First Abu Dhabi Bank PJSC is selling a 60% stake in its payments subsidiary, Magnati, to a unit of Canada's Brookfield Asset Management Inc., giving the business an implied valuation of up to $1.15 billion.
The deal is one of the biggest in the Middle East's payments sector in recent years, S&P Global Market Intelligence data shows. First Abu Dhabi Bank, or FAB, the United Arab Emirates' largest lender by assets, will retain a 40% stake in Magnati.
M&A activity in the sector has risen in consecutive years, with eight such deals registered in 2021. Dubai-based peer Mashreqbank PSC was earlier reported to be sounding out potential buyers for its payments arm that could be valued at roughly $500 million, sources told Bloomberg News.
Magnati, which was carved out into a fully owned subsidiary in 2020, sits under FAB's consumer banking segment. The payments business recorded double-digit growth in transaction volumes over pre-pandemic levels, increasing its market share during 2021, the bank said in its latest annual earnings report.
Digital payments in the region were increasing rapidly even before the COVID-19 pandemic accelerated adoption globally. In the UAE, the number of consumer digital payments transactions rose by more than 9% annually between 2014 and 2019, while in Saudi Arabia, card payments grew more than 70% between February 2019 and January 2020, according to consulting firm McKinsey.
The sale comes weeks after FAB offered to acquire a stake of at least 51% in EFG-Hermes Holding SAE, valuing Egypt's biggest investment bank at roughly 18.5 billion pounds.
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