By Alastair Sharp

CAIRO, Nov 8 (Reuters) - Egyptian financial services firm Pioneers Holding will take over investment bank Beltone Financial in an all-share deal.
Pioneers shares were up 7 percent at 7.15 Egyptian pounds ($1.31) by 1149 GMT, valuing the company at 3.575 billion Egyptian pounds ($654 million). The stock had jumped by a similar margin last Wednesday when talks between the firms first came to light.
Pioneers, with a leading position in Egypt's retail market, said it would issue 100 million new shares to give Beltone shareholders a 17 percent stake in the merged firm.
The management of the two firms will remain separate and unchanged but both will report to a holding company under the plan, Beltone said. The board of the new holding company has yet to be announced.
"The board of directors of Pioneers Holding agreed to merge with Beltone Financial by raising the company's capital and exchanging its shares with the holders of Beltone shares," Pioneers said in a statement.
"It is definitely something positive for investors," said Hashem Ghoneim from Pyramids Capital.
Ghoneim said Pioneers shares are traded at a discount to its peer EFG-Hermes and that its expertise in retail fitted well with Beltone's focus on institutions.
EFG-Hermes shares were 1.3 percent higher, while the main index gained 2.2 percent.

Pioneers, which was listed on the Egyptian stock market in June, was ranked second by value of executed trades in Egypt in the third quarter of this year, according to stock exchange data. Beltone was ranked sixth.
"They have retail distribution that we don't have," Iman Hammam, Beltone's head of marketing, told Reuters. "They don't have the investment bank, they don't have the products that we have."
On the management structure, she said: "Beltone is going keep its management and Pioneers is going to keep its management, reporting into a holding company."
Beltone oversees some $5 billion in assets and is based in Egypt, with offices in New York, Saudi Arabia, Qatar and the United Arab Emirates.
"This merger will establish the biggest entity in investment banking in the region," Beltone's chief executive Alaa Sabaa said in a statement.
A Beltone representative told Reuters the deal would exclude Beltone Private Equity, a separate unit 46 percent owned by Beltone Partners.
Pioneers, which specialises in brokerage services, offers market research and investment banking for retail and institutional clients. It operates in Egypt, Saudi Arabia, the UAE, Bahrain and Syria.

($1=5.468 Egyptian pounds)

(Additional reporting by Sherine El Madany and Edmund Blair; Editing by Greg Mahlich) ($1=5.468 Egyptian Pound) Keywords: BELTONE PIONEERS/

(alastair.sharp@reuters.com; Cairo newsroom +20 2 2578 3290)

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