After Mukesh Ambani, Gautam Adani and Tata’s N Chandrasekaran, it’s the turn of Kumar Mangalam Birla to look to the Middle East to forge key partnership.
Birla is set to partner with Hamed bin Zayed Al Nahyan, the Managing Director of Abu Dhabi Investment Authority (ADIA) and invest in Zand, UAE’s first digital only independent bank, said people aware. Initially, the plan is to deploy $50-$100 million but the quantum may go up in future as the business scales up.
The central bank of the Emirate is set to bless the investment, making Birla, chairman of the $46 billion Aditya Birla Group, fit and proper to invest in its banking system, a first Indian to do so. According to Forbes billionaire list, his net worth was $16.4 billion as on October 20th making him the 10th richest Indian billionaire.
AgenciesThe investment is expected to be from Birla’s private family office.
Zand plans to service both retail and corporate customers. Emaar Properties founder Mohamed Alabbar, the developer behind The Dubai Mall and Burj Khalifa, has invested in the company and will serve as chairman. Al Nahyan’s investment vehicle Al Hail Holdings and Birla will be the latest high profile backers of the venture.
A Birla spokesperson remained unavailable for comment. Mails to Zand and Al Hail Holdings did not generate a response.
“This would set the foundation for a deeper long term association,” said a Birla family watcher. “Al Nahyan is a key figure in the region. So other than the commercial angle of backing a new venture in a fast disrupting space, this is far more strategic. This potentially opens the door for similar such alliances to get replicated across the GCC. This is not a company to company deal, but for the first time two leading family offices are joining forces.”
Al Nahyan, a long term Indophile has been instrumental in several big ticket investments from UAE to India. Since 2013, he is also a co-chair of the UAE-India High Level Joint Task Force on Investments. Dubai government earlier this week, signed an MoU to develop real estate and industrial parks in Jammu and Kashmir – in a first of its kind initiative.
Zand will be led by Olivier Crespin, former Citi head of operations private bank who later joined DBS and launched Dibibank India in 2016.
“Backed by strong shareholders and working with the best bankers and technologies we have built a bank that delivers on the promise of understanding and meeting customer needs. From our systems to processes and our team, we are built and ready,” Crespin had earlier said in a statement.
Much like India, Digital, neo banks and other fintech start ups are upending the financial services segment with nimbler offerings or aggressively priced products. UAE is already a crowded market with 48 banks – including major local incumbents such as First Abu Dhabi Bank and Emirates NB, Mashreq Bank -- catering to a population of around 10 million people. But with 30% of the population of the Middle East and Africa aged between 15 and 29, representing around 110 million people, stand alone players like Yap, Bankiom, Hala, Pepper, Jingle Pay or arms of established players like Meem, Liv Bank, CBD Now, Mashreq Neo have been mushrooming. Additionally, UAE’s 18.3 million mobile phone subscribers with 200% mobile penetration offers great headroom for growth. The other big fintech opportunity lies in the country’s global payment eco system, especially the remittances of expats that crossed $44 billion in 2019, as per data from its central bank.
Bahrain was the first country in the region to launch a government regulated open banking products, creating a benchmark for the rest of the region’s financial sector.
In the past, Birla has made private investments in media and entertainment and education. The group had launched Bizlabs, an incubation programme in 2015 to explore open source innovation and partner with start ups in AI, fintech, machine learning, big data analytics. Till date, it had backed 20 bootstrap ventures under the programme.
Compared to Singapore, Dubai has been a smaller global outpost for the AV Birla Group. Flagship Ultratech acquired Star Cement to make a foray in the region in 2010 – its biggest bet in the region. Even the asset management business Aditya Birla Sun Life AMC has subsidiaries in Dubai. In 2015, Aditya Birla Nuvo had teamed up with Abraaj, a PE fund from Dubai to develop a platform for large scale solar power but the venture never off took after allegations of fraud, mismanagement of funds rocked the asset manager and its Pakistan born founder.
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