The consortium that agreed in December to buy UAE foreign exchange and digital payments company Finablr signed a sales and purchase agreement to acquire Bahrain-based remittance business BFC Group Holdings and its subsidiaries through its new WizzFinancial platform.
Under the deal, Finablr and BFC Group will be combined under the WizzFinancial umbrella to create the largest remittance services and currency exchange group in the Mena region.
The combined entity will be licensed to operate in more than 30 countries, Switzerland-based Prism Group and Abu Dhabi's Royal Strategic Partners said on Tuesday.
With 20 million customers, the group will become the only operator with a direct presence in all six GCC countries, they said.
BFC Group Holdings is the holding company for Bahrain Financing Company, Bahrain Exchange Company in Kuwait, BFC Forex & Financial Services in India and BFC Payments in Bahrain.
The companies are licensed by the Central Bank of Bahrain, the Central Bank of Kuwait and the Reserve Bank of India, respectively. The group specialises in sending and receiving money and offers foreign currency exchange services.
Finablr comprises a group of foreign exchange and digital payments companies such as UAE Exchange, Xpress Money, Unimoni, Remit2India and Bayan Pay that was previously owned by billionaire BR Shetty.
Remittance flows to poor and middle-income countries stood at $540 billion in 2020, 1.6 per cent less than in the previous year. However, they are set to rise as the global economy recovers from the Covid-19 pandemic, the World Bank said in its migration and development brief in May.
Remittances to the Mena region are expected to grow by 2.6 per cent in 2021 due to moderate growth in the euro area and weak outflows from GCC countries, the multilateral lender said.
BFC Group managing director and chief executive Ebrahim Nonoo will join WizzFinancial and lead its international money transfer business, which has a presence in 170 countries, the companies said.
“Two of the largest and most well-established remittance companies in the region are coming together to create a market-leading financial services group,” Anthony Wagerman, chairman of the advisory board at the Prism Group, told The National in an interview.
“The deal fills gaps for WizzFinancial in parts of the Middle East where it did not already have a presence.”
Declining to disclose the value of the acquisition, which is awaiting regulatory approval, Mr Wagerman said the BFC deal attracted investor interest – not only from the Middle East but also Africa and Eastern Europe – because of the potential in the corridors served by the Bahrain remittance company.
The acquisition of BFC will enable Royal Strategic Partners to “raise the level of resilience, agility and core competencies to create an integrated financial ecosystem”, said Hamad Al Ali, chief executive of Royal Strategic Partners.
The consortium will focus on growing BFC by making the existing business work more efficiently, leveraging FinTech developments and making more acquisitions to strengthen the network, said Mr Wagerman.
“The ambition for WizzFinancial is to be at the cutting edge of remittance payments. The biggest investment will be in the digital transformation of the existing business so that customers have an omnichannel platform to interact with,” he said.
Mr Wagerman said the Covid-19 pandemic had hastened digitisation in the payments space. However, the remittance business is quite traditional in many aspects.
“There are many blue-collar workers who still prefer making a physical transaction at a store. We have to take our customers along with us on the journey,” he said.
Meanwhile, the WizzFinancial platform will seek acquisitions in ancillary payments services such as micro loans and payday loans.
“There is strength in numbers and economies of scale to be gained. If there are suitable acquisitions where there are synergies, both in terms of revenue and costs, and where they add to other parts of the network, both for the sender and the receiver, that is a consideration for the Prism Group,” said Mr Wagerman.
WizzFinancial is in the process of consolidating additional remittance providers and alternative financial institutions on its platform, said Amir Nagammy, chairman of the Prism Group.
He said the consortium will announce additional strategic initiatives in the coming months.
Commenting on whether the holding company would reduce the number of physical shops in its portfolio, Mr Wagerman said it is examining the profitability and performance of the business on a shop-by-shop basis. Any brick-and-mortar business today must exist in a dynamic state, he said.
The consortium is also in the final stages of getting regulatory approval for the Finablr deal. It does not, however, plan to dispose of Finablr brands such as Xpress Money, UAE Exchange and Unimoni in the short term, according to Mr Wagerman.
The group floated on the London Stock Exchange in April 2019 in a deal that valued it at £1.23 billion ($1.7bn) but its shares were suspended in March last year after problems emerged at a number of Mr Shetty’s companies, including the UAE's biggest private healthcare business NMC Health, which was placed into administration last April.
The UAE Central Bank moved in to undertake direct supervision of UAE Exchange while investigators who were called in to look at Finablr’s books found previously unreported debt of $1bn in May last year, sparking a restructuring that led to its Travelex subsidiary being taken over by lenders in July.
The consortium agreed to buy the remainder of the group in December for a nominal fee of $1, plus up to 25 per cent of any funds recovered from "third parties in respect of possible historic wrongdoing" up to a maximum of $190 million.
“There are various tribulations UAE Exchange has been a part of. We are not connected with any litigation or outstanding matters concerning the business. We are acquiring it afresh and looking forward for the business, not backwards,” said Mr Wagerman.