Mubadala, the Abu Dhabi strategic investment company, and Temasek, a Singaporean wealth fund, are said to be among shareholders looking to sell their stakes in Dunia Finance, a personal finance company based in the nation’s capital.
The sale might attract a bidding war from banks seeking to tap high-yielding individual customers. One shareholder may buy the others out or the company may be sold to the public in an initial public offering, according to analysts.
Together, Mubadala and Temasek command a controlling stake in Dunia Finance with 31 per cent and 40 per cent respectively, according to the website of Waha Capital, another shareholder that owns 25 per cent of Dunia. Temasek owns a stake in Dunia through its wholly owned subsidiary Fullerton Financial Holdings and A A Almoosa Enterprises owns the remaining 4 per cent stake, according to an investor presentation on Waha’s website dated March 15.
Dunia may attract interest from banks at a time when UAE lenders are seeing their margins compress because of low interest rates. They would like to get more individual customers on board because they are forced to pay higher interest rates than corporations, which are typically less risky. The stakes on offer may, however, be bought by other shareholders or even sold in a public offering, although the latter may be the least favoured option at a time when trading in stocks has diminished following a sharp slide in equity markets during the fourth quarter of last year.
“In my experience, it will be one of the existing shareholders who want to buy the others out,” said Sanyalak Manibhandu, the manager of research at NBAD Securities. “That would be the most sensible thing for all of them to do. If they sell down their stake to an outside party, it might not get them the best price.”
He said that Dunia’s profitability and big client base “could attract a lot of bidders”.
“The clients are at the low end of the profit retail segment. It’s a niche area where Dunia made money so why can’t someone with a bigger balance sheet?” Mr Manibhandu said.
Two people familiar with the situation stressed, however, that plans for the sale are at an early stage. A full sale of Dunia may fetch about US$500 million, two people told Bloomberg News, which first reported plans for the sale.
A spokesman for Waha Capital declined to comment, while no one at Mubadala or Dunia was immediately available to comment.
Dunia, which was established in 2008 and has 164,000 customers, reported a net profit of Dh201 million in 2014, almost double the return from the previous year.
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