Abu Dhabi conglomerate International Holding Company (IHC) has made a foray into the South American market with a Dh734 million ($200m) investment in a Colombian company.
Through its subsidiary, IHC Capital Holding, the company acquired a 49.99 per cent stake in Lulo Colombia, which is the holding company of Colombia’s first regulated digital bank, Lulo Bank, IHC said in a regulatory filing on Monday to the Abu Dhabi Securities Exchange, where its shares are traded.
The deal, subject to regulatory approvals, is “critical” for IHC “to align any transaction with our growth strategies, whether to acquire new capabilities or consolidate, and Lulo Colombia sits very well with our expansion plans in Latin America”, Syed Shueb, chief executive of IHC, said.
Lulo Bank is the first fully digitalised bank in Colombia, with plans of expansion into other Latin American markets.
Colombia has made “significant progress” in terms of financial inclusion with the increase in access to financial products, Mr Shueb said.
The move comes as FinTech services gain traction amid the Covid-19 pandemic. The lockdowns and social distancing around the world hastened the move to digital financial and banking services as consumers switched to cashless payments and online shopping.
Neobanks, which are 100 per cent digital and use apps and online platforms to support their customers, have been mushrooming in the US, Europe, the Middle East and South-East Asia in recent years. According to a tracker by The Financial Brand publication, there are at least 333 neobanks worldwide, including start-ups and digital-only operations from legacy players.
Colombia is the fourth global market into which IHC has expanded its investment activities this year after the UK, India and Turkey.
Majority-owned by Abu Dhabi's PAL group of companies, IHC is rapidly expanding its portfolio through local and global acquisitions as well as investments, and currently comprises more than 30 entities with 52,345 employees.
It is diversifying its holdings across sectors, including real estate, agriculture, health care, food and beverage, utilities, industries, IT and communications, retail and leisure, and capital.
In India, Asia’s third-largest economy, IHC completed a Dh7.3bn investment deal with India’s Adani Group that is led by billionaire industrialist Gautam Adani.
Founded in 2020, Lulo Bank is a mobile banking app that provides money transfers, savings accounts, loans and other financial services.
Since its formal launch in June this year, the bank has signed up more than 120,000 active users and is set to complete more than 200,000 applications before the end of the year, the statement said.
It aims to achieve a customer base of 1 million in Colombia within the next three years.
“The FinTech ecosystem in Latin America has risen quickly over the past couple of years with sustained growth observed in all segments and in the number of active FinTech companies, especially digital banking,” Mr Shueb said.
“Digital banking has come a long way in Colombia. We are thrilled to have IHC join our mission of revolutionising the financial landscape in Latin America,” Benjamin Gilinski, chairman of Lulo Bank, said.
