x Abu Dhabi, UAETuesday 23 January 2018

Mubadala moves into consumer finance

The Abu Dhabi investment agency Mubadala will set up a consumer financial services company with three partners.

Mubadala manages over US$10 billion (Dh36bn) in assets for the world's fifth-largest oil exporter.  statement.
Mubadala manages over US$10 billion (Dh36bn) in assets for the world's fifth-largest oil exporter. statement.

The Government-owned Mubadala Development Company yesterday announced a joint partnership with three investment firms that will mark its first venture into the consumer finance marketplace. The announcement comes just three weeks after the opening of another Government-owned financial institution. Al Hilal Bank was officially opened on June 19 to serve the growing market for Islamic banking. It is wholly owned by the Abu Dhabi Investment Council with committed capital of Dh4 billion (US$1.09bn). The new financial services company, to be called Dunia Finance - "Dunia" means "the world" in Arabic - is to have branches across the UAE. Mubadala's partners are Waha Capital, Fullerton Financial Holdings and Al Moosa Enterprises, with the Dunia project offering loans, credit cards, financial planning and a range of other services to retail and small business clients. "We are very excited by this announcement, which marks our first project in the consumer finance sector in the UAE," said Waleed al Mokarrab al Muhairi, the chief operating officer of Mubadala. "This partnership is a first step towards introducing world-class financial services to the market, aimed at the rapidly growing customer segments, which are vital for the continued growth and prosperity of the UAE and its citizens." Wealth management and financial services are rapidly growing sectors in the country, and established players such as Citibank, HSBC, Mashreq and others have been stepping up efforts in recent years to cater to a rising number of wealthy people in the UAE. The number of millionaires in the country jumped 15.3 per cent to 79,000 last year, according to Merrill Lynch's World Wealth Report. A number of new financial institutions have also formed in recent years. In addition to Al Hilal, they include the Noor Islamic Bank, based in Dubai, and Aseel Finance, a financial services company opened in Abu Dhabi, both of which opened last year. "We've had quite a few companies being launched, Ajman Bank, Noor and Hilal being the most recent, while in consumer finance we have seen Aseel Finance," said Raj Madha, an analyst at EFG-Hermes in Dubai. "So it's not altogether surprising that you get what sounds like a consumer finance arm being launched by Mubadala." Whether there was a need for another financial firm in the UAE was another question, Mr Madha said. The UAE has more than 50 banks, many of which are Government-owned or supported. The financial services sector, meanwhile, boasts the country's largest economic footprint after the oil industry. "The new company will focus on the retail and small business sectors, which are both high growth, high profitability segments," Mr Madha said. "Although Dunia Finance will by no means be the only player in these market segments, there is perhaps still room for it to differentiate itself in a growing market." Waha is a financial services company partly owned by Mubadala and listed on the Abu Dhabi Securities Exchange. Its role is to assist Mubadala in getting its first consumer finance project off the ground. Fullerton Financial Holdings is wholly owned by Temasek Holdings, an investment and development conglomerate of the Singapore government that is run much like Mubadala. Fullerton is to help develop a business model based on one that it has run successfully in Asia and the subcontinent. Al Moosa is a UAE-based business conglomerate. It was acting as an investor in the enterprise, a Mubadala official reported. Yesterday's announcement represents the first stage of the launch of Dunia. A Mubadala spokesman said a second announcement, in a month or two, would reveal the business model and the value of the investment. Mubadala and the other partners were now holding off as they waited to receive all necessary licences to operate in the country, she said. afitch@thenational.ae