The Clap
Amazon agreed to buy EFG Hermes (HRHO) Global Depository Receipts (GDRs), with the option to replace the investment with a stake in EFG’s consumer finance arm “ValU” in the future.
Claps Class
GDRs are financial instruments that enable companies listed in stock exchanges to raise funds abroad. Company’s agree to keep local shares deposited at foreign banks, & in turn, the bank issues tradable certificates backed by the company’s shares.
The deets
Amazon will buy $10 million worth of EFG’s GDRs. If the tech giant switches these GDRs into a stake in ValU, it would translate to a 4.255% stake. This gives ValU a current valuation of $235 million, more than 25% of EFG’s market cap.
Amazon can exercise the option if 1) ValU lists on the stock market, 2) investments are made from third parties, or 3) the company gets sold.
The agreement will also allow ValU to be offered as a payment method on Amazon.eg.
For EFG’s full statement, click here.
