EFG-Hermes, the leading Egyptian investment bank in the Gulf, has bought a 9.97 per cent stake in Panmure Gordon, the London-based stockbroker. The bank is paying 47p cash per share, or £3.2 million, for 6.7 million newly issued shares.

The holding will lead to increased co-operation between the two and will help Panmure Gordon to gain a foothold in the Middle East and North Africa. The deal will also enable EFG-Hermes to increase its presence in Europe and the United States.

Tim Linacre, Panmure Gordon's chief executive, said that some of the company's staff would move to EFG-Hermes's offices in the Middle East and several of the Egyptian bank's employees would join Panmure's London offices.

“The world is changing and becoming more international and to help our clients we want to have a foothold in the Gulf,” Mr Linacre said. “We also want to attract more Gulf investors. I have been trying to get the business in as good a shape as possible so we can take advantage when the markets start to get better.”

Persistent rumours about the future of Panmure Gordon, founded in 1876, have included the possibility of a merger with Evolution Securities, another small investment bank in London, or a management buyout. It has also been dogged by speculation about the performance of ThinkEquity, its American unit, which it bought for $63 million (£34 million) last year.

The deal brought it into the US market just as the credit crunch was starting to have an impact. Panmure's shares, which are listed on AIM, rose by 5 per cent to 49p yesterday. EFG-Hermes also entered the Kuwaiti market yesterday through the purchase of a 50 per cent stake in Offset Holding KSC, a brokerage unit owned by Kuwait Invest Holding Company.

As well as being Egypt's largest investment bank, EFG-Hermes is the biggest securities broker in the United Arab Emirates, Saudi Arabia, Qatar and Oman. When it was established as the Egyptian Finance Group in 1984, it was Egypt's first investment bank.

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