EFG Hermes Holding has signed an agreement to acquire 51% stake in Egypt’s Arab Investment Bank (AIB).

The Sovereign Fund of Egypt (TSFE) also signed a separate agreement to buy 25% stake in the lender.

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As agreed, the deal will be structured as a capital increase to boost the bank’s paid-in capital to EGP5bn ($320m).

EFG Hermes will subscribe 423 million newly issued shares of AIB with a total value of EGP2.55bn ($160m). TSFE will subscribe 207 million newly issued shares at the same price for a total value of EGP1.25bn.

The deal is expected to complete in the third quarter of 2021. However, the closure is subject to closing conditions including green light from the Central Bank of Egypt.

Once complete, EFG Hermes will become the largest shareholder of AIB. The National Investment Bank, which is currently the majority shareholder of the bank, will retain around 24% stake in AIB.

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EFG Hermes Holding chairperson Mona Zulficar said: “The signing of this landmark transaction has helped create a partnership between TSFE and EFG Hermes, the leading financial services corporation in frontier emerging markets, as we work together to unlock the potential of the Bank and help it play an increasingly active role in the Egyptian Government’s drive for financial inclusion and digital transformation in the coming years.”

AIB is an investment and commercial bank offering a range of banking services.

In January, the bank selected Temenos to power its digital customer experience.