Walid Dib, left, and his brother Karim co-founded InsurTech start-up Hala. Antonie Robertson / The National
Walid Dib, left, and his brother Karim co-founded InsurTech start-up Hala. Antonie Robertson / The National
Walid Dib, left, and his brother Karim co-founded InsurTech start-up Hala. Antonie Robertson / The National
Walid Dib, left, and his brother Karim co-founded InsurTech start-up Hala. Antonie Robertson / The National

Business

Mubadala joins investors in $5m backing of InsurTech start-up Hala

The company will use the money to unveil new products and expand further in the Middle East, starting with Saudi Arabia

Deena Kamel
Deena Kamel

August 29, 2021

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  • Arabic

Abu Dhabi-based insurance technology start-up Hala raised $5 million in a funding round led by Entree Capital, with participation from Mubadala Investment Company, EQ2 Ventures, Global Founders Capital, 500 Startups and Hambro Perks Oryx Fund.

The company will use the funds to include new products such as home insurance and to expand within the Middle East, starting with Saudi Arabia, it said on Sunday.

“We believe people would love insurance if insurance loved them back," said Walid Dib, chief executive and co-founder of Hala.

"The region’s insurers have focused too hard on selling a product before understanding the customer's knowledge and preferences. Hala aims to bridge the gap between insurance misconceptions and peoples’ needs."

Current consumer adoption of InsurTech in the Mena region stands at 8 per cent. However, planned use of its services in the future stands at 48 per cent, according to data by India-based research company Redseer.

Hala was launched in 2018 by brothers Walid and Karim Dib to streamline payments between motor insurance companies in the UAE using blockchain technology.

In 2020, the company expanded into retail insurance and offered products directly to customers, with the aim of “revolutionising and disrupting" the InsurTech industry by making insurance more accessible.

Hala said it recorded "strong growth" in 2021, thanks to transparent and fair pricing, and an easy-to-use product, without revealing financial details.

"The size of the [insurance] market across the region has huge potential and Hala is proving to be very capable at using technology and data to provide a product offering, which appeals to a large customer base," said Ali Qaiser, general partner of Oryx Fund.

The Oryx Fund is a $50m venture fund unveiled in February 2021 by Hambro Perks.

The fund backs early stage start-ups across the Mena region, with a particular focus on FinTech, health technology and education technology. The Oryx Fund is domiciled within the Abu Dhabi Global Market.

Hambro Perks, which has its headquarters in London and bases within Hub71 in Abu Dhabi and in Riyadh, also invests in early stage companies.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: August 29, 2021, 1:07 PM
Technology