Sagard, a Canadian alternative asset management company with $14.5 billion worth of assets under management, is targeting markets including the UAE, Egypt, Saudi Arabia and Turkey for new investment, said its chairman and chief executive.
The company, which is backed by Abu Dhabi’s holding company ADQ, recently opened its office at Abu Dhabi Global Market to expand into the region.
“Our initial focus in the region will be very much around financial services,” Paul Desmarais III told The National in an interview.
“We really view [the] UAE as a hub for the broader region and we think that Egypt is very interesting ... as well as Turkey and Saudi Arabia," he said.
“There are a lot of very attractive markets for FinTech in the region ... Abu Dhabi is the ideal place to base efforts that are going after those other geographies.”
The company plans to announce its first major investment in the region in Turkey this year. Mr Desmarais did not disclose the total value of the deal.
Since the onset of Covid-19, people have turned to online banking services and other contactless technology to transfer money and pay for e-commerce transactions, boosting the FinTech sector.
The industry is expected to double in size to about $270 billion in 2027, from more than $135 billion in 2021, in the Middle East, Africa and South Asia, according to the DIFC FinTech Hive 2022 report.
The revenue of the FinTech industry in the Middle East, North Africa and Pakistan is set to surge to between $3.5 billion and $4.5 billion by 2025, up from $1.5 billion in 2022, amid strong economic growth and a robust banking sector.
The industry's share of financial services revenue could jump from less than 1 per cent to between 2 per cent and 2.5 per cent by 2025, according to a May research report by global consultancy McKinsey.
FinTech start-ups led in both funding and the number of deals in the Middle East, Africa, Pakistan and Turkey region last year, according to data platform Magnitt. The sector’s funding hit $2.25 billion across 351 deals in 2022.
“Our plan is ... to be a great partner to families and sovereign investors in the region that are interested in the services and kind of products that we have in terms of investment vehicles," Mr Desmarais said.
“We see the region as a major area of focus for many of our portfolio companies that serve financial institutions and other sectors and we believe that there is a meaningful opportunity for many of them to come here and establish themselves.”
It aims to team up with existing financial institutions as well as FinTech firms “who are bringing new access to services to people that are traditionally underbanked or unbanked or have not had the same exposure to certain financial opportunities”, he added.
“We have experience doing that in Canada ... we have built many of the leading financial technology brands including companies like Wealthsimple."
Sagard has a portfolio of 125 companies including online trading platform Wealthsimple as well as health and wellness platform Dialogue.
The company was created in 2002 at the initiative of Power Corporation of Canada, a major investor in Europe and North America.
It finds its roots in entrepreneurial families but has grown with the support of institutional investors, including Canada’s pension plans, family offices, financial institutions and other corporates with a commitment to supporting talented entrepreneurs, its website says.
“We’ve grown from $400 million of assets in 2016 to $15 billion today,” Mr Desmarais said.
“We are planning on continuing to develop and we are a very ambitious team and we hope to be a leader in every protocol we focus on within the next five to 10 years. Our objective is to generate top financial returns while growing our AUM [assets under management] and doubling our AUM in the next five years to $30 billion.”
In July, ADQ, along with the Bank of Montreal (BMO), acquired minority equity stakes in Sagard.
As part of the transaction, Sagard has also expanded its existing partnership with Great-West Lifeco (GWL), an international financial services holding company, which is increasing its existing minority share in the company.
Under the agreements, BMO, the eighth largest bank in North America by assets, ADQ and GWL have agreed to invest in Sagard to boost its growth, including through mergers and acquisitions.
ADQ has “believed in our expertise in certain sectors, most notably in financial services, health care and real estate, and our understanding of the Europe private equity as well as our ability to be entrepreneurial and build new businesses", Mr Desmarais said.
"They are not only partners with Sagard but also partners with me and my family, which is one of the leading business families in Canada and one of the leading financial institutions globally."