the industry. Seeking to further diversify our NBFI platform, the Firm introduced EFG Hermes Factoring in 2018, offering alternative sources of financing to companies seeking to grow their businesses and meet their working capital needs. Our factoring arm was one of the earliest players in the Egyptian market and has grown to capture a significant market share of 14% since its establishment. In July 2020, EFG Hermes consolidated its factoring and leasing arms to form EFG Hermes Corp-Solutions, offering a full range of financing solutions to suit clients of all sizes.

2020 Operational Highlights

The successful merger of EFG Hermes Leasing and EFG Hermes Factoring at the start of the year allowed for increased bidding capital, enabling the company to attract bigger tickets and more lucrative business opportunities as well as increasing operational synergies between the two teams. This in turn allowed for increased cross-selling to offer comprehensive solutions to clients. The merger was finalized at the height of the COVID-19 pandemic and accordingly faced a number of challenges. Among these was merging of the two business lines’ teams and coordinating their efforts. Despite having to adhere to social distancing regulations and, therefore, limiting the number of staff members operating in person at any given time, the team continued to offer clients unmatched customer service across business lines, allowing the company to hold firm to its leading market position.

Leasing

EFG Hermes Corp-Solutions’ leasing arm witnessed a considerable increase in business volume during the year as a result of the COVID-19 pandemic. This was mainly spurred by the counter-cyclical nature of leasing, which accounts for increased business during times where there is a shortage of liquidity as well as the team’s eagerness to offer support to existing clients, grow the business, and improve our ranking in the market. These efforts were heavily supported by our risk team whose work not only allowed us to exert stringent controls and mitigate risks but to also achieve growth.

Furthermore, in 2020, the company was able to increase its client base by 15% with a number of industries seeing increased activity, including digital, healthcare, education, food and beverage as well as real estate, which in turn feeds into a number of subsectors such as raw materials and contracting. As it stands, EFG Hermes Corp-Solutions holds a market share of 9% in the industry as a result of its exemplary service standard and varied product offering.

Factoring

Factoring continues to be a novel and relatively unfamiliar industry in the Egyptian market. Accordingly, a priority for the company’s factoring arm throughout the year was to raise awareness regarding the mechanisms and processes of factoring in order to allow the business line to gain traction in the market. A key tool to promote awareness was cross-selling across the EFG Hermes Corp-Solutions’ business lines by offering leasing clients limited factoring facilities, thereby allowing them to gain a better understanding of the manner in which factoring can support their business. This bore positive results allowed for increased familiarity with factoring products in the market as well as clients seeking to increase limits for their factoring facilities.

EFG Hermes Corp-Solutions’ factoring arm is able to work with clients of all sizes and across all industries offering a range of solutions that are able to meet the needs of various clients and offer them greater opportunities for growth. Among these solutions are debt factoring and export factoring, activities that offer benefits to clients, particularly SMEs, to which traditional debtors are often hesitant to offer their services. As such, the division stands as one of the leading factoring providers in the industry, with a market share standing at 14%.

Throughout the year, the company worked to obtain more facilities to include factoring through both increasing limits for leasing facilities as well as allocating sub-limits to factoring operations. These efforts resulted in the team availing a total of EGP 819 million for its factoring business.

Key Financial Highlights

EFG Hermes Corp-Solutions’ leasing arm’s total contribution to group revenues amounted to EGP 184 million, a 17% increase from the EGP 157 million recorded in 2019. Meanwhile, the company’s factoring arm contributed a total of EGP 25 million to group revenues, marking an increase of 178% from the EGP 9 million contribution in 2019.

2021 Strategy

In the coming year, EFG Hermes Corp-Solutions will seek to grow its portfolio both by sector and client size by continuing to offer the level of service each line of business has come to be known for. Offering bespoke solutions tailored to each individual client based on size, industry, and risk appetites will allow the company to continue to gain partnership opportunities, facilities, and clients, a key aim as we move forward. As the company grows, it plans to further cement its presence among SME clients and grow its market share to become one of the market’s top three players.