CAIRO (Reuters) -Shares in Egypt’s largest investment bank EFG Hermes rose 2.6% on the Egypt Exchange on Thursday after it acquired 51% of state-owned Arab Investment Bank (AIB), in the country’s first bank privatisation in more than a decade. The Sovereign Fund of Egypt also acquired a 25% stake, while the current owner, state-owned National Investment Bank (NIB), retained 24%, the fund and EFG Hermes said in a joint statement on Thursday. Under the transaction, new shares were issued to raise AIB’s capital to 5 billion Egyptian pounds ($319.9 million). EFG Hermes subscribed to new shares worth 2.55 billion pounds and the sovereign fund to shares worth 1.25 billion pounds, the statement said. The deal was announced late on Wednesday. “AIB’s strategy will focus on serving small and medium enterprises as a driver for inclusion,” the sovereign fund’s CEO Ayman Soliman said in the joint statement. “By upgrading its technological infrastructure, the bank will be better able to serve more customers, especially after the capital increase to meet the new banking law requirements.” The AIB transaction is the first of many to come in the near future under a cooperation protocol that the fund signed with NIB, Soliman added. James Swanston, an analyst with Capital Economics, said the acquision was positive sign in the privatisation drive that is part of the government’s wider reform plans. “This should help to improve the local business environment and make it more attractive for foreign investors/companies to invest into Egypt’s economy, but there are many more issues that need to be tackled to unlock faster productivity growth,” he said. NIB was established in 1980 to finance government projects. Egypt last year told the International Monetary Fund it would restructure NIB’s balance sheet through sales and swaps of assets, land or shares in public companies to settle overdue debts. Reporting by Ehab Farouk; Writing by Nafisa Eltahir and Patrick Werr; Editing by Jan Harvey, Estelle Shirbon and Kim Coghill Our Standards: The Thomson Reuters Trust Principles.