UAE fintech activity picks up pace; KFH agrees deal for Ahli United Bank

An increasing number of financial technology M&A deals are taking place in the United Arab Emirates as the country seeks to be a regional leader in the sector.

Six such deals were reached in 2021 while just one was clinched in other parts of the Gulf Cooperation Council region. Already in 2022, five deals have been reached in the UAE and none in other GCC countries, according to S&P Global Market Intelligence data.

The UAE granted a banking license to digital bank Zand Bank PJSC in July, after it awarded one to digital banking platform Wio in February. ADQ, a holding company owned by the Abu Dhabi government, is among the major backers of Wio. In June, ADQ launched a $100 million technology-focused venture capital fund together with Jordan's Ministry of Digital Economy and Entrepreneurship.

Hub71, a community of startups in Abu Dhabi, accepted 16 additional companies to its ranks in May. The new members include tech companies from other parts of the world.

The central bank launched a specialized fintech office in the second half of 2020, according to its website, and aims to become a top-two fintech index in the Middle East and North Africa region by the end of 2022 and a top-five fintech index globally a year later.

GCC countries are the most ready among those in the Middle East and Africa region for fintech innovation, according to S&P Global Ratings. The oil-rich region holds the most capital, which can be used for expansion, and its population also leads in terms of internet and financial penetration, the agency wrote in a report in 2019.

Aside from banking, payments and remittances are also growing fast in the UAE. The Dubai government in November 2020 launched a working group to come up with a plan to accelerate cashless transactions. The card payment market in the country is expected to grow by 9.4% in 2022 versus 2021, according to GlobalData.

UAE government efforts to boost the sector are continuing, with Trade Minister Thani al-Zeyoudi announcing recent changes aimed at attracting digital companies to the country. Within a year, the government wants 300 digital companies to be incorporated, Reuters reported.

The government is also looking to capitalize on the increasing interest in digital currencies. The central bank has been working on a potential blockchain-based digital currency for international fund transfers since early 2021, according to its website.

Other news

* Kuwait Finance House KSCP and Bahrain-based Ahli United Bank BSC have agreed on the revised terms of their long-planned merger. KFH will pay 1 of its shares for every 2.695 AUB shares, compared with 1 share for every 2.325581 AUB shares in the initial terms agreed upon in January 2019. The new offer is equivalent to $1.04 per AUB share, implying a 13% premium to the bank's July 5 closing price.

* Qatar National Bank QPSC, the Middle East and Africa's biggest bank by assets, posted a second-quarter profit attributable to equity holders of 3.89 billion riyals, up from the year-ago 3.46 billion riyals. The Doha-based national bank's first-half attributable profit also rose year over year, to 7.02 billion riyals from 6.78 billion riyals.

* Mastercard Inc. named Adam Jones country general manager for its central cluster in the Middle East and North Africa. Jones will be responsible for the U.S.-based payments giant's business in Saudi Arabia, Egypt, Jordan, Lebanon, Bahrain and Iraq.

* Bahrain-based Al Salam Bank BSC acquired a 26.19% stake in Bank of Bahrain & Kuwait BSC and a 55.91% stake in Solidarity Group Holding BSC. The transactions form part of Al Salam's deal with Ithmaar Holding BSC to acquire assets from the latter's group of companies.

* Bank of New York Mellon Corp. is working with SNB Capital Co., the Saudi Ministry of Investment and bourse operator Saudi Tadawul Group Holding Co. to organize international campaigns geared toward facilitating international investments in Saudi Arabia, Hani Kablawi, chairman of the U.S.-based investment company's international operations, told Arab News in an interview.

* A court of appeal in Ghana overturned a central bank decision to revoke the license of UniCredit Ghana, saying the regulator did not implement due process in implementing the measure, Joy Online reported. The bank was among those affected by the central bank's move in 2019 to withdraw the authorization of 23 savings and loans companies amid a cleanup of the sector. The central bank will further appeal the decision and has reportedly asked the bank's receiver to proceed with its activities in the meantime.

* South African mobile payments company Zapper brought in Ernst & Young as an adviser on a potential capital raising that could give it a valuation of nearly $1 billion, sources told Bloomberg News. The company, which caters to some 250,000 customers and 65,000 merchants, will also reportedly consider a combination with a strategic bidder. Interested parties put Zapper in a good position for ongoing and future discussions, a spokesperson told Bloomberg.

* The Central African Republic is looking to roll out a digital currency, possibly in the third quarter, following its adoption of bitcoin as legal tender, Bloomberg reported, citing President Faustin-Archange Touadéra. The Treasury will hold 20% of the Sango coin, as the digital currency will be named, according to the report.

* The UAE's Mubadala Investment Co. PJSC is among the new investors in Sweden-based buy-now, pay-later group Klarna Bank AB (publ), which raised $800 million in a fresh funding round. Klarna's valuation following the fundraising was at $6.7 billion, crashing from its peak $45.6-billion valuation a year ago

* Three organizations filed a criminal complaint in Switzerland against UBS Group AG, alleging the Swiss bank failed to conduct due diligence over "dubious" financial transactions received by an alleged associate of Joseph Kabila, the former president of the Democratic Republic of Congo. Switzerland's Office of the Attorney General confirmed to Reuters that it had received the complaint. UBS declined Reuters' request for comment.