Astra Tech, the Dubai-based technology-focused investment firm backed by Abu Dhabi’s G42, has teamed up with Sharia-compliant savings and investment company National Bonds to provide savings and investment opportunities for UAE users of its internet calling platform Botim.
A memorandum of understanding signed by the two companies aims to give low and medium-income Botim customers access to microfinance options through National Bonds to improve their financial well-being and boost their savings, Astra Tech said on Thursday.
Botim customers will be able to invest and save through Al Manassah, a digital investment tool owned by National Bonds, which will provide them with Sharia-compliant asset-backed financial solutions with end-to-end automation.
“Through the power of Botim, individuals can now effortlessly access and explore a wide range of investment opportunities, paving the way for a more secure and prosperous financial future,” said Abdallah Abu Sheikh, chief executive of Astra Tech and Botim.
“Through this partnership, we are expanding our range of services and enabling our users to conveniently invest and save – these are two elements of finance which have always had high barriers of entry in the region, but we are slowly changing this for the better.”
The world’s digital revolution, which accelerated during the Covid-19 pandemic, has transformed the financial services sector and spurred wider financial inclusion, leading to more people than ever before having access to bank accounts and investment platforms to save for their futures, according to the World Bank’s Global Findex 2021 report released last year.
The pandemic also raised widespread concern over personal financial issues, highlighting the importance of saving, having an emergency fund for short-term cash needs and having enough money for retirement.
Forty-five per cent of UAE residents still need to start saving for their retirement, a 2022 survey by insurance company Friends Provident International found.
About 44 per cent of people in the UAE expect to retire by 55, while 63 per cent hope to before they turn 60, according to the FPI survey.
Botim customers will also be able to invest in National Bonds savings certificates, which offer yearly profits and includes a rewards programme.
“This strategic approach not only enables us to actively contribute to the financial prosperity and secure future of UAE citizens and residents but also empowers us to reach out to a wider audience,” said Mohammed Qasim Al Ali, group chief executive of National Bonds, which is owned by the Investment Corporation of Dubai.
“Through our various programmes and solutions, we aim to extend our impact and benefit an even broader range of individuals.”
In March, Astra Tech, which secured $500 million in a funding round led by G42 in December, said it had obtained a Mastercard principal membership licence, which allows it to issue Mastercard-branded physical and digital cards through its PayBy and Botim platforms.
Astra Tech's partnership with Mastercard “will provide users with even greater financial flexibility and convenience through Botim's ultra app, which is due for launch in the second quarter”, Mr Abu Sheikh told The National at the time.
Astra Tech acquired PayBy last August and VoIP platform Botim in December.
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.”
