Waha Capital invests $55 million in fintech company Channel VAS

Airtime credit services provider enables micro-loans for over 500 million mobile users

Waha Capital chief executive Salem Al Noaimi. Delores Johnson / The National

Waha Capital, an Abu Dhabi-based investment firm, said it paid US$55 million for a minority stake in the Dubai-based credit service provider Channel VAS as it branches out into the fast-growing world of fintech.

The investment firm has meanwhile postponed plans to divest its stake in Abu Dhabi-based lender Dunia Finance due to unfavourable market conditions.

Channel VAS, founded in 2012 by the entrepreneur Bassim Haidar, provides airtime credit services for mobile telecoms operators in over 25 emerging markets, enabling micro payments and loans to over 500 million mobile subscribers.

“Through this acquisition, we are enhancing our portfolio by tapping into a high-potential industry and an innovative company backed by a best-in-class management team that already has an impressive track record, and is implementing a solid strategy for expansion.” said Salem Al Noaimi, the chief executive and managing director of Waha Capital.

Executives declined to disclose the size of the stake it purchased, saying only that acquisition is a “significant minority stake”.

Channel VAS plans to further expand its business into the field of micro-finance and expects next year to lend between $80m to $100m in loans that will likely range between $10 and $100.

So far the company, which started its operations in Cameroon, has lent $1 billion in mobile phone credit services. The default rate for its loans stands at around 0.5 per cent, a low rate which Mr Haider attributes to the fact that his company screens customers for 430 behaviour patterns.

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Speaking at a press conference at Waha Capital's Abu Dhabi office, Mr Haider said the proceeds of Waha's investment into his company may be used for acquisitions.

"This partnership will further cement Channel VAS' leading position on the fintech front and will support us in providing even more innovative services and financial solutions to hundreds of million people all over the world, most of which are without easy reach of traditional financial services," he said.

Separately, Fahad Al Qassim, the head of principal investments at Waha Capital, said at the press conference that the company had benched plans to sell its stake in the consumer financing company Dunia Finance for a couple of years due to unfavourable market conditions.

Shareholders of Dunia Finance also include Mubadala, an investment company of the Government of Abu Dhabi, and Temasek Holdings, Singapore’s sovereign wealth fund.

Waha Capital last month reported a 36 per cent fall in second-quarter net income, dragged down by an adjustment of Dh66.6m against the share of income from the New York-listed airline leasing company AerCap Holdings in which it has a stake.