EFG Hermes' valU and FAS Labs to expand buy now, pay later model in Saudi Arabia

Credit solutions will be offered to consumers across several retail outlets in the kingdom

The new consumer financing solutions will be offered across several retail outlets in Saudi Arabia. AFP
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Egypt-based FinTech platform valU has signed a deal with FAS Labs, a joint venture owned by Saudi Arabia's major retailer Fawaz Abdulaziz Alhokair and mall operator Arabian Centres Company to expand the buy now, pay later (BNPL) consumer financing model in the kingdom.

Under the partnership, valU, part of EFG Hermes, will acquire a 35 per cent stake in the paid-up capital of FAS Finance, the newly announced consumer microfinancing company owned by FAS Labs, the companies said in a joint statement on Monday.

The share capital of FAS Finance will be maintained at 55 million Saudi riyals ($14.6m).

FAS Labs offers customisable digital consumer finance solutions and the deal with valU will “expedite FAS Finance’s ability to develop and scale a fully integrated shopping platform”, the companies said.

In Saudi Arabia, the solutions will be available across Alhokair’s retail network of more than 1,000 shops, as well as online on Vogacloset and the monobrand websites, including 14 in Saudi Arabia.

They will also be extended to other vendors, retail networks and merchants to cover the entire Saudi market.

The solutions will also be offered to ACC’s tenants, located across 21 shopping malls in 11 major cities in the kingdom.

The BNPL business model, which allows consumers to make online purchases instantly and spread out their interest-free repayments, has surged since the onset of the Covid-19 pandemic.

The industry is expected to grow 10 to 15 times by 2025 worldwide, topping $1 trillion in annual gross merchandise volume by some estimates, according to a report by New York data research consultancy CB Insights.

A subsidiary of EFG Hermes Holding, valU was established in 2017 and offers customisable financing plans and access to a wide network of retail and e-commerce providers across diverse sectors, including residential solar solutions, home appliances, electronics, education, travel and home furnishings.

Its solutions cover more than 5,000 points of sale and in excess of 330 websites.

The latest move is aimed at expanding valU's reach in new markets, with “other similar moves to follow soon”, said Walid Hassouna, chief executive of valU and of the Non-Bank Financial Institutions (NBFI) platform at EFG Hermes Holding.

The platform will also issue cash loans along with its BNPL solutions in the kingdom, he said.

FAS Labs obtained preliminary approval to establish FAS Finance as a Sharia-compliant digital consumer finance company from the Saudi Central Bank in January 2022.

The change in ownership of FAS Finance remains subject to regulatory approvals from the Saudi Central Bank, the Ministry of Commerce, the Ministry of Investment and the General Authority for Competition, the companies said.

Updated: May 18, 2023, 11:40 AM